Strategy Exercise: Teddy bear maker Fuzzy Hugs pursues a high-quality, low-cost strategy and can’t afford to hire underperforming manufacturing employees given its lean staffing model. Fuzzy Hugs has identified an assessment system that has high validity and predicts job success well but that is also very expensive and results in fairly high levels of adverse impact. The company is concerned about maintaining a diverse workforce, and wants to avoid legal trouble. The assessment tools it identified that had lower adverse impact had substantially lower validity as well, and were almost as expensive.

The company asks your professional advice about whether it should use the new assessment system. What advice do you give?