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Halos All Around Us By Phil Rosenzweig  During
World War I, an American psychologist named Edward Thorndike was
conducting research into the ways that superiors rate their subordinates.
In one study, he asked army officers to rate their soldiers on a
variety of features: intelligence, physique, leadership, character
and so on. He was struck by the results. Some men were thought to
be “superior soldiers” and were highly rated at just about everything,
while others were thought to be subpar across the board. It was as
if officers figured that a soldier who was handsome and had good
posture should also be able to shoot straight, polish his shoes well
and play the harmonica, too. Thorndike called it the Halo Effect.
There are a few kinds of Halo Effects. One refers to what Thorndike observed, a tendency to make inferences about specific traits on the basis of a general impression. It's difficult for most people to independently measure separate features; there's a common tendency to blend them together. The Halo Effect is a way for the mind to create and maintain a coherent and consistent picture, to reduce cognitive dissonance. It's also a heuristic, a sort of rule of thumb that people use to make guesses about things that are hard to assess directly. We tend to grasp information that is relevant, tangible and appears to be objective, and then make attributions about other features that are more vague or ambiguous. For example, we may not know if a new product is good, but if it comes from a well-known company with an excellent reputation, we might reasonably infer it should be of good quality. That's what brand building is about: creating Halos so that consumers are more likely to think favorably of a product or service. Or take a well-documented setting for the Halo Effect – the job interview. What's the most relevant and tangible information we first have about job candidates? Probably the school where they earned their degree, their grade-point average and what honors they received. With this information clearly in mind – relevant, tangible and seemingly objective – interviewers tend to shade their evaluations about other things that are less tangible, such as a candidate's personal manner or the quality of answers to general questions. A strong record from an excellent school? The job candidate often appears to be a little brighter, with smarter answers and greater potential for success. A modest record from an unheralded local school? The very same answers may sound a little less intelligent, the same appearance a bit less impressive. Which is exactly what Thorndike found in his study about army officers and their soldiers all those years ago. Now consider companies. What's the most relevant and tangible information we often have about a company? Financial performance, of course. Whether the company is profitable. Whether sales are growing. Whether the price of its stock is on the rise. Financial performance looks to be accurate and objective. Numbers don't lie, we like to say – which is why Enron, Tyco and a handful of other recent scandals shake our confidence so deeply. We routinely trust financial performance figures. And it's natural that on the basis of this performance data, people make attributions about other things that are less tangible and objective. Why is it so hard to understand why some companies succeed and others fail? In fact, our thinking about business is shaped by a number of delusions, the first of which is the Halo Effect. So many of the things that we – managers, journalists, professors and consultants – commonly think contribute to company performance are often attributions based on performance. And even when we try to gather data in large-scale samples, like the Fortune survey or the “Great Places to Work” study, we often do little more than multiply the Halo Effect. The Halo Effect isn't the only delusion that distorts our thinking about business. But in many ways the Halo Effect is the most basic delusion of them all. It is a flaw – sometimes compounded by other errors – that turns up again and again, weakening the quality of our data and often diminishing our ability to think clearly about the factors that shape company performance. From THE HALO EFFECT by Phil Rosenzweig. Reprinted by permission of Free Press, a Division of Simon & Schuster, Inc. |
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