The existence of the so-called halo effect has long been recognised. It is the phenomenon whereby we assume that because people are good at doing A they will be good at doing B, C and D (or the reverse—because they are bad at doing A they will be bad at doing B, C and D).
Later work on the halo effect suggested that it was highly influenced by first impressions. If we see a person first in a good light, it is difficult subsequently to darken that light. The old adage that “first impressions count” seems to be true. This is used by advertisers who pay heroic actors and beautiful actresses to promote products about which they have absolutely no expertise. We think positively about the actor because he played a hero, or the actress because she was made up to look incredibly beautiful, and assume that they therefore have deep knowledge about car engines or anti-wrinkle cream.
Recognition that the halo effect has a powerful influence on business has been relatively recent. Two consultants, Melvin Scorcher and James Brant, wrote in Harvard Business Review in 2002:
In our experience, CEOs, presidents, executive VPs and other top-level people often fall into the trap of making decisions about candidates based on lopsided or distorted information…
This is to consider the halo effect in the context of recruitment. But the effect also influences other areas of business. Car companies, for instance, will roll out what they call a halo vehicle, a particular model with special features that helps to sell all the other models in the range.
In his prize-winning book “The Halo Effect”, published in 2007, Phil Rosenzweig, an academic at IMD, a business school near Lausanne in Switzerland, argued:
Much of our thinking about company performance is shaped by the halo effect … when a company is growing and profitable, we tend to infer that it has a brilliant strategy, a visionary CEO, motivated people, and a vibrant culture. When performance falters, we're quick to say the strategy was misguided, the CEO became arrogant, the people were complacent, and the culture stodgy…
Rosenzweig, P., “The Halo Effect … and the Eight Other Business Delusions that Deceive Managers”, Free Press, 2007
Scorcher, M. and Brant, J., “Are You Picking the Right Leaders?”, Harvard Business Review, February 2002