Literature Review: HALO EFFECT NO NAME GIVEN HERE Liberty University BUSI 600-B04 21 January 2013
LITERATURE REVIEW: HALO EFFECT Abstract
2
The term “Halo Effect” has several definitions. In conducting business research, it is important to understand which definition is to be used and apply that definition to the problem at hand. In this paper, we will attempt to define the correct version of the halo effect as it applies to this literature review. This paper will then look at the history of the halo effect in business and define how it is being used today. During the writing, examples and studies regarding the halo effect that have already been completed will also be reviewed to see if the halo effect can genuinely and repeatedly be used in business to increase profits or generate revenues.
LITERATURE REVIEW: HALO EFFECT Literature Review: Halo Effect Introduction Definition When discussing and researching the term “Halo Effect” the various definitions of the
3
phrase must be reviewed. Once reviewed, the researcher then has the responsibility to determine which definition best fits their research question at hand in order to best formulate the research design and subsequent answer. One of the definitions of halo effect is from the textbook Business research methods by Donald Cooper. It is defined as “error caused when prior observations influence perceptions of current observations” (Cooper & Schindler, 2011). Though broadly appropriate to the research at hand, perhaps a better definition would be from the psychologist Edward Thorndike, which states that “cognitive bias in which our judgments of a person’s character can be influenced by our overall impression of him or her (Thorndike, 1920).” A good example to help explain the halo effect--one that could be argued is extremely timely in today’s society--is one of the lawful gun owner. Just because someone owns several guns does not mean they are out to commit mass murder in an elementary school. Often, nongun owners assume that all gun owners are law breakers and non-gun owners are, therefore, using the halo effect to judge this person without knowing the truth. Subconsciously, the human mind introduces the halo effect daily in almost all aspects of life, most of the time without a person even knowing it. This is often confused with and/or related to stereotyping. “Stereotypes are generalizations about a group of people whereby we attribute a defined set of characteristics to this group. These classifications can be positive or negative, such as when various nationalities are stereotyped as friendly or unfriendly” (Changing Minds, 2012). For the research of this paper, the definition of the halo effect will be the following: “applying unknown traits or
LITERATURE REVIEW: HALO EFFECT characteristics to something without knowing the truth, mainly because of its relationship to something else.” History Before being able to apply the halo effect to answer the literature review, one must understand its background and why it was defined in the first place. In 1915, an American psychologist named Edward L. Thorndike, a professor at Columbia University, was conducting research on errors made in a recent study of military officers. The study, which was actually a rating plan created by Walter Scott, was made to rate certain criteria of military officers. The
4
ratings categories were leadership, physical qualities, intelligence, and character. In the plan, the officers doing the ratings were given specific instructions not to correlate any of the qualities together, but rather treat each category as an independent variable. Through the research, Edward Thorndike noticed that the ratings officials were almost entirely unable to separate each of the variables and inevitably gave ratings in each category using knowledge of the person as a whole. According to Thorndike, “the ratings were apparently affected by a marked tendency to think of the person in general rather good or rather inferior and to color the judgments of the qualities by this general feeling” (Thorndike, 1920). It was during this research that Thorndike then coined the phrase the “constant error of the halo” to explain his findings. Over time, the Halo Effect has been studied by many others and each has helped to solidify the findings of Edward Thorndike. The studies have ranged all across the board and have been conducted by businesses and psychologists alike. The medical field has studied it to determine what it is and how it affects people and the business world has studied it to see if they can use it to their advantage. Some of the more well-known studies about people and the halo effect include: What is beautiful is good by Karen Dion and Ellen Berscheid, which studied a
LITERATURE REVIEW: HALO EFFECT person’s attractiveness relative to his or her socially desirable traits, and Task evaluation as a function of the performer's physical attractiveness” by David Landy and Harold Sigall. The latter of which attempted to prove how a person would evaluate a piece of work written by a subject based on their attractiveness. Meaning, would a person grade the same piece of work differently based solely on the looks of the writer? These studies, and others, have gone on to prove over and over the existence of the halo effect and its profound effect on the subconscious mind. In the business world, marketing departments worldwide toil day and night to try and capture the halo effect. Whether in the launch of a new product, or in crisis management of a bad one, the halo effect can be used successfully in business when used properly. Several noteworthy articles in the business world have continued to demonstrate the halo effect. One is an the article in the Harvard Business Review by Melvin Scorcher and James Brant, which describes how top-level employees at companies often mistakenly use the halo effect in their hiring decisions. There are also many books and papers written about the subject, which will be covered in more detail in this paper, as well as the business approach to the Halo Effect. Objectives Now that the history and definition of the halo effect have been defined, it is time to turn to the objectives of this literature review. It is important that studies and works on both sides of the halo effect are reviewed. This will be the only way to determine if the research question is even valid and if so, can it be answered properly. This paper will attempt to review works from both sides in order to remain impartial until it can be determined if the research is valid and verifiable.
5
LITERATURE REVIEW: HALO EFFECT The Halo Effect in Business Modern Example Throughout the business community today, the halo effect is seen everywhere.
6
Documented cases and studies, particularly in the cellphone and automotive industry, suggest the halo effect is real and is being manipulated by marketers on a regular basis. One very high profile example of the halo effect is seen in the Apple product lines, specifically the IPod. In a survey conducted by Rebecca Runkle, an analyst with Morgan Stanley, over 400 IPod and nonIPod owners were surveyed to determine their potential computer purchasing habits. The study was designed to determine if more IPod owners were likely to buy a MAC computer versus a PC. The results of the study showed that nearly 90% of the IPod owners that replaced their PC’s with a MAC did so because of their experience with the IPod (Jade, 2005). This halo effect of the IPod also extended to the entire Apple and Macintosh lines, according to the study. People’s positive experiences with the IPod made them assume they would also have a positive experience with other Apple products. In 2005, Morgan Stanley used the halo effect study to determine that Apple would most likely see a 19% sales boost in the coming fiscal year. This study is a great example of the halo effect at work. Many PC owners know nothing about a MAC or its operating system, yet because of the IPod halo effect, they were willing to switch from a PC to a MAC based almost solely on that experience. As seen in the figure below of Apple revenues, the fairly steady increase year over year can be partly attributed to the halo effect.
LITERA ATURE REV VIEW: HALO EFFECT O
7
(F Figure 1: ww ww.Macworl ld.com, App financial statements, 2012) ple Scholarl Example ly The next major study that was conduc after Th T t cted horndike’s, w conduct by Richa E. was ted ard Nisbett and Timothy DeCamp Wilson in 197 and titled The halo eff a W 77 ffect: evidenc for ce unconsci ious alteratio of judgme on ents. This st tudy was con nducted thro ough the Uni iversity of Michigan where bot Richard E. Nisbett and Timothy D n, th d DeCamp Wil lson were ps sychologists at the Unive ersity. Nisbett was a Distinguished Professor of Social Psyc f chology and was the cod director of the Cultur and Cogni o re itive program at the Uni m iversity of M Michigan. W Wilson was a Professor of Psychology at the University of Virginia (W r U f Wikipedia, 20 013). The st tudy was aim med at finding out if peop were awa of the hal effect. Ni g ple are lo isbett and W Wilson argued that though d h many stu udies existed that proved the existenc of the hal o effect, non really des d d ce ne scribed if peo ople were awa of it and how it influ are uenced them. In this exp periment, Nis sbett and Wi ilson used videotape interview of a colleg professor acting differ ed ws ge rently in eac video. In one video, t ch the professor appeared to likeable, fl r o lexible, and displayed de d esirable traits such as ent thusiasm. In the n other, the professor appeared to be unlikable, distant, and even untru e a b d ustworthy. T students The viewing the videos were then giv a series of questions about the pr t w ven o rofessor. Th hose question ns asked the students to rate the pro e ofessor on ma annerisms, h foreign a his accent, and th way he he looked, or appearanc o ces. The data gathered sh a howed that s students rate the nice pr ed rofessor as having a better perso appearan and man onal nce nnerisms than the mean p n professor. T student The
LITERATURE REVIEW: HALO EFFECT
8
evaluations exposed great disparities between "the warm professor and the cold professor," as the researchers called them. The data showed that a person’s overall assessment can profoundly affect the evaluation of the same person’s individual attributes. When the students were then asked why they gave certain ratings on particular attributes, the students could not answer directly. Most didn’t know why they gave particular ratings for certain attributes. The study finally concluded that people lack awareness of the influence of one evaluation over another (Nisbett & Wilson, 1977). The study also proved that most of the time, people are unaware they are allowing other attributes to influence their ratings of something, and even further, that even if they are aware of the halo effect, most often times, they do not even realize when it is happening or they are doing it. In studying the halo effect, Nisbett and Wilson also concluded that in future blind reviews, even people that are adamant about their ability to separate individual judgments, should not be 100 percent relied upon, or as the researchers stated, their judgments should be considered suspect (Nisbett & Wilson, 1977). The next article continues to explore the effects of the halo effect by raters in a given subject. In this study, the researchers are attempting to detect the halo effect in ratings using a model called the Rasch model. The main idea behind the study was to determine if the errors introduced by raters of a certain topic were because of the halo effect, and how great was that error prone to be. The researchers in this case are Farahman Farrokhi and Rajab Esfandiari, both from the Department of English at the University of Tabriz, in Tabriz, Iran. Rasch models are used primarily to measure findings or data variables such as personalities, attitudes, or abilities (Wikipedia, 2013). In very simple terms, it is a mathematical way to analyze non-mathematical subjects. This study was done in order to detect the halo effect in raters using the Rasch model to measure the outcomes. The research question they created for this study asked, “…to what
LITERATURE REVIEW: HALO EFFECT extent do self-rater, peer-rater, and teacher rater display halo effect when rating the essays of students using an analytic scale?” (Farrokhi & Esfandiari, 2011). The study consisted of 194 student and teacher raters. Each were undergrad Iranian English majors and were enrolled in
9
advanced writing classes. They were then labeled as a self-assessor or a peer assessor. The idea of the study was then to rate various essay’s written by fellow students over a year time span in the advanced writing classes. The study was to determine if the ratings groups showed any variety of the halo effect in relation to each other. This study used a highly complex set of measurements and applied different values to a number of variables. This was a great example of operationalizing variables. The study finally concluded that each rater showed considerable halo effect in their evaluations when it came to the main categories of grammar and vocabulary. This halo effect was shown to affect the grades and final scores of the writers of each essay. Business Applications As shown above, uses of the halo effect in scholarly settings is well documented and defined. But how can it be used by the business world to drive brands, sales, and ultimately, profits? We now turn our attention to the business world and studies that focus on the research question at hand. The first piece is from an author named Joe Marconi. Marconi was an adjunct professor at DePaul University and Columbia College. He has written many books on marketing and public relations, including the book Reputation marketing, which is the subject of the next review. The book was written primarily for marketing departments and business marketers as a guide to creating brand focus and a plan to put that in action. Some of the key chapters in the book are attitude and awareness, damage control, and the most important for this review, the halo effect, or what this author calls “borrowed interest.” Using the term reputation to mean the halo
LITERATURE REVIEW: HALO EFFECT effect, Marconi has done an excellent job of explaining what the halo effect is and gives examples of how it is being used by businesses and organizations on a regular basis. The examples of the halo effect in this book are numerous. The first example explains how book retailers were able to add credibility to certain titles simply by adding the words
10
“Harvard Classics” to the title. Given that Harvard has a reputation of pushing excellence as the standard, sales of those books saw a marked increase because of the halo effect of Harvard. The truth is, however, the term is nothing more than a licensed phrase provided by Harvard. It has even been licensed to sell jewelry and clothing, but regardless, it has proven to increase sales of certain items. The next example comes from a US securities and exchange that was trying to convince investors to invest in their market instead of others because of specific benefits they offered. Most disregarded the statements from the exchange because they were seen as being self-promoting. In order to try and dispel that belief, the exchange hired a professor from Harvard and a professor from Columbia University to create a study to prove the truth of the specific benefits being offered by the exchange. The halo effect from the professors themselves helped bring validity and acceptance of the report because it was thought that these professors would not put their names on the line simply for money. This halo effect proved that people perceive the same information from different sources as very different. The New York Stock Exchange enjoys the same success simply by its name alone. There are many exchanges in which to list a company’s stock, but the prestige of being on the NYSE brings with it the halo effect of being a top-tier company since its stock is listed on the top tier exchange. Marconi goes on to explain that using the halo effect to brand and market your product has more to do with image than the actual product itself. Using fashion designers as an example, Marconi explains how the name of a desirable fashion designer brings with it such weight that they’ve been used to
LITERATURE REVIEW: HALO EFFECT
11
sell everything from candy to cars. Marconi says “what the designer is selling is an image and a reputation that have proven themselves to be worth far more than the actual designs or individual products” (Marconi, 2002). Through association or reputation, businesses use the halo effect in many ways. This includes selling products with prestigious logos, such as university or school logos, to locating their businesses in more prestigious locations, such as Silicon Valley or Wall Street. Another example Marconi discusses, and that is seen every day on every medium viewed, is the use of celebrity endorsements. Though diluted almost to the point of uselessness, businesses still hang on the tried and true method of the celebrity endorsement. Often, seeing your favorite actor or sports figure using a particular piece of equipment or driving a certain car, brings with it the halo effect, or the idea that the consumer wants to emulate that use for the prestige it brings with it. As the review of this article continues, it can be argued that Marconi has succeeded in proving the existence of the halo effect and also proven how businesses can use it to the advantage. The author has given specific examples for a business to evaluate and provided a guide for marketers to use in creating its reputation. These include using a prestigious award or recognition in its marketing; pushing a recent product certification by a well-known and established organization, (akin to a seal of approval); affiliation or membership in a prominent organization, association, or charitable organization; or inviting a noteworthy person to sit on their management board. Marconi even discusses using the halo effect to launch new product lines. By developing marketing that focuses on the main brand rather than the individual product, businesses can utilize the halo effect of their good name in order to bring the new line to market. Dubbed, “borrowed interest,” it is defined as using an unrelated subject to attract attention to your message (Marconi, 2002). Borrowed interest can also be defined as product
LITERATURE REVIEW: HALO EFFECT placement; meaning, using subtle marketing in a greater arena to bring attention to your brand.
12
This includes signage in the background of a press conference or a celebrity wearing a particular brand of logoed apparel during an unrelated interview. Subconsciously, the viewer picks these messages up, and through the halo effect associates that item as good or bad depending on the wearer or the situation. The NRA attempted this in order to show the image of their members as being every day ordinary people and not gun toting nuts. Marconi goes on to explain how the halo effect in this instance worked against the NRA because after the ad campaign they allowed public appearances and spokespeople that were perceived as being “angry militants” to speak on their behalf. This was a good example of how the halo effect can be negative as well as positive. Marconi concludes that in order to use the halo effect effectively, it must be used correctly. By choosing the wrong celebrity, or affiliation, a business can be hurt just as much as it can be helped by the halo effect. He has also shown that the halo effect does not have to be “direct and obvious”, but that it can be subtle and not so “in your face” to be effective. The next article that is written for business use is from the Centre for the Study of Choice at the University of Technology, Sydney. The authors are Flavio Freire Souza and Paul Burke. The main purpose of this study is to attempt to prove that businesses should account for the halo effect, or individual brand perceptions, when trying to predict the consumers brand choice (Souza & Burke, 2012). This study was more a review of other studies than a study in and of itself; however, the author does a good job of explaining halo effect and variables that can be used to help remove the halo effect when making judgments on brands. This study was conducted by use of a literature review of already established studies and documentation. The reason for choosing this article for this literature review is the author’s use of their propositions to explain how to remove bias in decision making. The three propositions defined here are 1.
LITERATURE REVIEW: HALO EFFECT
13
“Prompting [the] raters’ awareness of [their] own halo effects will reduce brand halo in choice”; 2. “Experts will be less prone to brand halo in choice than novices”; and 3. “Confidence in decision setting increases brand halo” (Souza & Burke, 2012). In brand selection, a consumer is shown to use the halo effect from many different sources of information. Those sources include advertising, memory and previous experience (Souza & Burke, 2012). They have also shown that a consumer will often rearrange or create their own attitudes about a brand, true or not, in order to give their preferred brand a more favorable review. This is an interesting statement in that the simple use of the halo effect can lead a person to believe something they’ve possibly made up in their own mind as being completely true. The goal of the authors was to determine if making consumers aware of their own self-induced halo effect, could they then attempt to reduce their use of it in decision making. In this paper, the authors provided information that supports their original theory of brand awareness. Though they should have expanded with more examples, or even a study, it can be said that their argument was answered by the study. The next review comes from the renowned business author Phil Rosenzweig. Mr. Rosenzweig is a Professor of Strategy and International Management at the International Institute for Management Development in Lausanne, Switzerland. He has written many business books for corporate managers about critical thinking. One book in particular is titled Halo effect...and the eight other business delusions that deceive managers. In the section of the book about the halo effect, Mr. Rosenzweig does a great job of explaining about how the media and consumers view a particular company based on several factors, regardless of if anything has changed within the company. He explains how a company that appears to be very successful is perceived as being well managed, with sound practices and ideas and even as leaders in the industry. But when that same company is in decline or sees lost profits, the general public now
LITERATURE REVIEW: HALO EFFECT thinks that they are mismanaged with complacent employees, and an unfocused strategy.
14
Despite the fact that perhaps nothing in the company has changed. Mr. Rosenzweig goes on to explain that “company performance, good or bad, creates an overall impression, a halo, that shapes how we perceive its strategy, leaders, employees, culture, and other elements”(Rosenzweig, 2008). The article continues on to explain how attributions and contributions are often mistaken for one another and how that affects financial performance. This is often mistaken to include culture and even competencies. When evaluating a company, or its performance, good managers have learned to not allow the halo effect to cloud their judgment. By looking for evidence of good leadership and a good strategy, real data can be extrapolated without bias. Unfortunately, the opposite is often what happens and studies have proven that data research quality is often compromised. The author explains that regardless of the size of the data collection or how well analyzed the data is, if the halo effect is not taken into account, many errors in the findings will be given. The author also makes a great point in academics, as well as the real world in regard to the manager’s lack of quality research. He points out that many researchers often miss valuable resources, such as journals, when making decisions or giving advice, and rather, more often than not, simply talk to others, reflect on past practices, or read a popular book, all which contain many biases due to the halo effect (Olk & Rosenzweig, 2010). Though this book is more business centered than research centered, it gives a very good understanding of how the halo effect is used every day in business and how it often clouds the everyday judgment of managers and executives. The theory of the author is that until these effects are recognized and dealt with properly, research will continue to be difficult to conduct properly.
LITERATURE REVIEW: HALO EFFECT
15
The next article deals specifically with human resources and the halo effect in hiring the right talent. Though this is a short article, it explains in specific detail how a sales person with exceptional skills in one area, does not necessarily translate into another area. The article explains about the promotion of a leading sales person who excelled at her job and her position, but failed miserably when she was hired as the sales manager. According to the article, the hiring company “took for granted that the winning performance of this salesperson would transfer into other skills” (Pinsker, 2009). The book, titled Seven rules for hiring extraordinary people was written by Richard Pinsker. Mr. Pinsker is the president of Pinsker and Company, which is an executive selection firm. His expertise includes being a certified management consultant, and Fellow of the Institute of Management Consultants. He also holds a degree in psychology from the University of Wisconsin. Mr. Pinsker goes on to explain why it’s important to overcome the halo effect in hiring, and provides a two-step process to do so. The two steps to avoid the halo effect discussed are: probing or digging for examples during the interview of what a person has accomplished, their management style, and how they work with others; and continued deeper probing when checking references and backgrounds (Pinsker, 2009). The conclusion is that this article is a good example of how the halo effect affects hiring decisions and why it is important for hiring managers and human resource departments to look beyond their biases and the halo effect.
Halo Effect Studies Now that the theory of the halo effect has been shown in the business world, it is time to move on to actual studies done on the topic. The studies that are important are ones that are able to prove and measure the halo effect, and come up with real world conclusions that help to
LITERATURE REVIEW: HALO EFFECT answer the research question. The reviews below are of actual studies performed in various
16
settings, covering a range of topics. However, they all work towards trying to determine the halo effect and its real life applications. Real World Studies The first study takes an interesting look inside a consumer’s emotional response of a company during what is called a product harm crisis. The study aimed to determine if a corporation’s “Corporate Social Responsibility”, or CSR, had an influence on the consumer’s perception of the company during a crisis event. In this case, the event was tainted margarine that was proving fatal to children and the elderly. The study was titled The Effect of corporate social responsibility on consumers’ emotional reactions in product-harm crisis. It was written by Dr. Ioannis Assiouras, who is a Marketing Assistant Professor at the ESC Toulouse Business School. His degrees include a PHD in Marketing, a Masters in Services Management and a Bachelor Degree in Political Science and History. In this study, the authors were trying to establish if a company’s halo effect, in terms of their corporate social responsibility, determined how consumers would view them after some sort of problem or crisis. They defined a productharm crisis as a “well publicized occurrence where products are found to be dangerous or defective” (Assiouras, et al, 2011). As is well known in the business world, any type of negative press often threatens a company’s reputation and its brand image. This can result in a loss of sales, strengthening of a competitor through their increased sales, loss of marketing effectiveness, and even the negative halo effect on some of the company’s other brands that weren’t affected by the event (Van Heerde et al. 2007). A company that has done well to build a great reputation can often use this as way to fend off the harm that can be caused by a bad event. It is thought that this good reputation will also help to reduce the amount of time the negative
LITERATURE REVIEW: HALO EFFECT
17
connotations last and hopefully allow the company to return to good standing in less time. This study tries to prove that this good reputation is built by having a good corporate social responsibility culture. By focusing on emotional responses versus attributes, the study was designed to measure the consumer’s emotions after a crisis event. During this study, six hypotheses were written in an attempt to answer the questions. The first three hypotheses are the most important and include the following: 1. When a company has a positive social responsibility it is assumed that consumers will show more sympathy toward this company versus a company with negative social responsibility; 2. When social responsibility is positive, consumer anger toward the company will be lower than towards a company with negative social responsibility; and 3. The pleasure derived from the misfortune of others will be lower towards the company that has the more positive social responsibility. The design of the study included three conditions of a fictitious company. Those conditions were positive social responsibility, negative social responsibility, and no information given about their social responsibility. The last was used as the control group for the experiments. The first step was to give all the participants in the study the background information on the company in question. They then were told about the company’s corporate social responsibility conditions, meaning, if they were positive, negative or none was given. The participants were told about a corporate social responsibility index scale that the companies were rated on. Company A was rated number one on the list when shown with positive social responsibility, and listed last, at number fourteen, when listed with negative social responsibility. The respondents were then given the crisis scenario and asked to respond to a series of questions. The questions were broken up into different parts to correspond with different stages of the scenario. The first series of questions were asked after the company information briefing, and then again after the crisis event was
LITERATURE REVIEW: HALO EFFECT introduced. Each series of questions was again postulated towards discovering emotions. The main emotions the researchers were trying to elicit were anger, sympathy and the pleasure derived from the suffering of others, or what they call schadenfreude (Assiouras, et al, 2011).
18
The actual study took place outside four different grocery stores in Athens, Greece and consisted of all volunteers. The format was convenience sampling and each took about 20 minutes to complete. In total, there were two hundred and three valid survey results to analyze. The results of the study were very much in line with the hypothesis questions posed at the beginning of the study. The researchers found that in response to hypothesis one, the sympathy levels for the company with the positive social responsibility rating were generally higher than for those with the negative social responsibility rating and the control group company. The same was true for hypothesis two, which showed that respondents were less angry at the first company than at the negatively rated company. Hypothesis three had similar results for the positively and negatively rated company. This includes the control group being rated closer in line with the negative company than the positively rated company. This study is a great example of the halo effect at work. There was no discussion on the handling of the situation or any differences in the situations, other than how socially responsible the company in the scenario was. One interesting discovery, though not surprising, was the classification of sympathy as a positive emotion and anger as a negative one. The conclusion of this study proved that the importance of corporate social responsibility not only attributes to brand evaluation or problem blame, but it contributes directly to consumer emotions, such as anger and sympathy (Assiouras, et al, 2011). In review of the halo effect, agreement with this study’s findings help to conclude the true existence of the halo effect and how a company can use it to their advantage in good times and in bad times.
LITERATURE REVIEW: HALO EFFECT
19
The next study takes an interesting turn in the research of the halo effect. In this case, the researchers wanted to know why team failures are often not blamed on the team, but rather individuals within the team. In contrast, most team successes are often attributed to the team effort and not to one individual on the team, in general. This study, titled The team halo effect: why teams are not blamed for their failures, was conducted at the University of Notre Dame by Charles E. Naquin and Renee O. Tynan. The article begins by explaining two distinct contrasts seen more and more in the business world today. The first is the use of teams by more businesses, and second is the work produced by researchers that show teams are some of the least effective ways to conduct projects. In the team dynamic, managers believe that by using a team for projects, this allows for better use of unique skills by members of the group and therefore, better performance across the board of various tasks versus individuals alone (Katzenbach & Smith, 1993). Efficiency and usefulness aside, the research is focused more on the team halo effect mentioned above. In the opening discussion of the study, the authors argue that when people seek to understand team performance, credit is given to the team for success, but when failures occur, people tend to overlook the group itself as the point of failure (Naquin and Tynan, 2003). A great analogy used by the authors is one of the major league baseball player. Should a particular outfielder miss a ground ball that allows the hitter to score, most people will blame the outfielder for the loss rather than the whole team, which didn’t do what was needed to win the entire game in all the other innings. In contrast, the team that defeated this same team was praised for their group effort and how well the team played together. Needless to say, this is a very interesting observation. The authors termed this the team halo effect. In order to attempt to answer the why questions, or “cognitive explanations,” several hypotheses were developed. The first hypothesis is that teams are given significantly more
LITERATURE REVIEW: HALO EFFECT
20
recognition for their successes than for their failures. The second is when diagnosing poor team performance; individuals will have more counterfactual thoughts about the activities of individuals than about the team as a collective (Naquin and Tynan, 2003). The definition of counterfactual, or counterfactual thinking, is the tendency a person has to use their imagination to produce alternates to what really happened. In other words, the playing of the scenario over and over in your head, with different steps along the way, to see if the outcome would have been different. For example, thinking about the idea that what if that ball player had caught the ball and gotten the runner out at first, maybe they would have won the game instead. The next hypothesis states that when attempting to determine a team’s poor performance, reviewers will more likely hone in on the individuals in the group as the cause of the problems rather than the team as a whole. Hypothesis four and five deal with an individual’s personal knowledge and understanding of teams as a collective and their ability to judge the group as a whole, rather than the individuals as the cause of the failures (Naquin and Tynan, 2003). These hypotheses are combined together by the researcher to define what they call, the team halo effect. In order to test their hypothesis, the researchers conducted two studies. The first study involved fifty eight graduate students and their recollection of a real life situation when they were members of a team, either successful or unsuccessful. They were then asked a series of questions about the team attributes and then the attributes of the individuals in the group. Next, they were asked a series of questions about boosting the team’s performance and their recommendations to do so. They were then asked to complete a Rentsch scale to assess the level of individual experience with teams and teamwork. Lastly, they were asked counterfactual questions so the researchers could determine what the participants thought could have gone differently that might have changed the outcome (Naquin and Tynan, 2003). As the results of the questionnaires were
LITERATURE REVIEW: HALO EFFECT
21
analyzed, the answers to the hypotheses became clearer. Each hypothesis was answered almost exactly as presented. One interesting finding was that their findings suggested that good performance was a causal factor of the team, however, the individuals within that team were held responsible for its poor performance. The results also proved that respondents with more experience in working with teams were more likely to blame the team for performance over the individual. Meaning, the more experienced team members were less likely to follow the team halo effect than less experienced individuals. The second study conducted by Naquin and Tynan involved seventy three graduate students forced to work on a team as part of an assignment in class. The idea here was that teams were to complete long term tasks relating to labor and management negotiations. The assignment was split into three phases, or rounds. Phase one involved the negotiation of operations, locations, employee and wage issues. Phase two required negotiating wage rates with union employees, and phase three required negotiating new labor contracts with many issues included. Each team was to negotiate each issue on its own, but it had to be done as part of a negotiation team. Once completed, each individual was required to complete a negotiation analysis. This time, the study attempted to remove the counterfactual elements in the questions and analysis. Instead, they were asked an open ended question to see if counterfactualization would be added without prompting (Naquin and Tynan, 2003). Not surprisingly, the results were very similar to the results of the first study, showing tendencies to follow the team halo effect. Also in line with the first study, they proved once again that an individual with more experience and knowledge of teamwork was far less likely to fall into the team halo effect trap. The conclusion of this study brings into light some practical uses for managers to be aware of when working with team dynamics. The main practical use is about making managers aware of the team halo effect so that they may be more thoughtful, and use
LITERATURE REVIEW: HALO EFFECT more accurate diagnostic reasoning, when evaluating the team’s performance. Meaning, not focusing on the individuals within the team when there is a problem, but rather focusing on the group itself (Naquin and Tynan, 2003). CONCLUSION
22
As seen in everything from relationships, to reviews, to shopping, almost every aspect of daily life is touched in some way by the halo effect. Most often undetected in daily decisions, it none-the-less plays a significant role. Research has shown that the halo effect does exist, though there is some discrepancy among scholars as to the amount of the halo effect in certain situations and when it occurs. The studies are interesting in that time and again it was proven that when multiple variables are introduced, in almost any given situation, there is a natural tendency by people to allow one variable to affect the next. Most often, without their knowledge of even doing do. In business, this halo effect can be a blessing or a curse. Most sales people spend every day in front of customers trying to sell a product or a service and most work to either use the halo effect to their advantage or overcome a negative halo effect related to their service or product. The pharmaceutical industry has long used the halo effect in its hiring practices by hiring attractive female sales people in order to leverage a male doctor’s natural inclination towards attractive females. The attractiveness of the salesperson has absolutely nothing to do with their product knowledge or their ability to sell, but the industry knows that an attractive person will get in the door much easier than someone else. Everywhere a person looks, examples of the salesperson halo effect abound, some good, some bad. Take the used car salesmen halo effect. Most likely a negative image just popped into your head of a sleazy, poorly dressed man pushing his way into your conversation and trying to “sell” you one heck of a deal. The truth is often very opposite of this image, an image created because of the halo effect
LITERATURE REVIEW: HALO EFFECT of the past. Today’s car salespeople are smarter, better educated and most often, just trying to
23
earn an honest living like everyone else. A good salesperson will leverage their brand halo and other attributes in order to increase sales. Finally, a smart business will use every aspect of the halo effect to their advantage in order to increase revenues and profits. From brand recognition to damage control, the right use of the halo effect will most certainly pay off in the end.
LITERATURE REVIEW: HALO EFFECT References Assiouras, I., Ozgen, O, & Skourtis, G. (Winter, 2011). The Effect of Corporate Social Responsibility on Consumers’ Emotional Reactions in Product-Harm Crisis. American Marketing Association. Retrieved from
24
http://www.academia.edu/1140169/the_effect_of_corporate_social_responsibility_on_consu mers_emotional_reactions_in_product-harm_crisis Changing Minds (2012). Stereotypes. Changing Minds. Retrieved January 27, 2012, from http://changingminds.org/explanations/theories/stereotypes.htm Cooper, D. R., & Schindler, P. S. (2011). Business Research Methods (11th ed.). New York, NY: McGraw-Hill/Irwin. Farrokhi, F., & Esfandiari, R. (2011). A Many-facet Rasch Model to Detect Halo Effect in Three Types of Raters. Theory and Practice in Language Studies, 1(11), 1531-1540. doi:10.4304/tpls.1.11.1531-1540 Jade, K. (2005, March 18). IPod halo effect estimated at a staggering 20%. AppleInsider. Retrieved January 31, 2013, from http://appleinsider.com/articles/05/03/18/ipod_halo_effect_estimated_at_a_staggering_20 Katzenbach, J. R., & Smith, D. K. (1993b). The wisdom of teams: Creating the high performance organization. Boston, MA: Harvard Business School Press. Marconi, J. (2002). Reputation marketing: building and sustaining your organization's greatest asset. New York, NY: McGraw-Hill. Naquin, C. E., & Tynan, R. O. (2003). The team halo effect: Why teams are not blamed for their failures. Journal of Applied Psychology, 88(2), 332-340. doi:10.1037/0021-9010.88.2.332
LITERATURE REVIEW: HALO EFFECT
25
Nisbett, R. E., & Wilson, T. D. (1977). The Halo Effect: Evidence for Unconscious Alteration of Judgments. Journal of Feisonality and Social Psychology, 35(4), 250-256. Olk, P., & Rosenzweig, P. (2010). The Halo Effect and the Challenge of Management Inquiry: A Dialog between Phil Rosenzweig and Paul Olk. Journal of Management Inquiry, 19(1), 4854. doi:10.1177/1056492609347567 Pinsker, R. J. (2009). Don't be fooled by the Halo Effect. In Seven rules for hiring extraordinary talent: A business story (pp. 29-32). Amherst, Mass: HRD Press. Rosenzweig, P. M. (2008). In The halo effect . . . and the eight other business delusions that deceive managers. Princeton, NJ Souza, F. F., & Burke, P. (2012). Brand Halo: Understanding its Implications, Shortcomings and Directions for Choice Studies. ANZMAC | Australia and New Zealand Marketing Academy. Retrieved February 9, 2013, from http://anzmac.info/conference/2012/papers/408ANZMACFINAL.pdf Thorndike, E. L. (1920). A constant error in psychological ratings. Journal of Applied Psychology, 4(1), 25-29. doi:10.1037/h0071663 US Census Bureau (2010). Homeownership Rates, United States. Real Estate Research Experts The Danter Company. Retrieved February 14, 2013, from http://www.danter.com/statistics/homeown.htm Van Heerde, Harald, Kristiaan Helsen, and Marnik G. Dekimpe (2007), “The Impact of a Product-Harm Crisis on Marketing Effectiveness,” Marketing Science, 26 (2), 230–45. Wikipedia (2013). Richard E. Nisbett. In Wikipedia, the free encyclopedia. Retrieved January 31, 2013, from http://en.wikipedia.org/wiki/Richard_E._Nisbett
