The Halo Effect – the book

Before you read another business book, read Phil Rosenzweig’s The Halo Effect … and the Eight Other Business Delusions That Deceive Managers (Rosenzweig, 2007), it could save your career. This book ranks as one of the most important books anyone, especially people in business should read. The basis of this bold assertion (not made by Rosenzweig) is the high risk that a large amount of the information with which we all make decisions is based on halo effects and business delusions, and is thus inherently flawed. The halo effect is a bias of perception where we attribute traits to a person or object based on another trait, for example assuming, perhaps unconsciously, that someone is intelligent because they are good looking, or assuming that a poorly dressed person is either poor, unintelligent, or both. We become subject to halo effects and business delusions due to our preference for compelling stories over not-so-compelling research reports. This is due in large measure to our preference for simple, plausible, sure-fire, yet unproven, recipes over weakly correlated but validated research data. Unless we have the time, inclination, and the resources to validate the information we are being provided, it is too easy to get swept along by the flood of invalid research and false authority. The danger of the halo effect is the risk posed by making judgements and decisions when we don’t know it is happening. These judgements and decisions can affect your career, your staff, and your organisation. In The Halo Effect, Rosenzweig discusses the errors of logic and attribution that impact our judgements and decisions, and ultimately our personal and organisational performance. It is a brilliant book and ought to be mandatory reading for all managers. In the space allowed here, only the briefest of summaries of the halo effect and the eight business delusions can be provided: 1. The halo effect – the tendency to attribute a company’s performance to factors such as its leadership, vision, strategy, and culture to name a few. However such attributions are based prior performance, not the cause of it, and such attributions have little predictive value of future company performance. 2. The delusion of correlation and causality – just because two phenomena are correlated, it does not mean that they have a causal relationship. For example, does good employee satisfaction cause good company performance, or does good company performance cause good employee satisfaction?...

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