So how could (now former) Penn State President Graham Spanier allow his athletic department to take risks that would damage the image of the whole university? The answer is the halo effect: the remarkable force a winning sports team exerts on a university’s brand and student recruiting power. The success of Boston College quarterback Doug Flutie—especially his legendary 1984 Hail Mary pass and his Heisman trophy—helped transform a regional college into an internationally known, highly selective institution. Annual applications jumped 12 percent in 1985, to 16,163, and have since doubled.
The effect was first documented in the U.S. Army decades ago, when soldiers who earned high scores from commanders for one quality (such as neatness) also got high marks for entirely unrelated qualities (such as physical strength).
Halos can be cast by many aspects of a company. Consumers who know a firm is highly profitable are more likely to believe its products are high-quality and its advertising honest. That helps build loyalty among customers, making companies more resistant to competition.
Our conclusion is that the halo effect as shield does exist in a limited crisis domain but works only for organizations with very favorable prior reputations. There is little reason to believe that the halo effect creates a benefit of the doubt that will counteract the fundamental attribution error. The failure to find halo's effect on attributions of crisis responsibility echo findings from earlier halo and crisis studies (Coombs and Holladay, 2002; Klein and Dawar, 2004).
He explains his most important delusion, 'the halo effect', as the phenomenon that occurs when an organisation's financial performance is particularly good - be it profits, sales or fundraising totals. People within the charity - and big cheeses are especially prone to this - will probably conclude that the manager responsible for this glittering success is a visionary leader who has deployed a brilliant strategy and created the kind of working environment where every bright young charity worker wants to be.
Unrecognized, it can result in management problems like these:
During interviews. A manager permits the pleasant appearance or verbal skills of an applicant to blind him to the fact that the individual has held six jobs in two years. And, of course, the halo effect can work in reverse: an unattractive appearance or manner may prevent you from seeing an applicant's assets.
The halo effect also works in marketing, writes the author. One example? Apple Computer. Apple had great success with the marketing halo effect when it used broad campaigns focusing on a single product line: the iPod.
Apple bombarded the public with television advertising, print ads, and billboards that touted the iPod, but launched only minimal marketing for Apple's other products (e.g., personal computers, etc.) Apple put the bulk of its marketing budget behind the iPod, creating a halo effect that helped the entire Apple product line, the author writes.
Companies often benefit from the halo effect of catalog sales when they release a product that becomes popular with consumers. Not only do past products start to sell, but the halo effect can also extend to future product releases. When one product from a family of products sells well, the rest of the product catalog can benefit. One of the most common examples of this is in the sales of music CDs.
A non-governmental organization (NGO) issues a report on alleged Israeli human rights violations, and it's instantly and automatically newsworthy. The Israeli and foreign media uncritically, even eagerly, promote the NGO's politicized agenda, regardless of the NGO's credibility or the veracity of the allegations.
This "halo effect," whereby the claims of human rights groups are accepted without a modicum of scrutiny, often results in Israel's vilification on the international stage for violating "international humanitarian law" or demonized as an "apartheid state" to be shunned and boycotted. By publishing these stories, the media reinforces the halo effect and becomes partner to the damage done.
The halo effect (halo error) was first described in the psychology literature around the turn of this century. Thorndike coined the term in connection with his observation that supervisors seemed unable to rate their subordinates independently on different (presumably independent) characteristics. Rather, supervisors' ratings exhibited a consistently high correlation with their global impression of the subordinate being rated.
IT'S BEEN TERMED THE "HALO EFFECT" when companies that are so outstanding in implementation of strategic and business fundamentals raise the best practices bar for an entire industry. Such is the case in this year's PoweRanking Survey, published by Cannondale Associates, which named Wal-Mart and Procter & Gamble as the top firms in key areas of best practices.