What is Halo Effect History impact on company and employees

Halo Effect

The Halo effect is a psychological concept that describes the tendency that we human beings have to judge and make conclusions about other people or situations based on a single characteristic. 

Within the interpersonal context, the Halo effect can be described as stereotyping. That is, the attribution of traits and characteristics that do not necessarily have to do with one another from a superficial observation

But… how does this effect impact the performance of the company’s employees? 

It is important to note that the Halo effect does not only apply to individuals, but also to situations. Imagine, for example, that part of your sales team is involved in a project that lasted a few weeks… 

Everyone was very productive during the period but, in the last few days, an error destabilized the team, leaving everyone stressed and unproductive. The chances of them seeing the project as a failure are high, even if the mistake was superficial. 

Another major impact of the Halo effect within the corporate environment happens precisely in performance evaluation processes and in the interaction between different parts of the team.

The History of the Halo Effect 

The concept of the Halo effect was created by the American psychologist Edward Thorndike, still during the First World WarAt first, the theory helped him to analyze the criteria used in evaluating soldiers. 

This made him realize that there was a strong correlation between soldiers who met a certain standard of beauty and those who met a certain standard of ability. 

This was a very interesting finding, which was corroborated by many studies that came later. For example, research published in the scientific journal Journal of Applied Psychology shows that people with a physical appearance that is considered attractive have benefits related to their professional life, such as better wages. 

That’s where the name of the concept comes from, after all the term Halo, translated from English, refers to the halo of light characteristic of the representation of angels . 

It may seem like an unfounded theorybut the truth is that the consequences of the Halo effect can indeed be observed in the daily lives of many companies , especially in selection processes. Interesting to think about it, don’t you think? 

How can the Halo effect impact your company and your employees? 

The Halo effect can be very harmful in several areas of the same company. The Human Resources and people management sector is a good example, both when hiring new employees and when evaluating the performance of those who already complete the staff.

Judging a candidate in a hasty way, for example, can close the doors for his hiring, even if he has skills that can be developed. 

The truth is that errors related to team management can translate into significant financial losses for companies. That’s because, in the end, these misconceptions can prune the ability of employees and harm their performance

Another important point to be raised is related to the image of managers and leaders within this context… 

When the Halo effect impairs the judgment of these professionals, who are essential in the project and team management process, the other team members may feel antagonized, which makes them less cooperative. 

We don’t ultimately want leadership that is feared, because it can be very ineffective.

Halo effect examples

Many people spend a good part of their lives without knowing about the Halo effect and its impacts within the corporate world. This, however, is a very powerful psychological trap, which can really dictate how we handle our interpersonal relationships.  

So that the effects of this problem become clearer, we are now going to share two fictitious examples, which have everything to do with how the Halo effect influences the day-to-day of a company. 

A good first example can be found in how marketing teams use the Halo effect to sell products. 

In 2002, Melvin Scorcher and James Brant, two North American consultants, wrote to the Harvard Business Review on the subject. In the article, they talk about how the auto industry uses models with special features to attract consumers’ attention. This makes the entire line of cars have a more positive perception, even if they don’t share the exact characteristics. This is the Halo effect in action! 

We can still see this today, with influencer marketing , for example. When an influencer or celebrity talks about a product and recommends it to their followers, what happens is that the audience has their perception altered by the fact that they like that person and their content. 

The same happens with brands that do collaborations – especially within the food business . Some examples are McDonald’s ice cream partnerships – with KitKat, Ovaltine, Oreo and several other brands well established among the public – and Coca-Cola’s clothing line. Have you thought about it? 

How to avoid the Halo effect within your company? 

Although the power of this effect is great and its day-to-day influences are not always very clear, it is important that measures are taken to combat this bias within the work environment . 

Below, we share some tips that may be useful in this mission…

1. Dedicate yourself to the analysis of all process variables 

Whenever the challenge of analyzing the performance of teams arises, it is important that all the variables involved in this process are taken into account. The ideal, therefore, is that the errors and successes are analyzed on a case-by-case basis. 

One thing that can help in this work is to implement a culture of constant feedback and periodic performance reviews. In this way, it is possible to follow the development of a team over time, focusing on data. 

In addition to breaking the Halo effect, this habit can also serve to highlight the team’s good practices and leverage them in order to improve results. 

2. Know that managers’ specialization is not everything

It is quite common for professionals who have more practical experience in the subject or more technical knowledge in a certain area to be designated as project managers. 

However, when it comes to managing people, technical knowledge alone may not be enough. It is important that people placed in leadership have some training in relation to communication with other professionals , contributing to a more productive organizational climate. 

3. Invite other collaborators to the conversation

It is important that team members really feel heard and welcomed at all stages of a project. Your company’s business culture should encourage dialogue between managers and employees , after all, a context like this encourages the exposure of new ideas and different points of view. 

Influence of the Halo effect on physical and online stores

Within retail, the Halo effect has been used to conceptualize the positive influence physical stores have on online sales. A study by the International Council of Shopping Centers (ICSC) shows that when a brick-and-mortar retailer closes a store, online sales for that region can drop by up to 10% . 

On the other hand, sales on the company’s website can grow by up to 37% with each new physical store that opens. Interesting, isn’t it? 

This can be explained by the fact that more traditional consumers – that is, those who are still afraid to buy on the internet – feel safer to make their purchases when they see that a brand also has a presence outside the digital world. 

How to use the Halo effect in favor of your Ecommerce?

As you can see, the Halo effect has a great influence not only on a company’s internal processes, but also on factors that are beyond its control, such as customer behavior. 

The truth, however, is that the Halo effect is not always a bad thing. If well used, the phenomenon can help your company make a good impression on consumers and establish a close relationship… 

This can be seen in Ecommerces from the moment a person enters their website. Everything must be thought of to cause a sense of fluidity in the visitor’s experience. This includes, for example, the banners , the colors used, the fonts chosen and even the photos that illustrate the products. 

All information must be written in a clear and inviting manner. In addition, always be aware of the CTAs on your pages, making sure they are easy to understand and make sense within the consumer’s  purchase journey .

Take quality photos, showing the real features of the item and ensure that the product description offers all the information the customer needs to make a purchase decision . 

All of this contributes to making the customer feel more connected to your brand. According to the “Emotion Sells” study , 73% of customers say they are willing to pay more for a product if they identify with the brand . 

Furthermore, 76% of consumers say that when they feel connected to a brand, they do not switch to competitors. It’s hard to ignore those numbers, isn’t it? 

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