Book Review: The Halo Effect

The Halo Effect

No, this isn’t about the video game. The full title on this one is The Halo Effect …and the Eight Other Business Delusions that Deceive Managers. In it, author Phil Rosenzweig sets out to take the business press and best sellers to task for a list of flaws in their thinking and chest thumping. Basically, it’s a list of fallacies that you could compile from the chapter titles in most books on psychology, decision-making, and behavioral economics:

  1. The Halo Effect (inferring other traits on the basis of one trait, like performance)
  2. The Delusion of Correlation and Causality (assuming correlation means causation)
  3. The Delusion of Single Explanations (not realizing that it’s all a rich tapestry; every outcome has multiple causes)
  4. The Delusion of Connecting the Winning Dots (a.k.a., selection bias; the habit of studying only successes)
  5. The Delusion of Rigorous Research (substituting research quantity for quality)
  6. The Delusion of Lasting Success (forgetting that the nature of business means very few successes are permanant or even long-lasting)
  7. The Delusion of Absolute Performance (not realizing that company performance is relative to your competition, not absolute)
  8. The Delusion fo the Wrong End of the Stick (attributing success for a trait that both successful and unsuccessful companies share)
  9. The Delusion of Organizational Physics (Failing to realize that human systems like the marketplace are too complex to predict perfectly)

I liked this book quite a bit, in part because I just like exploring these little kinks in human nature, but also because Rosenzweig fully committed himself to a no bullshit, no pulled punches critique of the silliness you see in the business press and best-selling books like Built to Last or Good to Great (which I thought was transparently terrible, too). His diatribes are replete with real-world examples, quotes, and data compilations, but also always cogent and centered around one of the delusions above (though sometimes they bleed together, as you might expect). He spends a fair amount of time splendidly savaging people like Jim Collins (of Good to Great fame and fortune), calling him on the carpet for making sure that facts, science, and sound methodology don’t get in the way of telling an uplifting story. It’s great to see someone with both the moxie to say stuff like this and the scientific training to substantiate his critiques. If the Journal of Applied Psychology were more like this, I’d read it cover to cover every issue.

My only substantial complaint about the book is that it’s almost all criticism and has very little in the way of solutions beyond “don’t fall into this faulty mode of thinking.” The subtext of the book is that business performance is gosh-darn hard to measure and even harder to predict or influence. So what do you do? How DO you identify the qualities that make businesses better? Clearly, some are better than others. What are the methodologies by which we can evaluate things in the absence of truely scientific experiments? The Halo Effect isn’t much help there. But at least the author criticizes the ways NOT to do it in an entertaining and enlightening way.


Ha! This was just too great not to share. From the frequently awesome webcomic xkcd:

I predict we will soon start seeing this strip pop up in Statistics 101 presentations all across the world.

New Column in TIP


Oh, looks like my new column went up in TIP, in which my co-author and I talk about research that bridges the gap between scientists and practitioners. My part of this issue’s column talked about some really interesting stuff going in the applicant reactions area, but coming at it from a slightly different perspective. I talk about how there’s some opportunities for some really interesting and novel research by looking at how stakeholders other than applicants react to selection systems. It’s an idea that refuses to stop rattling around in the back of my head, and I’d like to do some research in the near future if possible.

Most practitioners would have little difficulty imagining or even recalling from memory these kinds of beliefs in action. Who hasn’t had a hiring manager come in and insist that you explain why someone who passed your test is failing miserably on the job or demand that exceptions to the testing rules be made for a candidate who they have a really good gut feel for on account of some ineffable quality or some perplexing constellation of traits? For those of us who administer selection systems in organizations, these are the kinds of battles and challenges that we face daily, and many of us have come up with a list of well-rehearsed starting points for those discussions. Moreover, Highhouse, along with many of the people responding to his article in the same issue, provides some insight and suggestions not only for combating these attacks, but also for developing research programs to examine the issue scientifically.

Read the whole column.