Reduce the impact of human error

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A good mood is the key to the halo effect. When a person is rested, well-slept, happy, he is ready to worship subordinates in the full sense of this expression. To avoid forgetting, it is necessary to have the right management tools at hand.

The programs prevent even small halo effect errors, as they follow clearly defined algorithms and reduce the probability of human error to a minimum. Neither the boss nor the psychiatrist email addresses specialist will doubt the timekeeping system, which shows that one of the subordinates spent 2 hours on social networks.

Such services provide a key advantage - numbers and statistics that you compare with the set goals, evaluating the employee's productivity. Without negative and positive interventions.

Remember the case with two colleagues: one publishes stories during working hours, the other distributes memes in messengers? When using a working time tracking system, it becomes clear that the story case is just an exception that does not affect overall productivity. Analyzing the statistics of another employee through such a program, it is clear when he is active in work chats and when he devotes time to entertainment.

But that's not all. For those who are not among the favorites of the manager, time and task trackers become a real salvation in work. They will have convincing evidence of efficiency and interest in work, presented in the form of numbers.

Using tools such as time tracking systems helps to establish transparent collaboration and prevent potential errors.

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The Danger of the Halo Effect in Business Analytics
Many studies of company performance face a problem known as the halo effect. First identified by American psychologist Edward Thorndike in 1920, it describes the tendency to draw certain conclusions based on a first general impression. How does this play out in business?

Imagine a company with growing sales, high profits, and a rapidly rising stock price—it’s easy to conclude that the company has a coherent strategy, an educated leader, motivated employees, a customer-oriented policy, a dynamic corporate culture, and so on.

The Danger of the Halo Effect in Business Analytics

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Given the increasing level of business activity that results from positive profitability dynamics, there is often a tendency to assume that the organization is in trouble when sales and profits are declining.

In such situations, many people conclude that corporate strategy is out of control, teams are filled with complacency, the company is ignoring customers, the culture has changed for the worse, etc. In reality, all aspects may have remained unchanged or improved.

Key moments in a company's work, regardless of the assessment, create an overall picture - an image that determines our perception of strategy, management, teams, corporate culture and other components.

For example, during Cisco Systems's rapid growth in the late 1990s, it received high marks from journalists and analysts for its effective strategy, skillful deal management, and focus on customer needs.

But after the tech crash, many of those observers reconsidered: Critics said Cisco had flawed strategy, disorganized deals, and troubled customer relationships. Closer examination showed that Cisco was essentially the same, but its declining performance had forced the public to take a fresh look at the company.

The Danger of the Halo Effect in Business Analytics

Source: shutterstock.com

Cisco and ABB have undergone significant transformations and remain among the leading technology and engineering companies, respectively. Since the 1990s, ABB has earned recognition for its stylish design, entrepreneurial culture, and charismatic CEO Percy Barnevik.

But when the company's performance worsened, it faced criticism for its dysfunctional structure, chaotic atmosphere, and arrogant leadership. However, the organization remained the same and did not undergo significant changes.

In business, there are often vague concepts such as leadership, corporate culture, core competencies, and customer focus. These are difficult to define because of their ambiguity.

We tend to base our conclusions on criteria that seem more concrete, such as financial indicators. However, many aspects of business performance that we consider important are in fact merely consequences of processes. In other words, it is incorrect to take results as inputs.

Experienced leaders recognize the need to be vigilant about the halo effect. They seek objective evidence rather than accepting at face value the notion that a successful company must have a forward-looking leader and that a struggling company must have poor strategy and poor execution.

The question they ask themselves is, “If I were not familiar with the workings of this organization, how would I feel about its corporate culture, its effectiveness, its customer focus?” They realize that as long as their views merely reflect the company’s performance, their conclusions will remain internally closed.

The halo effect is a serious threat to the validity of data used in research. Many studies of business performance evaluation, as well as some articles published in the Harvard Business Review, McKinsey Quarterly, and academic business journals, may be based on findings that are distorted by the halo effect. Researchers may be proud of the amount of data they have collected, but they should not forget that if the data is not valid, the amount of data and the complexity of the analysis no longer matter.

Relying on bad information can lead to wrong conclusions. Two misconceptions—full-time efficiency and long-term prosperity—are key for business strategists.