[Photo credit ericcastro]
The Economist recently carried an article on The Halo Effect.
when a company is growing and profitable, we tend to infer that it has a brilliant strategy, a visionary CEO, motivated people, and a vibrant culture. When performance falters, we’re quick to say the strategy was misguided, the CEO became arrogant, the people were complacent, and the culture stodgy … At first, all of this may seem like harmless journalistic hyperbole, but when researchers gather data that are contaminated by the halo effect – including not only press accounts but interviews with managers – the findings are suspect.
Happens so many times, doesn’t it? The same feeling was hinted in Gurcharan Das’ India Unbound, which according to me is one of the best books written about India. There while speaking about the fruits of liberalisation, he also at one instance tell us about how CEOs wereshifted from one company to another and these managers were put in a totally new field and were recruited based on their past successes alone. As one could imagine, they didn’t do too great a job in their new avatar.
A similar feeling is also echoed in Nassim Nicholas Taleb’s books where he says that averages aren’t something that would fascinate him too much. Just because something has been doing well for the last decade shouldn’t affect your judgement to discard it, if there’s a slightest bit of chance of it failing, rpovided the risks upon failing are enormous.
Closer home,take the scenario of a university. In my university, the professors are also allotted administrative posts. Now just because a professor might have years of experience in the academic circle, one can’t conclude that he might do that impressive a job in the administrative department. That’s because that requires a completely different skill set.
I’d be fascinated to understand the Halo effect with respect to the non-profit/responsible business sector. Does your expertise in one domain help you get a job in another domain. And once you do get a job there, do you perform equally well? Can a person who has spent years in the health sector, start working in microfinance? Obviously the job profile matters to an extent here, but I was speaking on a more general sense.
One thing that I have noticed in this sector is that one requires a lot of experience to end up with a good profile. But does the relevant experience matter or is it the experience in any social activity that counts?
