We’ve all seen it happen: one employee nails a client pitch or solves a crisis overnight, and suddenly, they’re the go-to star for everything. Another fumbles once, and their every move is scrutinized. These quick judgments often stem from something called the halo effect—a cognitive bias that shapes how we perceive others, sometimes for the better, but often at the cost of fairness and clarity.
Understanding the halo effect isn’t just about psychology—it’s about running teams more thoughtfully, designing better review systems, and making sharper decisions about talent. Join Sereda.ai as we unpack how this bias shows up in the workplace, how it helps and hurts, and what you can do to manage it better.
What Is the Halo Effect?
The halo effect is a psychological bias in which our impression of one trait—such as likability, appearance, confidence, or a single success—colors our overall perception of a person. If someone seems capable in one area, we’re more likely to assume they’re strong in others too.
The term was coined by psychologist Edward Thorndike, who observed that military officers consistently rated their subordinates as either high or low across unrelated categories. A soldier who looked neat and energetic was also rated as smarter, more responsible, and even taller.
In the workplace, this same mental shortcut can lead us to overestimate (or underestimate) someone’s overall performance based on one standout or one slip-up.
Also read: Employee Development Plan: Why It Matters and How to Create One That Works
How Does This Apply in Business?
The halo effect isn’t just a theory tucked away in psychology textbooks—it plays out in offices, Zoom calls, and one-on-ones every single day. And the tricky part? Most of the time, we don’t even realize we’re doing it.
Let’s break down some of the most common places it shows up:
- In hiring: A resume from a big-name company or top university can create an instant impression of competence, even before an interview. It’s easy to assume someone’s qualified based on brand signals alone, which may cause you to overlook better-fit candidates without the same shine.
- In performance reviews: One great project or moment of visibility can lift an employee’s ratings across unrelated areas, like communication, collaboration, or leadership. That “halo” can make feedback less accurate and development goals less clear.
- In promotions: People who are more visible, vocal, or charismatic often rise faster. Meanwhile, quieter team members who consistently deliver may be overlooked, not because of performance, but because they don’t “look” the part.
- In day-to-day management: Managers may give more trust, feedback, or stretch assignments to people they perceive as “stars.” Others get less support, even if they’ve been reliable. Over time, this distorts growth opportunities and team dynamics.
The halo effect isn’t always about favoritism—it’s about perception. And while it often starts with something real, it becomes a bias when that moment of excellence outweighs everything else. That’s why noticing it matters: it helps teams stay fair, decisions stay grounded, and real talent—not just perceived talent—gets the space to grow.
Also read: The Soft Skills Revolution: Redesigning Performance Reviews for Truthful Feedback
The Real Danger of the Halo Effect
The real threat of the halo effect isn’t just bias—it’s misalignment. When performance decisions are based on perception rather than reality, the cost adds up fast.
Misplaced investment
Companies invest heavily in top talent, but what if the wrong people are getting the spotlight? When perception skews who gets promoted, trained, or trusted, resources get misallocated, and ROI drops.
Talent attrition in disguise
Quiet top performers—those who consistently deliver but don’t fit the “star” mold—often feel overlooked. According to a Gallup report, employees who feel their strengths are ignored are more likely to leave. When the halo effect dominates, retention isn’t just about keeping people—it’s about keeping the right people.
Flawed decision-making at scale
The halo effect doesn’t stay local. If left unchecked, it creeps into hiring pipelines, succession planning, and even strategic pivots—especially when leadership relies too much on anecdotal wins. One misjudged leader or poorly placed “rising star” can have cascading effects across departments.
Bias isn’t always obvious—but its impact always is. That’s why reducing the halo effect isn’t about nitpicking impressions—it’s about protecting decision quality, business agility, and long-term talent equity.
When the Halo Effect Helps
The halo effect is a bias, but like many biases, it’s not always destructive. In specific scenarios, and when reinforced by feedback, data, and values, it can serve as a useful catalyst. While not a strategy to rely on, here’s when the halo effect can actually work in a company’s favor:
1. It can accelerate leadership growth
When a team member shines in a high-stakes situation—closing a deal, solving a crisis, leading a project—they often get noticed. If leaders respond by giving that person more autonomy or responsibility, it can kickstart a development loop.
- Why it can work: With the right support, the employee grows into the expectation, building real skills through stretch assignments.
- Business impact: This can fast-track emerging leaders, filling succession pipelines organically and keeping high-potential talent engaged.
2. It can fuel team confidence and stability
In moments of uncertainty—market shifts, restructures, high-growth phases—charismatic or high-performing individuals often become informal “anchors” for their teams. The halo effect can magnify their perceived steadiness.
- Why it can work: Trust in visible leaders boosts team optimism, morale, and belief in company direction—even if that trust began with one great moment.
- Business impact: Stability during change is a competitive advantage. Perception, when paired with action, can hold teams together through turbulence.
3. It can reinforce positive behaviors—if values-aligned
When the halo forms around actions that align with core company values (like collaboration, integrity, or innovation), it sends a strong internal signal about what gets recognized and rewarded.
- Why it can work: Others are more likely to model behavior that’s visibly linked to advancement or praise.
- Business impact: It builds culture through example, turning perception into a quiet but powerful lever of behavioral alignment.
The halo effect isn’t a management tool—it’s a psychological shortcut. But if leaders are aware of its presence and verify early impressions with evidence and feedback, it can spark momentum instead of bias.
When used consciously, the halo effect can serve as a gateway—not a guarantee—to uncovering and supporting real potential.
Here’s How to Overcome the Halo Effect for Unbiased Management
So, as we established, you don’t need to “eliminate” the halo effect—it’s part of how our brains are wired. But you can design around it, building systems and habits that bring balance, context, and fairness into how you manage people.
Here’s how to make that happen:
1. Use 360-Degree Performance Reviews
A 360-degree review collects feedback from everyone an employee works with—peers, direct reports, managers, and even cross-functional teams. Instead of a single manager’s opinion (which is often where bias creeps in), you get a fuller, more accurate picture of performance.
This multi-source approach helps uncover strengths and development areas that might otherwise go unnoticed. Tools like Sereda Review make the process simple and scalable, turning scattered insights into clear, actionable feedback—so decisions are based on reality, not just impressions.
2. Separate traits from competencies
Avoid broad performance labels like “high performer” or “great team player” without breaking them down. Instead, rate employees across specific, observable skills—like adaptability, decision-making, accountability, and communication. This forces evaluators to reflect more critically and reduces the influence of a single standout trait.
3. Track performance over time, not in moments
Don’t base decisions on one big win (or loss). Use tools that log individual contributions and progress across months or quarters. A visual record of consistent delivery often tells a more accurate story than memory or gut feel.
4. Normalize real-time, frequent feedback
Annual reviews are a breeding ground for halo bias because they rely on memory and early impressions. Regular check-ins (monthly or even weekly) reduce that bias and encourage growth throughout the year.
5. Use peer recognition to spotlight the less visible
Not everyone self-promotes or stands out in meetings. Encourage peer shoutouts, anonymous praise boards, or retrospective reflections to surface behind-the-scenes contributions that might be overlooked.
6. Train managers to recognize bias, then check it
A simple workshop on unconscious bias (including halo and horn effects) can shift how managers evaluate people. Pair this with review calibration sessions—where multiple leaders discuss and challenge evaluations—to reduce overinflated praise or outdated narratives.
Also read: What Is Response Bias and How Does It Influence Your Employee Surveys
7. Build reflection into your review process
Before finalizing a performance review, ask:
- “Is this feedback based on one moment or a pattern?”
- “What do others see that I might not?”
- “If this person were quieter or less visible, would my rating be different?”
Bias thrives in vague, inconsistent systems. But when you commit to structure, evidence, and honest dialogue, you don’t just neutralize the halo effect—you replace it with something better: trust, clarity, and performance that’s earned.
Conclusion
The halo effect is a powerful reminder that perception often shapes reality at work. One strong impression can overshadow the full picture, skewing feedback, promotions, and trust.
But bias doesn’t have to define your decisions. With the right tools and habits, you can shift from snap judgments to clear, evidence-based insights.
Want to see how tools like Sereda Review can help you build fairer, more balanced performance feedback? Book a quick demo and we’ll walk you through it.