May 4, 2011

Last Call: Get Answers to Your Thorny Benefits Questions

Join our team for the Nonprofit Employee Benefits Conference, this May 16-17 in New York to get answers to your questions and learn practical, resource-saving strategies. Register today! Conference workshops include:

• How to Save Money and Pay for Health Care Benefits
• 10 Employee Benefits Mistakes You need to Avoid in 2011
• Developing a Strategic Benefits Plan
• Benefits Innovations: Cooperatives, Self-Insurance and Carve Outs

Beneath the Halo

By Melanie Lockwood Herman

Author Duncan Watts’ discussion of “The Halo Effect” in his book, Everything is Obvious Once You Know the Answer led me to reflect on the halos that hover above nonprofit organizations. The Halo Effect is in essence a form of cognitive bias that alters our perception of people and things. The Halo Effect is in play when we assume the existence of certain traits or characteristics based on our observation of others. The term Halo Effect suggests that the known trait or characteristic is a positive one, but my hunch is that the opposite is true as well; we humans regularly attribute certain negative traits based on the observation of a negative trait. Recently I’ve been reading about this bias in the employment context. Research shows that hiring managers sometimes make many unfounded presumptions about older, shorter than average or heavier applicants.

I have to admit that I’ve allowed the Halo Effect to influence my perception of an audience. Many years ago I couldn’t help but notice a workshop attendee who appeared to be scowling throughout my presentation. I assumed he was both grumpy and unhappy with the content of the workshop or my delivery. When he approached me after the presentation I discovered that an apparent scowl can be misleading. The participant reached out to shake my hand, smiled broadly, and told me that it was the most helpful session he had ever attended.

The Halo Effect leads to inaccurate and unfounded impressions of both individuals and organizations. An organization with a charismatic leader is presumed to be well run. A nonprofit facing a lawsuit is presumed to be poorly run. A nonprofit with a large pass-through grant is presumed to have a bigger than average exposure to fraud. An organization that spends 30% or more on “overhead” is a black sheep in the nonprofit barnyard and its leaders are looked upon with scorn.

The fact is it’s awfully easy to allow our understanding of a few facts to lead us to believe that others may be true. And we fail to notice the bias of the “Halo Effect” in many corners of nonprofit life, from hiring staff to working with partners.

Consider the following ways to avoid the potential downsides of the “Halo Effect.”

• Ask, Don’t Presume – Whether you’re interviewing a prospective volunteer, meeting with a colleague to discuss a partnership agreement, or working with an employee whose performance is below par, ask yourself whether you’ve made any possibly erroneous assumptions or presumptions about the person across the table. Keep in mind that prior results or behavior are far from perfect indicators of future performance.
• Remember the Details – Successful performance management, partnership discussions, contract negotiations and even volunteer supervision require the willingness to identify and pay close attention to a wide swath of details. Your expectations of a partner, employee or volunteer should not be a secret. It is well worth the time to review, in detail, who, what, when and how.
• Think Past, Present and Future – Planning for success requires the commitment to reflect on your nonprofit’s past experience with similar ventures, consider your current circumstances (where are we?), and envision ways in which the future might unfold. For example, when hiring a replacement for a long-time employee it’s tempting to focus on finding someone who reminds you of the departing staffer and therefore seems to fit the “bill.” A better approach is to reflect on how the organization—and its staffing needs—have evolved over time and will continue to evolve in the months and years ahead. The best replacement for a departing employee may be someone who brings a different skill set—including skills suited for the challenges you are likely to face in the future.

Recognizing the potential of the “Halo Effect” to influence our perceptions and decisions is the first step in addressing a cognitive bias that can doom a prospective relationship before it gets underway. Every nonprofit leader brings biases to the table; learning to spot how biases lead us astray is a worthy goal.

Melanie Lockwood Herman is Executive Director of the Nonprofit Risk Management Center. She welcomes your ideas about any risk management topic, feedback on this article and questions about the Center’s resources at Melanie@nonprofitrisk.org or (202) 785-3891. The Center provides risk management tools and resources at www.nonprofitrisk.org and offers consulting assistance to organizations unwilling to leave their missions to chance. A limited number of hard copy versions of Melanie’s most recent books are available from our e-Store. If you’re interested in EXPOSED: A Legal Field Guide for Nonprofit Executives or Ready or Not…A Risk Management Guide for Nonprofit Executives, order today!

Don’t Despair; Reach Out!

Whether you’re trying to understand your nonprofit’s appetite for risk-taking, sharpen your risk management skills, build on success or avoid preventable losses, don’t hesitate to reach out the team at the Nonprofit Risk Management Center for assistance. We can support you in a number of ways, from helping you draft or revise risk management policies to designing custom training programs (on-site, virtual/webinar, or online). We also offer in-depth risk assessments, Enterprise Risk Management engagements, and advice and consultation on topics ranging from developing or updating youth protection policies, to strengthening governance practices. Why make the journey alone when you can partner with a team of nonprofit specialists who live and breathe nonprofit sector risks? Contact Melanie@nonprofitrisk.org or call (202) 785-3891 to discuss your needs and learn how we can help.