Manager Personality Can Lead to Organization-Wide Performance

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Is personality related to job performance? This classic I-O psychology question is still debated today, and thanks to the latest research, clearer answers are emerging. A new study (Oh, Kim, & Iddekinge, 2015) shows that the manager personality is related to important organization-wide outcomes. This finding has clear implications for selection of organizational leaders.

Past studies considered the relationship between personality and job performance at the individual level. For example, a study might investigate if outgoing or extraverted people perform better at their jobs. These studies only advance the field so far, say the current authors, because job performance is typically measured with supervisor ratings. Even when associations are found—say that extraverted people have better performance—there is room for organizational leaders to be skeptical: Even if extraverted people receive better ratings, will that really impact my company’s bottom line and make us more successful? An astute I-O psychologist would present a utility analysis showing the predicted financial gain for hiring each extraverted employee, but this might still be dismissed as confusing and overly speculative.

 

ORGANIZATIONAL LEVEL PERSONALITY MEASUREMENT

This current study does better than simple individual level-analysis, and instead measures many managers within the same organizations. This allows the researchers to ascertain two important facts. The first is the average level of a personality trait that the organization’s managers have, and the second is an estimate of the typical range (or “variance”) of that personality trait in managers within the organization. Once these two metrics are evaluated, researchers can determine if organizations with certain types of employees do better than others. For example, do “extraverted organizations” fare better than “introverted organizations”?

The researchers surveyed 6,709 managers in 71 different companies. Results indicate that when organizations had managers with high levels of emotional stability, extraversion, and conscientiousness, their organizations had higher levels of managerial job satisfaction and had higher levels of labor productivity (measured by revenue per employee).

When the average levels of personality traits were considered along with the variance or “typical spread” of the personality trait, several interesting findings were reported. Organizations with higher emotional stability had higher levels of job satisfaction, labor productivity, and financial performance (measured by return on equity), and this effect was even more pronounced when there was less variance among managers (in other words, managers were more similar on emotional stability).

Additionally, higher extraversion was associated with higher financial performance, and this effect was also more pronounced when managers were more similar on extraversion.

Openness to experience and agreeableness were related to labor productivity and financial performance, respectively, and these effects were more pronounced when there was more variance, in other words managers were more spread out on the respective personality trait.

 

 

ORGANIZATIONAL IMPLICATIONS

This study shows that personality is related to organizational level success, specifically when managers are emotionally stable, extraverted, and conscientious. Results generally show that homogeneity is preferable, in other words results were better when managers had similar levels of the personality trait. This means, say the authors, that organizations might want to consider selecting employees who have these traits, and also try to create a singular organizational profile, which might encourage desired employees to initially join the company and subsequently stay as long as possible.

This study also advances the general theory and plausibility of selecting employees based on personality type. The evidence in this study may be more convincing than studies that investigate individuals and focus on performance ratings. By using aggregated organizational-level personality traits and connecting them with the most tangible measures of organizational success, the current authors make personality-based selection a more alluring proposition.