The way one thinks, feels and acts in certain circumstances can determine career opportunities in terms of employment and pay. For the first time in Russia, Ksenia Rozhkova has examined the effect of personality characteristics on employment.
Traditionally, one's cognitive (intellectual) abilities are believed to determine productivity, career advancement and pay. However, differences in productivity or income cannot be attributed solely to varied levels of intellectual ability.
Other factors include non-cognitive psychological characteristics, which can be assessed using the ‘Big Five’ personality test (also called FFM, or the five-factor model), namely:
conscientiousness. Refers to characteristics such as perseverance, meticulousness, diligence, commitment and striving for order;
extraversion. Refers to directing one’s energy and interest towards the outside world rather than one's subjective experience (sociability, enthusiasm, emotional warmth, propensity for adventure, and activity);
neuroticism. Refers to emotional (in)stability (anxiety, impulsivity, insecurity, irritability, vulnerability to stress, and hostility);
openness. Refers to creativity, curiosity and good imagination;
agreeableness. Refers to being friendly and willing to compromise (being accommodating, cooperative, altruistic, trusting and modest).
Rozhkova’s study Returns on Non-cognitive Characteristics in Russian Labour Market is based on data from the 2016 RLMS-HSE, including detailed information on sociodemographic indicators, skills, incomes and workplaces (industry, occupation, type of company) of 5,300 men and women aged 20 to 60, as well as their responses to 24 questions about their psychological traits.
Rozhkova’s main finding is that such returns are real and personality traits are indeed associated with career advancement and can account for differences in pay in various sociodemographic and professional groups.
Openness and conscientiousness are consistently associated with earnings: someone who is disciplined, ambitious, creative, inquisitive and hardworking, with good imagination and who strives for achievement is more likely to see their pay increase.
In contrast, neuroticism is conversely associated with expected amount of pay: people who are emotionally unstable, vulnerable to stress, insecure and overthinking the consequences of their actions are at a disadvantage in the workplace.
Taken together, the 'Big Five' personality traits account for some 5% difference in pay, which is comparable to the effect of having received a higher education.
Conscientiousness is particularly important during the employment-seeking phase: by integrating those characteristics which are essential for job performance, it serves as a gateway to employment and increases the chances of being hired by an average of 6%.
Factors such as gender, age, occupation and type of employment can have an effect on whether and how non-cognitive skills contribute to one's employment opportunities and expected pay.
For example, openness, conscientiousness and neuroticism are significant for both men and women, but women also face penalties for agreeableness (cooperation, compromise, modesty and trust) which tends to lower their expected pay by some 2%.
Women with such characteristics often agree to stay longer hours and do work for others and generally attach too much importance to teamwork as opposed to their own career advancement. According to the study’s author, women tend to be less assertive in salary negotiations: they either avoid raising the issue or underestimate the required pay level.
On average, according to RLMS-HSE, women rank relatively high in each category of the 'Big Five'. Compared to men, they tend to be more open, conscientious, sociable, friendly and neurotic.
After controlling for workplace characteristics (industry, professional category, company size and ownership), being extraverted — open to the world and to other people — is a particularly important characteristic for 30 to 39-year-olds. One can assume that at this age, their careers have already reached a stage where they manage other people and therefore 'require sociability and well-developed leadership and negotiation skills'.
Extraversion associated with advanced communication skills is valued in executive positions and in workplaces which involve contact with customers (sales and service). Executives, office workers and frontline employees tend to be the most outgoing, while unskilled workers across industrial sectors rarely, if ever, describe themselves as sociable.
Openness has a positive effect on the salaries of highly qualified specialists (almost a 7% premium) and is also important for pre-retirement age employees as a reflection of their ability to adapt to new economic realities and explore new technology.
Higher qualification levels are associated with more openness and conscientiousness and lower neuroticism. The highest degrees of neuroticism are observed in unskilled workers, while senior managers and highly qualified specialists whose jobs involve advanced responsibilities and require emotional stability and resilience tend to be the least neurotic of all.
These Russian research findings are consistent with those of some similar studies in developed countries. Just as in Russia, a relationship between openness and pay dynamics has been reported in Germany and the U.S., agreeableness comes with a penalty in Germany, U.S. and the Netherlands, and the effect of neuroticism on pay is negative across cultures.
Cultural and geographic proximity contributes to similar findings between countries.
'Shared perceptions, symbols and meanings which form a "national character" have a bearing on people's economic behavior. The average ratings of the Big Five personality traits differ between countries. However, Western cultures share certain characteristics among them but not with Asian or African countries', Rozhkova comments.
Individualist cultures, such as the U.S., impose a penalty for agreeableness, while collectivist cultures, such as Japan, reward it. Societies with predominantly male values (Japan, Austria) emphasise career and pay advancement, while countries where female values are strong (Sweden) give priority to teamwork and social guarantees of employment.
Geography also matters: economic cooperation between neighbouring countries 'may lead to a common market and, consequently, to similar market responses to certain non-cognitive traits of employees'. The expansion of transnational companies and higher labour mobility due to globalisation can further contribute to these trends.