Effects of Personality on Individual Earnings: Leadership Role Occupancy as a Mediator

Purpose  The purpose of this study was to investigate the direct and indirect effects of personality characteristics on individual earnings and to examine a person’s leadership role occupancy as the potential mediator in the personality–earnings relationship. Design/Methodology/Approach  Longitudinal survey data were collected from a sample of 209 individuals. Earnings were measured 6 years after the personality variables. Findings  Two personality traits, i.e., Social Potency and Achievement, predict individual earnings longitudinally. The effects of personality were partially mediated by the person’s occupancy of leadership roles in the workplace. For those occupying similar leadership positions, people higher in social potency still have greater earnings. Implications  These findings lend support for personality assessment in personnel selection and have important implications for leadership development and individual career success. Originality/Value  Previous research suggests that personality influences individual earnings beyond the effects of traditional human capital variables. This study is among the first to distinguish personality’s direct and indirect (through leadership role occupancy) effects on individual earnings. The findings provide direct support for the incentive-enhancing property of personality as well as indirect support for the trait activation theory on the personality–earnings relationship.

Richard D. ArveyEmail: