Your paycheque may change your personality, and vice versa

The relationship between success and self-development runs deeper than previously thought

Featured faculty: Li Wendong
Written by Gigi Wong

Those who have worked long enough may still recall the feelings of receiving their first paycheques. After years passed, many would have realised how far they had come, and more importantly, how their personalities or the people they know had evolved over the years. At some quiet hour, a random thought may pop up: Do we shape our income, or does our income shape who we are?

A new study suggests our personalities and our paycheques may be more intertwined than we realise, each influencing the other over time in a reciprocal dance. “When income increases, it signals that the current career progress is significant and the status in society is improving,” says Li Wendong, Associate Professor in the Department of Management at the Chinese University of Hong Kong (CUHK) Business School.

Professor Li’s latest study challenges the assumption that our personalities are relatively fixed and set in stone, that a person is always either an introvert or an extrovert, agreeable or argumentative, cautious or reckless. Furthermore, his paper titled A continuous time meta-analyses of reciprocal relationships between personality traits and income suggests that some personality traits can also predict future income changes.

His study also found an overlooked drawback of pay rises. Positive reinforcement that comes with income increases may lead employees to stick to routines and conventional ways of doing work, eventually limiting them from exploring new approaches to improve their performance.

“Such a positive reinforcement likely prompts employees to exploit the current effective work methods and strategies further. Over time, changes in such behaviours, thoughts and feelings likely foster personality change.”

“Thus, after a pay rise, organisations may also consider using incentives to motivate employees to come up with novel strategies to complete their work responsibilities and think out of the box to spur creativity and innovation,” he adds.

Which came first: pay rise or personality change?

Along with his PhD students, as well as Zhang Zhen of Southern Methodist University, Zhang Xin of Shanghai University of Finance and Economics, and Christian Dormann of Johannes Gutenberg University Mainz, Professor Li analysed data from 11 large national and regional longitudinal studies in the world involving 134,551 participants in total.

Studies were included if they measured at least one of the Big Five personality traits and individual income at three or more time points. These personality traits refer to five broad dimensions of personality that make each person unique, including emotional stability, conscientiousness (e.g., being dependable and hardworking), agreeableness (e.g., friendliness), extraversion (e.g., being outgoing), and openness (e.g., being curious and open to new experiences).

The team integrated findings across all the studies, which followed participants over periods ranging from four to nineteen years. The researchers also examined patterns of personality change and income shifts within the same individuals over time, painting a much richer picture than a simple snapshot study.

They found that conscientiousness and emotional stability tended to increase following a boost in income. The results also demonstrated significant effects of income changes on subsequent changes in both traits.

“While an income increase can make employees more stable and reliable, it may also reduce their tendency to seek novel strategies and goals — that is, their exploratory, creative and risk-taking behaviours may decline.”

Professor Li Wendong

In other words, a fatter paycheque seems to make employees more disciplined, dependable, poised, and unflappable over time. On the other side, as expected, people who became more conscientious and emotionally stable went on to see larger income increases over the next several years.

On the contrary, there was a negative reciprocal relationship between extraversion and income: being more extroverted seems to make people less likely to earn more money later on and earning more salary appears to make people more introverted at a later point in time. The effects of conscientiousness, emotional stability, and extraversion on income fluctuate over time, with the strongest impact occurring around one year after personality traits were assessed and tend to weaken afterwards.

Other personality traits have a negative relationship with the pay rise. The effect of income on changes in agreeableness is negative and the relationship between agreeableness and change in income is unclear.

“Increases in conscientiousness and emotional stability are positively related to subsequent increases in the employee’s income over time,” says Professor Li. “Our analyses also revealed that the reciprocal effect between extraversion and income was negative and significant across different time points.”

Success rewires our inner traits

Income-personality link cuts both ways, but what explains these intriguing connections between who we are and what ends up in our bank accounts? The researchers propose a few rationales, drawing on the cybernetic Big Five theory.

As mentioned above, pay rises reinforce our current strategies and behaviours at work, and in turn, motivate us to hone and further exploit those strategies. This results in deepening the motivational stability or conscientiousness quality, as well as emotional stability and social stability.

However, the cybernetic Big Five theory suggests that income increases are less likely to provide incentives for employees’ exploration and risk-taking behaviours, which may further enhance extraversion and openness traits. Based on empirical findings, the researchers posit that all five traits above correspond to one of the two broad dimensions of the Big Five that are associated with career strategies: stability and plasticity traits.

Extraversion and openness are included in plasticity traits, which encourage exploration by generating novel strategies when old plans prove insufficient, or when environmental changes occur, allowing for adaptation in uncertain environments. Stability traits comprise conscientiousness, emotional stability, and agreeableness, which primarily serve to maintain stability and prevent disruption to ongoing strategies for achieving long-term goals.

When experiencing a career setback, employees are likely to adjust their strategies and explore novel approaches or acquire new strategies to advance their careers —a characteristic of openness. They may also become more extroverted and enhance their social capital for career development or for exploring other alternatives. These changes over time may get habitualised across various life domains.

“The idea that income increases confidence and exploration remains a theoretical possibility, but our empirical evidence suggests that, over time, higher income may instead lead to more stability and less exploratory behaviour or lower extraversion, likely because employees settle into effective, established work strategies rather than seeking novelty,” Professor Li says.

Career development and pay incentives

The upshot is that our personalities are not entirely fixed to our job descriptions. As we progress through our careers, our personality inevitably gets imprinted by our professional successes and stumbles, but those experiences also get funnelled back into further shaping our future fortunes, for better or worse.

According to Professor Li, the findings have important practical implications for employees and organisations. Earning a higher income may make us more conscientious and emotionally stable over time, but also diminish our extroverted and explorative tendencies to find novel strategies.

Employees should be mindful of these potential shifts, he advises, to better navigate their career development. Organisations, too, should take note that the common workplace practice of using pay rises to motivate staff may have some unintended consequences on employees’ personality development.

“Given that many organisations tend to employ pay rises as an important incentive scheme to motivate their employees, the findings suggest that organisations should also be aware of positive and perhaps, unintended consequences of pay rises,” he adds.

“While an income increase can make employees more stable and reliable, it may also reduce their tendency to seek novel strategies and goals — that is, their exploratory, creative and risk-taking behaviours may decline. This may lead to adverse consequences for organisations in adapting to new and uncertain environments.”

To mitigate the adverse effects of pay rises, Professor Li emphasises the importance of acknowledging the benefits and risks, and find a way to balance stability and creativity. Companies need to adopt practices that encourage employees to explore new ideas, such as supportive management and more job autonomy, to foster intrinsic motivation and creativity.