What do personality profiles of entrepreneurs indicate (new findings)?

A few years ago, we summarized an empirical study that focused on the differences between paid top managers and entrepreneurs in their personality profiles.

As a continuation of this fascinating topic, the (intermediate) results of an analogous study by Northwestern University, published recently in the journal Psychology Today, would be an interesting read. Here, paid top managers were not compared with entrepreneurs, but the results were studied within a sample of entrepreneurs. For the sake of truth, it should be mentioned that these are not final results – data is still being collected. However, the first findings are already quite interesting. This time, too, entrepreneurs have been asked to complete the Hogan Personality Inventory personality test. Hogan’s tools are now used by about 75% of Fortune 500 companies. Since 2010, they have also been used in Arista for personnel selection and today in Adera Executive Search.

People who have been (co-)founders of companies, who have grown their corporate sales to millions of dollars, were selected for a Northwestern University study. A significant proportion of those in the sample have either listed their company or made it a successful exit.

What was found?

Three findings, two of which are quite expected and the third surprising. Successful entrepreneurs are characterized by both high ambition (Ambition scale) and high sociability (Sociability scale). Ambition is all about taking the lead, taking the initiative, setting high goals, being competitive, confident and energetic. Incidentally, ambition is empirically linked to work performance in a wide range of occupational clusters: managers, sales, professionals and specialists. Sociability (similar to extroversion in Five-Factor Model of personality) is associated with communication activity. People with high sociability scores like to interact with other people, they are open and receive energy from social interactions. High scores on both scales support entrepreneurs in fast-paced competitive work environments, where success depends on solving communication tasks (appearances, meetings with investors, growing the client portfolio, creating a work network, etc.).

What was surprising was the low score of successful entrepreneurs on the Prudence scale. This finding is intuitively difficult to understand at first glance. Fortitude is associated with a sense of duty, adherence to rules, internal structure and the ability to resist temptation. The authors interpret the findings as follows: entrepreneurs take risks, are spontaneous, think outside the box, make quick changes to plans if necessary, and are often poorly managed. Low scores on the fortitude scale are associated with creativity.

In addition, on two scales (Emotional Stability and Interpersonal Sensitivity), very large variations have been found in the responses of successful entrepreneurs, from which it could be concluded that some of the respondents have relied on the strengths that come with low scores in their work, others on strengths associated with high scores. What does it mean?

Interpersonal sensitivity measures a person’s empathy, warmth, helpfulness and tact. This is a trait that is empirically related to the ability of managers to create and lead successful teams (in addition to being ambitious). However, the strengths of low scores include the ability to make difficult decisions, directness, directiveness and concreteness. In certain environments (pushing people out of comfort zones, corporate reversals, restructurings, etc.), managers with such a profile can be very effective.

Emotional stability is associated with internal anxiety levels. High scores indicate the calmness of a person: does not get nervous, maintains a cold head in a conflict situation. Strengths associated with low scores: worries about the quality of work, is open to feedback, admits mistakes. The researchers suggested that entrepreneurs with low emotional stability can be effective in a certain environment: e.g., high sensitivity to criticism, which forces to quickly address service/product quality problems. Thus, for the most part, these two basic personality traits have all depended on the work environment and challenges: in certain circumstances, some are more effective than others.

For me, of course, it would have been interesting to know whether entrepreneurs also had paid CEOs at work or whether they themselves performed the role of manager in parallel.

Hogan Assessment Systems, the developer of the assessment methodology, is an advocate of the so-called trait paradigm, which states that there are basic personality traits that are fairly stable over time and largely shaped by heredity and early childhood. They are difficult to reprogram: it is easier to develop and change our skills, knowledge and regulate behavior than personality traits.