Emma Soane

Personality and domain‐specific risk taking

The concept of risk propensity has been the subject of both theoretical and empirical investigation, but with little consensus about its definition and measurement. To address this need, a new scale assessing overall risk propensity in terms of reported frequency of risk behaviours in six domains was developed and applied: recreation, health, career, finance, safety and social. The paper describes the properties of the scale and its correlates: demographic variables, biographical self‐reports, and the NEO PI‐R, a Five Factor personality inventory (N = 2041). There are three main results. First, risk propensity has clear links with age and sex, and with objective measures of career‐related risk taking (changing jobs and setting up a business). Second, the data show risk propensity to be strongly rooted in personality. A clear Big Five pattern emerges for overall risk propensity, combining high extraversion and openness with low neuroticism, agreeableness, and conscientiousness. At the subscale level, sensation‐seeking surfaces as a key important component of risk propensity. Third, risk propensity differs markedly in its distribution across job types and business sectors. These findings are interpreted as indicating that risk takers are of three non‐exclusive types: stimulation seekers, goal achievers, and risk adapters. Only the first group is truly risk seeking, the others are more correctly viewed as risk bearers. The implications for risk research and management are discussed.

Employee engagement, organisational performance and individual well-being: exploring the evidence, developing the theory

The development of mainstream human resource management (HRM) theory has long been concerned with how people management can enhance performance outcomes. It is only very recently that interest has been shown in the parallel stream of research on the link between employee engagement and performance, bringing the two together to suggest that engagement may constitute the mechanism through which HRM practices impact individual and organisational performance. However, engagement has emerged as a contested construct, whose meaning is susceptible to ‘fixing, shrinking, stretching and bending’. It has furthermore not yet been scrutinised from a critical HRM perspective, nor have the societal and contextual implications of engagement within the domain of HRM been considered. We review the contribution of the seven articles in this special issue to the advancement of theory and evidence on employee engagement, and highlight areas where further research is needed to answer important questions in the emergent field that links HRM and engagement.

Knowing the Risks: Theory and Practice in Financial Market Trading

Theories about trading in financial markets are well developed and practically influential. However, traders’ behaviour within these markets appears to deviate substantially from that predicted by theory. Using data from a study of traders within financial markets in London, this article seeks to document this apparent paradox and assess its implications. General theories about how the financial world works are distinct from, but compatible with, more instrumental behavioural rules about how to work in the financial world. The latter may be seen as internally consistent recipes for action which require concurrent belief in both the validity of the general theories - for example about the relationship between risk and return - and in the ability of individual agency to secure outcomes which, in terms of the general theory, have low probability.

Traders, managers and loss aversion in investment banking: a field study

The paper examines the management of traders in financial markets from the perspectives of agency and prospect theory. Using interview data from a sample of traders and managers in four investment banks, the paper argues that managers focus on avoiding losses rather than making gains. This focus emerges from the characteristics of managers and the nature of their role. The implications for agency and prospect theory, together with the policy issues for managers, are discussed.

The role of perceived costs and perceived benefits in the relationship between personality and risk-related choices

This paper considers how perceptions of costs and benefits can influence the association between personality and risky choice behaviour. We assessed perceptions and behaviours in six domains (ethical; investment; gambling; health and safety; recreational; social) using the DOSPERT and measured personality using the NEO PI‐R. Results from structural equation modelling showed that personality had a direct effect on risky choice behaviour in four domains (social, ethical, gambling and recreational risk‐taking). In addition, perceived costs and benefits mediated the relations between personality and risk‐taking in the five domains (social, ethical, gambling, recreational and investment risk‐taking). Evidence for a mechanism that integrates both direct and indirect effects of personality on behaviour is discussed.

Flood Perception and Mitigation: The Role of Severity, Agency, and Experience in the Purchase of Flood Protection, and the Communication of Flood Information

Protection of human life and property from flooding is a strategic priority in the UK. We examine how to encourage home owners to protect themselves and their residences. A model of factors that influence the decision to buy flood-protection devices is tested using survey data from 2109 home owners. The results show that the majority of respondents have not purchased domestic flood protection (N = 1732; 82.1%). Purchase of flood-protection devices was influenced by age; perceived seriousness; and beliefs about, and trust in, the role of regulators in managing flooding. In younger respondents the perceived seriousness of the dangers of flooding acted as precursors and barriers to action depending on individual sense of responsibility and agency. The second part of the study examines responsiveness to information. Information about flooding alone was insufficient to promote behavioural change, particularly among people who had not experienced a flood or who believed that they were not in a flood zone. Implications for understanding flood protection, managing agency issues, and flood-communication campaigns are discussed.

Optimising risk reduction: an expected utility approach for marginal risk reduction during regulatory decision-making

In practice, risk and uncertainty are essentially unavoidable in many regulation processes. Regulators frequently face a risk-benefit trade-off since zero risk is neither practicable nor affordable. Although it is accepted that cost–benefit analysis is important in many scenarios of risk management, what role it should play in a decision process is still controversial. One criticism of cost–benefit analysis is that decision makers should consider marginal benefits and costs, not present ones, in their decision making. In this paper, we investigate the problem of regulatory decision making under risk by applying expected utility theory and present a new approach of cost–benefit analysis. Directly taking into consideration the reduction of the risks, this approach achieves marginal cost–benefit analysis. By applying this approach, the optimal regulatory decision that maximizes the marginal benefit of risk reduction can be considered. This provides a transparent and reasonable criterion for stakeholders involved in the regulatory activity. An example of evaluating seismic retrofitting alternatives is provided to demonstrate the potential of the proposed approach.

Regulators as ‘agents’: power and personality in risk regulation and a role for agent-based simulation

We critically examine how evidence and knowledge are brokered between the various actors (agents) in regulatory decisions on risk. Following a précis of context and regulatory process, we explore the role power and personality might play as evidence is synthesised and used to inform risk decisions, providing a review of the relevant literature from applied psychology, agent‐based simulation and regulatory science. We make a case for the adoption of agent‐based tools for addressing the sufficiency of evidence and resolving uncertainty in regulatory decisions. Referring to other environmental applications of agent‐based decision‐making, we propose how an agent model might represent power structures and personality characteristics with the attending implications for the brokering of regulatory science. This critical review has implications for the structuring of evidence that informs environmental decisions and the personal traits required of modern regulators operating in facilitative regulatory settings.

Followers’ personality, transformational leadership and performance

Purpose – Effective leadership is important to performance in both organisational and sporting arenas. The authors theorised that follower personality would influence perceptions of leadership, and that perceived effective leadership would be associated with performance. The authors drew on Social Identity Theory (Tajfel and Turner, 1986), Transformational Leadership and personality theory to develop a research model designed to assess leadership effectiveness and performance. The purpose of this paper is to test the research model in a sporting context. Design/methodology/approach – The context of the research was a round the world sailing race, a ten-month competitive circumnavigation with ten identical boats. Quantitative data were gathered concerning participants’ personality, their perceptions of transformational leadership and boat performance. Qualitative data on transformational leadership and leadership effectiveness were gathered from a subsample of crew members. Findings – Results showed that transformational leadership was associated with leadership effectiveness and performance. Personality influenced perceptions of leadership and, for moderate performing boats, there were associations between perceptions of leadership and performance. Research limitations/implications – The data have implications for the extension of transformational leadership theory. Further consideration of follower personality could enhance leadership effectiveness. A limitation is the relatively small scale of the study. Practical implications – The main implication is that leaders should take follower personality into account, and adapt their leadership style accordingly. Doing so has consequences for performance. Originality/value – This novel study examined personality, leadership, and performance and has implications for enhancing leadership and performance in sports and business.

Managing Change, or Changing Managers? The role of middle managers in UK public service reform

Abstract Drawing upon interview data from three case study organizations, we examine the role of middle managers in UK public service reform. Using theory fragments from organizational ecology and role theory, we develop three role archetypes that middle managers might be enacting. We find that rather than wholesale enactment of a ‘change agent’ role, middle managers are balancing three predominant, but often conflicting, change-related roles: as ‘government agent’, ‘diplomat administrator’ and, less convincingly, ‘entrepreneurial leader’. Central government targets are becoming the main preoccupation for middle managers across many public services and they represent a dominant constraint on allowing ‘managers to manage’.