This is not about how to construct a character, or determine his/her place in the plot. That’s a different article. Here I'm talking about ways to convey character to your reader, and this is a sort of broad diagnosis of how authors and readers imply or infer personality in fiction.
There are two basic approaches for describing characters in fiction: from the outside-in, or from the inside-out.
The outside-in approach describes what the character looks like: height/weight; hair/skin/eye color; other superficial indicators like clothing, job, wealth/status. Assumptions about the character are thus construed from his personal appearance. This can be an excellent start for character development; after all, human first impressions are often about looks. There are two downsides to this method. First, writer and reader must share certain assumptions about how a person's appearance reflects his character. Second, fiction is not a visual medium; without constant reminders of a character’s appearance or identity (which can become annoyingly repetitive), your readers may have a difficult time remembering who is who.
The inside-out approach relies heavily on dialogue/dialect, and “business” or descriptions of body language during a scene. It is similar to method acting, in that the author may draw on her own experiences to portray a character’s feelings and reactions convincingly. Critics and lit professors tend to consider this sort of faux-psychoanalysis superior to superficial description, but too much of it can drag the story down into navel-gazing. Giving each character a unique “voice” is very important in this approach, and that can be difficult for some writers to manage.
Very very few published novels will feature one approach exclusively, although it has been my observation that certain genres favor one technique above the other. Science fiction, police procedurals and thrillers tend to favor the outside approach. Robert W. Butler excelled at it—but then Spenser often had to size up strangers in the blink of an eye.
Romances and literary novels tend to favor the inside-out approach—which may be why this type of characterization is sometimes considered “feminine” or “emotional.” Whether this dichotomy reflects the personalities of genre authors, or a convention of the genres themselves, or the expectations of the readers, or some combination thereof, I couldn’t say.
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A wise writer will construct her characters from both sides of the spectrum, to create more well-rounded characters, and to connect with as many readers as possible. Cross-genre writers are going to have an especially hard time of it, because the cross-section of potential readers will bring a wide variety of expectations to the story.
I once wrote a short story about a genetically engineered female assassin, on a make-or-break job on a space station, who was contemplating an affair with her boss. I submitted the story to an online critique group, where it received feedback from about twenty strangers. About a third said they loved the character but were bored with the story. Another third said the story idea was cool but they couldn’t identify with the character. The remaining third, whom I considered my control group, said the story worked just fine.
Since I have a literary background (and possibly because I am a woman), I tend to use the “inside” approach for my characters. They have to have “resonance” for me, i.e. is this character an optimist/pessimist? Confident/insecure? Happy/sad/lonely/angry? What kind of mood is she in right now and how do I convey that with her speech and the word choices I use in her POV? I prefer to use minimal physical description for my POV character, because I think that makes her more accessible to more readers, be they blond or brunette, fat or thin, male or female. But some readers—probably because they were weaned on television—feel lost and unhappy without a strong visual image. These readers are almost always male, by the way. I don’t think I’m being sexist by saying that. All you have to do is read the first few paragraphs of a dozen online porn stories (in which the heroine’s height, weight, age, hair color, and bra size are dutifully and clinically categorized) to know the stereotype about men being visual creatures didn’t condense out of thin air.
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Sometimes readers take a dislike to a character for reasons that have nothing to do with your writing—maybe the character reminds the reader of her fourth grade teacher, whom she despised. Readers bring their own baggage to a story, and to some extent they will see the characters as they see themselves. I once wrote a secondary character who was a bitter, alcoholic, aging trophy wife, a foil and reluctant frenemy to my heroine. I saw the character as somewhat pitiful and contemptible, but one of my beta readers identified with her and said she was her favorite of the cast. Accept these little vagarities of readership and move on.
Still, if the majority of your beta readers say the characters aren’t working, take the feedback seriously. Do you have a clear picture in your mind of this character? If not, fill out a “Character Development Worksheet” –not the kind used for role-playing characters, but something designed for fiction writing. Play the Celebrity Casting Game, if it helps, but think beyond the good looks to certain roles that the actor played; what made those roles work? Don’t be afraid to steal and remix from real life, either. People you really admire or really despise can provide excellent raw material.
Once you have a firm grasp of the character’s personality, work on conveying those traits to the reader. Consider examples from both the inside and the outside; appearance, lifestyle, speech patterns, voice, actions, etc. Select three or four details that really seem to epitomize the character and feed those into the scene where the character is first introduced. Then, make them consistent throughout the work.