Whenever I think of character building, my mind always goes back to when I played Dungeons and Dragons.
If you're not familiar with D&D, players begin the game by creating the characters they are going to play with. You can chose from different races (Human, Dwarf, Elf, Gnome, etc), Class (Fighter, Magician, Cleric, etc), Alignment (anything from Chaotic Evil to Neutral to Lawful Good). Then you roll the dice to determine their attributes, strengths, weaknesses. You get the idea.
It is very much the same when conceiving the characters for a new story (which I'm doing right now). In fact, my D&D experience proabably shaped my current story telling in many more ways. Once everyone has their characters they go on an adventure quest only the characters (and the real life people who play them) have no idea where they are going.
A Dungeon Master holds the map and knows where the characters are and has to describe to the players where they are going, what they see, and who they encounter. Good for the DM from a descriptive standpoint. Good for the players because their imaginations are completely piqued.
The characters in a story can be developed in a lot of ways.So along this line of thinking, I've considered character development in four ways:
Here's a good exercise: Imagine a party with a lot of people where something odd happens. Plop your character in the middle of it and don't script their reaction. Just allow them to act and react.
How do they view their world? How do they view their place in their world? How do they view others?
Here's a good exercise: Try to imagine a person who is 3rd generation poverty stricken and then also a person who is 3rd generation wealthy. Drop them both into a setting of your choosing and describe how each views their setting.
Now I must say, dialogue is one of FAVORITE things to write. "I" think I do great dialogue. But I suppose it's all in the eyes of the beholder. But I digress.
Dialogue is so powerful because sometimes the dialogue can say even more than the other descriptors above. Sometimes dialogue works in concert with perspectives, which creates a powerful tandem.
Consider this; how do they speak? Proper? Dialect? Slang heavy? Broken English? Do they even speak English? Is English their first language? Do they have an accent? Southern drawl? Are the concise, verbose? Snarky? Do they speak rapidly or slowly?
Consider the dialogue in The Color Purple. Or even Gone With The Wind. Consider indivual speech patterns like that of James Earl Jones.
Dialogue can be really fun. And it forces the writer to get completely into the character's head for the "voice" to be true.
Here is a very good link to some more in depth character development information.
Adventures In Children's Publishing
Below is a pretty good video that also delves deeper into the subject of character development. Enjoy.