At a recent law school graduation ceremony, the keynote speaker concluded her commencement address by asking doctor of jurisprudence candidates to raise their hand if they were above average in their class. Every student raised a hand; 100% self-identified as above average! The fact that it is arithmetically impossible for all students to demonstrate above average performance is of secondary interest. A more compelling line of inquiry relates to human capacity for objectivity.

Research tells us our self-assessments tend toward inaccuracy; sometimes too favorable, others, too harsh. We see this when employees receive 360 degree feedback that surprises them (and it always does). The recipient’s first reaction is to think through everyone that provided feedback to find out who could have been so wrong with their assessment.

For most of us, individual self-objectivity is difficult to achieve. Is the dilemma different for our organizations? Companies are complex social networks comprised of individuals, therefore subject to human conditions.

Many of the challenges associated with hearing how stakeholders – employees, customers, vendors, communities, or regulators – perceive our organization mirror individual reactions. Defensiveness, denial, rationalization, and derogating the feedback provider are common experiences. As a director, succumbing to this Pavlovian response elevates risk, jeopardizes governance, and exposes the firm to misreading or missing changes in its operating environment.

Seeing your organization as others do is critical to earning, re-earning, and sustaining relevance.

In a business context, relevance refers to the pertinence, meaningfulness or importance stakeholders ascribe to their engagement with a organization. The relationship between an organization and its stakeholders is always in motion. This requires leaders to stay attuned to stakeholders’ perceptions, observations, and reactions to unintentional missteps by the business, adjusting course in alignment with vision when evidence says relevance is at risk.

Relevance has a finite shelf life, thus must continually be re-earned. The business world is in perpetual motion, even when we don’t feel or recognize base-level evolution. Employee interests, expectations, and priorities shift. Customer needs, interests, and expectations evolve. Competition redefines the operating landscape. Motion is normal; speed can vary.

With this context, directors provide additional eyes and ears to scan the environment, identify subtle and dramatic changes, ask management their interpretation of the evolving landscape and what it means to the organization’s relevance with its stakeholders.

There are cues and clues suggesting a shift in relevance. While each organization tracks different metrics, general leading indicators that relevance may be at risk include changes in employee engagement or satisfaction, changes in customer engagement, satisfaction or loyalty metrics, increasing complaints, unfavorable online traffic (social media, online reviews, blogs) and slowing accounts receivable turnover. Lagging indicators include decreasing employee productivity, increasing regrettable turnover, uptick in customer attrition, decreasing repeat customer activities or fewer new customers. Any of these cues or clues relevance may be waning are an invitation for directors to ask management about root cause, potential trends, what intervention is needed and when strategic adjustments will take place.

How can board directors override natural challenges to seeing their organization as others do?

Organizational self-awareness means understanding stakeholders’ perceptions of how the organization shows up. Here are five actions management and directors can take to gain a greater awareness of how stakeholders see the organization:

• Feedback Assimilation Process. Most companies gather employee and customer engagement metrics. Interpreting and addressing the results are less ubiquitous. Develop feedback assimilation processes to override the tendency toward Situational Attribution (in other words, attributing the cause of perceptions to a situation or event outside the organization’s control rather than an internal characteristic). This process defines how the organization will receive, hear, and interpret stakeholder feedback (who gets the input, how information is shared in its unvarnished form, what to do with the feedback, how to distill feedback into actions aligned with the organization’s future state vision).
• Multiple Sources. Draw upon multiple, comfortable, safe channels to gather diverse observer input that yields actionable feedback. A single-channel approach (i.e., employee engagement surveys, Net Promotor Score) will miss opportunities with stakeholders uncomfortable in a chosen format. Peer-to-peer listening reviews, independent customer or user groups, advisory board members and community influencers are examples of channels through which more objective feedback can be accessed.
• New Employee Download. Initial perspectives from your organization’s new employees can produce actionable insights. When they arrive, new hires will see and hear things that capture their attention. Once they acclimate, these stand-out observations will lose their attention-grabbing newness, then fade into business-as-usual patterns. Operationalize an approach of capturing the power of first impressions during an employee’s first month on the job. Initial observations, documented and shared, provide a meaningful source of insight so you can see your organization as others do.
• Promote a Safe Culture. Commit to receive feedback without judgment, blame, or retribution to the messenger. This includes observations from employees. Team members have an abundance of opportunities to identify and communicate potential issues (concerns heard from customers, possible safety issues), yet withhold information, fearing retribution. Ensure management holds people harmless when issues are surfaced. Shooting the messenger damages a culture of self-awareness.
• Distill Observations into Actions. Knowing how stakeholders perceive your organization is a first step. Translating observations into action contributes to earning and sustaining relevance with stakeholders. Directors and management must balance distinguishing observations that push a organization away from its vision and dilute relevance from those that accelerate progress toward the vision. Determining which observations are directly translatable into actions is art and science. Feedback on what customers don’t like is informative but doesn’t frame a picture of what they want. Stakeholder observations can simply represent a stimulus, guiding the organization toward a theme that requires further analysis. The next step following an unfavorable employee engagement survey may be a series of team member listening sessions with management in the room to hear concerns and ask questions, for instance – what would be a better approach, what would success look like in this situation, or, if you were in my position, how would you deal with this challenge?

Leaders focused on building and sustaining organizational self-awareness seek honest feedback from fans and critics, demonstrate authentic curiosity about how their organization is perceived by stakeholders, and sustain relevance by adjusting activities that interfere with the way others see them. Directors can play a valuable role in helping management develop and sustain organizational self-awareness as a guiding principle.

Losing relevance is unintentional, and that’s part of the problem—lack of intention to sustain relevance. Out of sight, out of mind. Leaders often keep long lists of important priorities yet overlook the essential elements of earning and sustaining relevance with their stakeholders. From a director’s perspective, this tells us how important it is to guide organizations in continually refreshing their attunement to how stakeholders perceive the organization.

Article originally published by Board Leadership as “The Importance of Seeing Your Organization as Others Do” by Dave Coffaro, © September 14, 2021, Volume 2021, Issue 177, September/October, pages 1-8. Reprints available at https://doi.org