Are organisations getting better or worse at understanding people? And why does it matter?

Introduction

Organisations have always been (and remain) essentially humans serving humans.

But the challenge for every organisation is working out which humans they will serve and in which way. A common approach to this problem is for organisations to categorise people according to the relationship they have with them. For example using labels such as customers, employees, partners, suppliers etc. This relationship-led approach is intended to provide an efficient and effective framework. One that provides both a clear focus as well as boundaries designed to ensure that organisations limit their interest to what are deemed to be the relevant needs, behaviours and desired outcomes of each group.

The time and resources invested in this activity should prove beneficial as there is an established correlation between the ability of an organisation to understand the people they interact with, and how successful they will be. In practical terms the results should be realised through measurable outputs such as reduced costs, higher profits and enhanced resilience.

And in theory, organisations should be better than ever at understanding people. They generate or have access to more data than ever before, whether at an individual or collective level. Alongside this, increasingly sophisticated methods to analyse, visualise and codify the insights are constantly being developed and enabled through technology.

So, given its importance and the enhanced capability available to organisations we should be well into an exciting new era of truly knowing people. But despite the good intentions and significant investments, that is not the case.

Signs that all is not well

Customers and employees are vital to organisational success. As a result these two groups tend to attract the most investment when It comes to improving understanding of them. And so they offer a useful litmus test to consider whether organisations are improving their knowledge of people. How people feel about organisations is an important indicator of how well organisations are meeting their needs. And it is not good news.

Employee engagement

“Stagnant engagement levels are starting to improve, but are still significantly below pre-pandemic levels”. Source: Engage for success, Employee Engagement Survey and Index 2025.

Customer Satisfaction

“The July 2025 United Kingdom Customer Satisfaction Index (UKCSI) is 77.3 (out of 100).” This is just 1% higher than it was in July 2014. Source: Institute of Customer Service UKCSI Survey July 2025

The value of the above surveys is that they are well established and offer a perspective over a number of years. Whatever investments are being made into employee and customer experience are not producing a proportionate improvement in how people feel about organisations.

Other indicators also support the sense that current approaches are not working. For example, the 2025 annual Edleman Trust survey declares “Unprecedented Global Decline for Employer Trust”. Another compounding factor is often referred to as the ‘perception gap’. This is where senior leaders perceive their effectiveness differently to how other stakeholders perceive it. For example, Marshall Goldsmith found that "74% of managers believe they listen well, [but] only 34% of employees feel heard".

And so the evidence suggests that, in many cases, organisations are not only failing to improve their understanding of people but things may actually be getting worse.

What explains the trends?

To consider why that is the case we need to look beyond the surface symptoms and consider the underlying assumptions that drive current approaches.

In that respect two key questions emerge.

Is it possible to sufficiently understand a person by defining them in terms of their relationship to the organisation e.g. as a customer? Potentially, the changing needs of organisations (e,g. operating at scale and speed) are exposing flaws that were present but previously less visible or impactful in this traditional method of understanding people.

But equally the evidence suggests that new data and technology are not proving to be an antidote to this either. Which leads to the second question. Is the increasing reliance on data and technology creating a new but equally flawed model of understanding people?

Which leads to the obvious conclusion that there is an urgent need for organisations to adopt new ways to understand people. Not ones that constrain people within a notional relationship or convenient data points. But ones that are built on a more authentic and complete understanding of what people desire, need and value.

Bio

David Wales MSc is the Founder of SharedAim Ltd (a behavioural science consultancy) and the not for profit company, Purposefully Human (a global hub for human ways of working).

His work focuses on helping organisations understand people as they truly are. And how they can use this knowledge to create strategies, environments and processes that enhance, and not inhibit, their interaction with people.

His interest in human behaviour began in 2009 when he instigated and led a pioneering study to understand peoples response to a fire in the home. David was fascinated by what it revealed about what he now terms ‘the human-organisation gap’. And so, unexpectedly, his career began this new chapter. One which he is just as intrigued by, and passionate about, as he was then.