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How Leadership Self-Awareness Improves Financial Performance

Whether you're the CEO or a frontline leader, financial performance is a measure of effectiveness. But how do you improve bottom-line performance amid economic uncertainty, a persistent talent crisis, and the reality that only 3 in 10 employees are engaged? One key is self-awareness. A study involving 486 companies found it moderated business success, and poor-performing businesses had 20% more leaders with blind spots. Unfortunately, self-awareness is rare in leadership. A global study found that 95% of leaders think they are self-aware, but only 10-15% met the criteria to be considered self-aware on essential leadership competencies related to empathy, trustworthiness, and leadership performance. When you can't see yourself objectively and don't accurately understand the perspectives of others, you can't make the transformational changes necessary for business growth. Here are two proven strategies to increase leadership self-awareness and the signs when it might be lacking.

Why leadership self-awareness matters

Recently the positive connection between self-awareness and improved company earnings was established by Korn Ferry. A study of 486 companies over 30 months found that organizations with a higher percentage of self-aware leaders outperformed organizations with a lower rate. Poor-performing businesses had 20 percent more leaders with blind spots than high-performing businesses.

The importance of self-awareness for achieving success and significance is not new. The researched benefits of knowing yourself are numerous beyond improving a business's bottom line. Some of these include:

  • higher quality leadership relationships

  • improved self-control

  • better decision-making

  • enhanced life satisfaction.⁠

In today's increasingly complex and culturally-diverse workplace, leaders that are able to perceive, assess, and regulate their own and others' emotions accurately are able to better promote unity and team morale⁠.

Studies have demonstrated that followers perceive leaders with a heightened emotional intelligence as being successful and effective leaders. Also, increased awareness may enable leaders to create shared emotional experiences that enhance personal and follower growth, well-being, and psychological safety.

Leaders are better prepared to adapt appropriately when they possess a heightened self-awareness.

Self-awareness in leadership

It is natural to see the world from our unique point of view. We tell ourselves stories about our strengths and areas where we need to be better, as well as what is or is not good leadership.

Leadership habits are shaped by past experiences and the words used to describe our actions. With good intentions, we set out to lead as best as possible. Then life happens, and for most of us, we realize we have blind spots and distortions that jeopardize our goals.

“To know yourself, you must sacrifice the illusion that you already do.” Vironika Tugaleva

Consider the passenger-side rearview mirror on a car. The required safety warning on the mirror states that objects in the mirror are closer than they appear. Also, these rear-view mirrors have blind spots.

Distortions and blind spots can be hazardous to our well-being if what is seen and not seen is not interpreted within the proper context. Leaders can make bad decisions without understanding the wisdom of knowing their distortions and blind spots.

How to become more self-aware

The higher you move within any organization, the less objective and the less feedback you tend to receive. This makes knowing yourself even more critical and challenging.

The last thing any leader needs in today's demanding workplace is someone or something telling them what they already know or what they perceive they want to hear. The better the quality of the feedback you receive, the better the decisions you can make.

Leadership is a relationship, and it is vital to know what others think. When we only consider ourselves, we have an incomplete understanding.

Self-Awareness Strategy #1: Leadership Assessment

A 360 leadership assessment is a type of multi-rater instrument that collects feedback from multiple directions relative to the leader's position within an organization. Typically the questions in a 360 assessment are focused on leadership performance, skills, and contributions.

While 360-degree feedback effectively improves leadership skills across all cultures, it is most effective in cultures with low power distance and individualistic values, such as Germany, the Netherlands, the United Kingdom, and the United States.

“Look outside and you will see yourself. Look inside and you will find yourself.” Drew Gerald

Self-Awareness Strategy #2: Executive Coaching

Combined with leadership assessments, executive coaching helps reveal deep insights into areas that, with attention, lead to enhanced potential. Research supports that a coach's timely and appropriate use of leadership 360 assessments leads to improved self-awareness and organizational outcomes.⁠

Given that the ultimate goal of coaching is related to change within you, the process centers on using essential questions and client-centered critical thinking to invoke self-awareness and personal responsibility.

Signs you might lack self-awareness

Lacking self-awareness limits your specific ability to realize your professional and personal goals, like trying to navigate a ship without a sextant. Self-aware leaders are not naive about their accidental habits and are better positioned to develop life-changing leadership habits.

Overestimating your ability can lead to negative consequences for your performance and the organization.⁠ Leaders who have a distorted view of their strengths and weaknesses usually cannot effectively regulate their emotions and behaviors.

Research has demonstrated that the symptoms of a lack of self-awareness include negative consequences to your physical health, work performance, and social interactions.

Signs of a lack of self-awareness include:

  • Stalling career

  • Lack of direction

  • Absence of learning something new

  • Surprised frequently by feedback from others

  • Frequently make excuses

  • Constantly firefighting and struggling with time management

What is your real self-awareness challenge?

Key summary points

  • When you know yourself, you have the insight necessary to recognize leadership bad habits and make transformational changes that deliver proven results.

  • Self-awareness means to know yourself so that you are able to see yourself objectively, you are aware of similarities and differences from others, and you understand the perspective from which you see others and the world.

  • A study of 486 companies over 30 months demonstrated that organizations with a higher percentage of self-aware leaders outperformed organizations with a lower rate.

  • Leaders can make bad decisions without understanding the wisdom of knowing their distortions and blind spots.

  • The better the quality of the feedback you receive, the better the decisions you can make.

  • Executive coaching combined with leadership 360 assessments help reveal deep insights into areas that, with attention, lead to enhanced potential.


Athanasopoulou, A., & Dopson, S. (2018). A systematic review of executive coaching outcomes: Is it the journey or the destination that matters the most? The Leadership Quarterly, 29(1), 70-88.

Baldoni, J. (2013). Few executives are self-aware, but women have the edge. Harvard Business Review.

Bratton, V. K., Dodd, N. G., & Brown, F. W. (2011). The impact of emotional intelligence on accuracy of self-awareness and leadership performance. Leadership & Organization Development Journal, 32(2), 127-149.

Goldstein, G., Allen, D. N., & Deluca, J. (2019). Handbook of psychological assessment. Elsevier Science & Technology.

Gorgens-Ekermans, G., & Roux, C. (2021). Revisiting the emotional intelligence and transformational leadership debate: Does emotional intelligence matter to effective leadership? SA Journal of Human Resource Management, 19(2), e1-e13.

June, C. (2020). 10 signs you lack self-awareness. Psych2Go.

Oltmanns, T. F., Gleason, M. E. J., Klonsky, E. D., & Turkheimer, E. (2005). Meta-perception for pathological personality traits: Do we know when others think that we are difficult? Consciousness and Cognition, 14(4), 739-751.

Pekaar, K. A., Bakker, A. B., van der Linden, D., & Born, M. P. (2018). Self- and other-focused emotional intelligence: Development and validation of the Rotterdam emotional intelligence scale (REIS). Personality and Individual Differences, 120, 222-233.

Wilson, T. D., & Gilbert, D. T. (2005). Affective forecasting: Knowing what to want. Current Directions in Psychological Science: A Journal of the American Psychological Society, 14(3), 131-134.

Zes, D., & Landis, D. (2013). A better return on self-awareness. Korn Ferry Institute.


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About Dr. Jeff Doolittle

He is the founder of Organizational Talent Consulting in Grand Rapids, MI, and Program Director of online graduate and continuing business education at Olivet Nazarene University in Bourbonnais, IL. Executive leaders who work with Jeff describe him as thoughtful, decisive, intelligent, and collaborative. Jeff is a business executive with over twenty years of talent development and organizational strategy experience working with C-suite leaders in Fortune 100, Forbes top 25 private, for-profit, non-profit, and global companies in many industries.

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