A hearing device, a hearing system and a method for improving a hearing impaired person's ability to perceptually separate a target sound from competing sounds, the target sound and the competing sounds forming a composite sound signal having a given frequency range, where the method comprises the steps of: (i) subdividing the frequency range of the composite sound signal into a plurality of frequency sub-bands; (ii) grouping frequency sub-bands based on comparable characteristics of the plurality of frequency sub-bands; (iii) for each of the groups calculating a group envelope; and (iv) multiplying the signal in the frequency sub-bands of each individual group by a function or functions that enhance(s) peaks of the group envelope and/or attenuates energy in troughs in the group envelope. The comparable characteristics may be the correlation between the envelope of each of the bands in the specific group of frequency sub-bands and the corresponding group envelope.