Blog Post

As a leader, you make countless decisions—from whom to hire and which projects to prioritize to where to make budget cuts.

If you’re a new leader, acclimating to being a decision-maker can be challenging. Luckily, like other vital business skills, you can learn how to make better decisions through education and practice.

Here’s a primer on why decision-making skills are crucial to leadership and six ways to enhance yours.

WHY ARE DECISION-MAKING SKILLS IMPORTANT?

While decision-making is built into most leaders’ job descriptions, it’s a common pain point. According to a 2023 Oracle study, 85 percent of business leaders report suffering from “decision distress”—regretting, feeling guilty about, or questioning a decision they made in the past year.

When distressed by difficult decisions, it can be easy to succumb to common pitfalls, such as:

• Defaulting to consensus
• Not offering alternatives to your proposed solution
• Mistaking opinions for facts
• Losing sight of purpose
• Truncating debate

By defaulting to the “easy answer” or avoiding working through a decision, you can end up with outcomes that are stagnant at best and disastrous at worst.

Yet, decision-making is a skill you can sharpen in your leadership toolkit. Here are six ways to do so.

6 WAYS TO ENHANCE YOUR LEADERSHIP DECISION-MAKING SKILLS

1. Involve Your Team

One common pitfall of leadership is thinking you must make every decision yourself. While you may have the final judgment call, enlisting others to work through challenging decisions can be helpful.

Asking for peers’ input can open your mind to new perspectives. For instance, if you ask your direct reports to brainstorm ways to improve your production process’s efficiency, chances are that they’ll have some ideas you didn’t think of.

If a decision is more private—such as whether to promote one employee over another—consider consulting fellow organizational leaders to approach it from multiple angles.

Another reason to involve your team in the decision-making process is to achieve buy-in. Your decision will likely impact each member, whether it’s about a new or reprioritized strategic initiative. By helping decide how to solve the challenge, your employees are more likely to feel a sense of ownership and empowerment during the execution phase.

2. Understand Your Responsibilities to Stakeholders

When facing a decision, remember your responsibilities to stakeholders. In the online course Leadership, Ethics, and Corporate Accountability—offered as a Credential of Leadership, Impact, and Management in Business (CLIMB) program elective or individually—Harvard Business School Professor Nien-hê Hsieh outlines your three types of responsibilities as a leader: legal, economic, and ethical.

Hsieh also identifies four stakeholder groups—customers, employees, investors, and society—that you must balance your obligations to when making decisions.

For example, you have the following responsibilities to customers and employees:

• Well-being: What’s ultimately good for the person
• Rights: Entitlement to receive certain treatment
• Duties: A moral obligation to behave in a specific way
• Best practices: Aspirational standards not required by law or cultural norms

“Many of the decisions you face will not have a single right answer,” Hsieh says in the course. “Sometimes, the most viable answer may come with negative effects. In such cases, the decision is not black and white. As a result, many call them ‘gray-area decisions.’”

As a starting point for tackling gray-area decisions, identify your stakeholders and your responsibilities to each.

3. Consider Value-Based Strategy

If you make decisions that impact your organization’s strategy, consider how to create value. Often, the best decision provides the most value to the most stakeholders.

The online course Business Strategy—one of seven courses comprising CLIMB’s New Leaders learning path—presents the value stick as a visual representation of a value-based strategy’s components.

By toggling each, you can envision how strategic decisions impact the value you provide to different shareholders.

For instance, if you choose to lower price, customer delight increases. If you lower the cost of goods, you increase value for your firm but decrease it for suppliers.

This kind of framework enables you to consider strategic decisions’ impact and pursue the most favorable outcome.

4. Familiarize Yourself with Financial Statements

Any organizational leadership decision you make is bound to have financial implications. Building your decision-making skills to become familiar and comfortable with your firm’s finances is crucial.

The three financial statements you should know are:

• The balance sheet, which provides a snapshot of your company’s financial health for a given period
• The income statement, which gives an overview of income and expenses during a set period and is useful for comparing metrics over time
• The cash flow statement, which details cash inflows and outflows for a specific period and demonstrates your business’s ability to operate in the short and long term

In addition to gauging your organization’s financial health, learn how to create and adhere to your team or department’s budget to ensure decisions align with resource availability and help your team stay on track toward goals.

By sharpening your finance skills, you can gain confidence and back your decisions with financial information.

5. Leverage Data

Beyond financial information, consider other types of data when making decisions. That data can come in the form of progress toward goals or marketing key performance indicators (KPIs), such as time spent on your website or number of repeat purchases. Whatever the decision, find metrics that provide insight into it.

For instance, if you need to prioritize your team’s initiatives, you can use existing data about projects’ outcomes and timelines to estimate return on investment.

By leveraging available data, you can support your decisions with facts and forecast their impact.

6. Learn from Other Leaders

Finally, don’t underestimate the power of learning from other leaders. You can do so by networking within your field or industry and creating a group of peers to bounce ideas off of.

One way to build that group is by taking an online course. Some programs, including CLIMB, have peer learning teams built into them. Each term, you’re sorted into a new team based on your time zone, availability, and gender. Throughout your educational experience, you collaborate with your peers to synthesize learnings and work toward a capstone project—helping you gain new perspectives on how to approach problem-solving and decision-making.

In addition to learning from peers during your program, you can network before and after it. The HBS Online Community is open to all business professionals and a resource where you can give and receive support, connect over topics you care about, and collaborate toward a greater cause.

When searching for courses, prioritize those featuring real-world examples. For instance, HBS Online’s courses feature business leaders explaining situations they’ve encountered in their careers. After learning the details of their dilemmas, you’re prompted to consider how you’d handle them. Afterward, the leaders explain what they did and the insights they gained.

By listening to, connecting with, and learning from other leaders, you can discover new ways to approach your decisions.

GAINING CONFIDENCE AS A LEADER

Taking an online leadership course can help you gain confidence in your decision-making skills. In a 2022 City Square Associates survey (pdf), 84 percent of HBS Online learners said they have more confidence making business decisions, and 90 percent report feeling more self-assured at work.

If you want to improve your skills, consider a comprehensive business program like CLIMB.

It features three courses on foundational topics:

• Leadership
• Strategy
• Finance and accounting

And three courses on cutting-edge leadership skills:

• Dynamic Teaming
• Personal Branding
• Leading in the Digital World

Additionally, you select an open elective of your choice from HBS Online’s course catalog.

Through education and practice, you can build your skills and boost your confidence in making winning decisions for your organization.

Are you ready to level up your leadership skills? Explore our yearlong Credential of Leadership, Impact, and Management in Business (CLIMB) program, which comprises seven courses for leading in the modern business world. Download the CLIMB brochure to learn about its curriculum, admissions requirements, and benefits.