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Decision-making in Leadership: 8 Key Steps to Follow

Andrew Langat
May 21, 2024
A leader making a strategic decision, representing effective leadership and organizational success.
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The quality of your decisions determines the quality of your life - Craig Groeschel

As a leader, you will be judged by the quality of your decision-making skills.

Take the example of Sakichi Toyoda, the founder of Toyota whose decision to implement continuous improvement(Kaizen principles) from the onset, massively paid, and made Toyota the billion-dollar company it is today. Conversely, John Antioco, Blockbuster CEO's dismissal of Netflix in 2000 is a cautionary tale of how poor decision-making can lead to a business's downfall.

As a hallmark of sound leadership; it only makes sense to learn—deeply and widely— the science and art of decision-making in leadership.

Effective decision-making is a soft skill acquired through learning, mentorship, coaching, and experience. Business leaders must be able to make reasonable decisions and be mindful of the effects of their decisions on their employees, customers, shareholders, and other stakeholders.

Some 85% of leaders suffered decision distress or questioned a decision made in the past year. This indicates a tremendous need for business leaders to learn how to avoid making dangerous judgment errors. The best decision-makers use their tactical skills, emotional intelligence, and leadership skills to make important decisions in a timely manner and avoid decision disasters.

So how do you distinguish between a leader with good decision-making skills and one without? We'll review an eight-step process you can use to understand the difference – and develop your skills as well.

Elements of a Good Decision vs Bad Decision

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Eight-Step Decision-making Process Model

To arrive at a good business decision, business leaders should be able to follow this procedure:

1. Define the problem

The first step is defining the underlying problem and why it needs to be resolved. Avoid the temptation of rushing into decisions without a clear understanding of the issue at hand.

These can lead to quick fixes leading to temporary relief, unlikely to address the root cause of the problem(band-aid approach).

Actively seek comprehensive data— including speaking with other team members, or even consultants—to get a full picture of the situation. Proactively addressing problems at their early stages allows for well-researched problem identification.

A good example of a well-defined problem:

"The engineering department experienced a 30% turnover rate in the past year, significantly higher than the industry average of 15%. This has led to a 25% increase in project delays and the loss of a key client who cited 'engineering team instability' as a reason for departure.

2. Get proper information through the analysis of available data

Well-analyzed data enables a leader to gather relevant information; leading to making decisions based on facts rather than conjecture or speculation.

Gathering data must include investigating prospective courses of action, weighing the benefits and risks of stressful decisions, considering alternate options, and contacting experts.

Careful consideration must be paid to alternative perspectives before any significant decision is made.

Listening to different perspectives that often differ from your own as a leader will help you recognize any potential bias blindspots you may have that may cloud your judgment and prevent logical reasoning.

Getting feedback from employees and other stakeholders assists in creating consensus around any suggested solution before moving forward, limiting surprises later.

3. Define the goal of the decision-making process

Once the data has been collected and analyzed successfully, the goals must be defined to give a clear vision of the desired outcome of the decision-making process. The best decisions are supposed to address the root cause of the problem and be applicable in the long term.

The goals of the decision-making process that are set create a road map that gives a clear direction for the team when it comes time to implement the action plan. It aids in defining the scope of the issues that must be solved and gives perspective on the size of the problem to be solved.

4. Develop the decision-making criteria.

The team that will be responsible for implementing the decision has to brainstorm and develop clear decision-making criteria that will weigh all the options of how you can get to the best decision.

It is recommended that the criteria be developed before the leader and his team start to consider choices. The number of criteria must also be limited to avoid analysis paralysis.

To avoid intuition bias, the decision-making criteria must be developed based on the relevant and important attributes of the final decision.

5. Generate all the viable options based on the available data.

All the viable options that will contribute to achieving the goals of the decision-making process must be generated. Business leaders frequently fall into the trap of generating insufficient options to make the best decision.

This is typically a brainstorming step in the decision-making process for the leader or the team. It is important to list all the possible options without passing judgment on any of them, even if they may seem outlandish.

If this is done with a team, it is preferable to come up with options independently before bringing them together and selecting the best ones. You can use innovative techniques to make the best choices, for example, by drawing the written options.

6. Weighing options from the number of viable options

This step entails carefully weighing options to determine which will be most beneficial for the business, while causing the least harm. All the relevant information that supports each choice must be considered.

It may also be necessary to consult experts in the field about the potential outcomes of the choices to find an optimal solution to the initial problem.

The weight of the options should be data-driven. This will prevent or minimize any biases stemming from personal opinions, personalities, relationships, and internal politics. Good decision-making must be fact-based.

The decision-maker must be aware of initial preferences and be able to see the preferred choice in a clear light. It's crucial to be conscious of any potential biases that can impair your judgment, such as your own beliefs. initial preferences, or ideas.

Choosing the best option necessitates thorough thought and deliberation to maximize the likelihood of picking the best option.

At this step of the decision-making process, it is necessary to establish some decision alerts or flags that you would use to reconsider the decision made if new information becomes available. This will  ensure you and your team are making the most informed decisions possible at any given moment. This can be applied in all levels and types of decisions, from moderately important decisions to those crucial for success. It is important to remain open and receptive to new information and to be skillful in pivoting or adapting if necessary. Being skillful and adaptable means it will also be possible to make timely decisions.

7. Implementation of the selected option.

The last step in the decision-making process is the implementation process. The selected option has to be implemented carefully to result in the best possible outcome.

This may require simulating all the possible outcomes of the decision. Both the failure metrics and success metrics of the decision have to be assessed and taken into consideration. Any potential problems that might result in failure must be considered and potential solutions have to be developed.

With this information fully understood, it becomes possible to bring the simulation to life. All the reasons for success and the lessons learned can be fully integrated into the implementation process.

If the implementation is done using a team, steps must be taken to ensure clear accountability and clear communication of the respective roles and responsibilities. Leaders can and should ensure clarity of expectations and workflow among members. This will prevent conflicts and reduce feelings of anxiety and doubt.

Stakeholders must communicate effectively during the implementation stage to ensure choices made during the planning, analysis, and assessment phases are adhered to.

Tracking the process is critical for quickly identifying and dealing with any changes or adjustments. Any potential threat to success that comes up in the implementation stage must be addressed promptly and any potential opportunities have to be seized.

Tracking, together with failure-proofing techniques, ensures that objectives are reached and prevents decision disasters.

8. Review and revise decisions and implementation as needed.

A good decision-maker has to develop clear metrics of success that can be measured throughout the implementation step. The results have to be monitored to ensure that the objectives of the decision-making process are reached.

Accessing feedback on whether the selected line of action was successful in producing the desired results or not is an essential element of the decision-making process.

Evaluating the outcomes through feedback is the best way of determining what worked and what didn't. If everything is fine, implementation can continue. If not, then a revision of the implementation is required.

It may also be a case where the implementation is headed for disaster and the decision-making has to be revised completely. In such cases, being skillful and adaptable will allow leaders and teams to pivot quickly, reducing wasted time, efforts, and even profits.

Review and revision of the results make it possible for risks to be recognized and controlled before they develop and have a significant financial impact.

It is important to recognize that review and revision do not necessarily indicate a problem exists. They are crucial steps to avoiding problems that may come about as well as establishing and maintaining a forward-thinking and adaptive approach. It is essential before any strategic decisions can be made, as well as during implementation, to identify areas where changes can be made, saving the company time and money in the long term.

The 8-step decision-making model is a research-driven and battle-tested decision-making technique that relies on factual and measurable results to measure outcomes. This method improves the decision-making capacity of leaders and yields the best decisions.

What are the keys to good decision-making?

Making good decisions – and being considered a good decision-maker – implies that the leader has a consistent ability to select an option from multiple possibilities that effectively handles a problem or issue.

The characteristics that make a great leader also lend themselves to good decision-making. The best decisions come from leaders who have developed these characteristics into skills, resulting in wise decisions. These skills include:


Problem-solving involves identifying the problem and finding logical steps to solving it. This includes understanding the resources and other constraints that may influence the outcome.


Creativity refers to the ability to think beyond the list of options and possibilities provided. The person in the leadership position has to think outside the box to provide solutions.

According to the Harvard Business Review article "Leaders as Decision Architects," start by framing the question of possible solutions as "what could I do?" instead of "what should I do?" This stimulates thinking beyond the apparent or given possibilities, resulting in more insight and creativity.

Logical Reasoning

Good decision-makers rely on logical reasoning when weighing options. They collect all the inputs and define the possible outcomes and consequences of their chosen option.

Emotional Intelligence

Emotional intelligence includes the ability to overcome and mitigate bias or emotion that impairs decision-making skills. Tapping into emotional intelligence is what often sets good decision-makers apart

Types of Business Decisions

  • Operational decisions: These are decisions about day-to-day activities such as customer orders, selecting a new supplier, inventories, etc.
  • Financial decisions: These types of decisions can include mergers and acquisitions, dividends, capital structure decisions, budgeting and forecasting, etc.
  • Strategic decisions: These are decisions regarding business goals and objectives such as mergers and acquisitions, productivity and professional development of employees, etc.
  • Policy decisions: They govern the organization's actions and procedures, such as compensations and benefits.

In the competitive corporate world, relying only on intuition and gut reactions may prove to be unreliable and lead to inconsistency in making decisions. This may sometimes lead to dangerous judgment errors that can be detrimental to the organization.

To improve the quality of the decision-making process, there is a need to combine intuition, critical thinking skills, data-driven analysis, and experience. Business leaders must consistently make good decisions to ensure smooth operations and improve customer satisfaction.

According to reports published in the Sage Journals, research in Behavioral Economics and Cognitive neuroscience on the medium- to large-scale effects of one-shot debiasing training interventions indicates that a even just one single training intervention can improve decision-making skills.

It is disappointing that many prominent leaders fail to get professional development in decision-making. Most leaders rely on intuition in their decision-making process. Training can turn normal decisions into great decisions, leading to widespread positive impact and change.

Intuition and gut reactions cloud judgment, as they do not consider biases that can nudge decisions in a particular direction. However, they are not to be completely discounted, as they are important attributes of leadership decision-making. The key is to integrate these with sound data analysis, openness to feedback, and a time-tested strategic structure for important decisions.

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Why is it important to have good decision-making skills?

  • To help the business adapt and transform its organization to guarantee longevity and growth.
  • To enable organizations to choose the right variety of sensible tactics and actions that increase profitability.
  • To choosing reputable business partners and foster key relationships, such as with suppliers and stakeholders, that improve efficiency and profits.
  • To optimize strategies and operations that maximize effectiveness and accomplish workplace objectives.
  • To maintain a high level of professionalism when dealing with stakeholders.
  • Showcasing evidence of excellent decision-making skills can help you negotiate a top notch pay package as well as inspire and motivate your direct reports, new employees, and generate buy-in from senior leadership.
  • Great leaders know how to help everyone from the new employee to the seasoned senior leadership in making decisions that impact others.

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Tools for Effective decision-making skills

Several tools assist in making better decisions such as:

  • Root cause analysis: (e.g., the "5 Whys" method) to dig deeper into problems beyond the symptoms.
  • Decision matrix: visually rank options against criteria.
  • Cost-benefit analysis: For financial decisions.
  • SWOT analysis: Identifying strengths, weaknesses, opportunities, and threats.
Tools for decision making

Even with all the research available, it has not stopped leaders and gurus from doubling down on trusting their intuition, which can lead to many judgment errors. Decision-makers often rely on their instincts because it is a comfortable and natural approach to decision-making.

A great leader of an organization should be able to make intuitive, quick, and accurate decisions based on acquired skills. They have to make sound decisions with their heads, relying on informed perspectives rather than their gut reactions.

Inspiring, isn’t it ? Want to learn more about connecting self-awareness to professional development? Get in touch today.

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Let Highrise Improve your Decision-making Skills

For those looking for contemporary leadership skills, having good decision-making skills is essential. Highrise coaching teaches leadership skills that can help you develop your decision-making abilities, alongside other crucial contemporary competencies.

Highrise's focus on coaching can be particularly helpful because it fosters self-awareness and helps you identify areas for improvement in your decision-making process. Through coaching, you can learn to gather and analyze information more effectively, consider different perspectives, and make well-reasoned choices.

Book a free consultation today.

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Andrew Langat
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Andrew Langat is an experienced content specialist in Leadership, Productivity, Education, Fintech, and Research. He is an avid reader and loves swimming as a hobby. He believes that quality content should be actionable and helpful.