Decision-making skills are the ability to evaluate several courses of action and choose which to take. This is an important life skill as well as a business leadership skill, since effective problem-solving requires deciding on a solution. However, making smart business decisions isn’t just about being decisive in an abstract sense.

Effective decision-making is a skill that requires a combination of critical thinking and data analysis. In a business context, a familiarity with tools of financial analysis is especially important for decision-making, although the financial bottom line isn’t always the only factor to be considered in a careful cost-benefit analysis. For example, a growing number of companies consider corporate social responsibility principles and a “triple bottom line” approach that also looks at social and environmental costs and benefits.

Beyond cost-benefit analyses, there are approaches informed by psychology that are used to make decisions as well as describe decision-making in the real world. Decision theory uses tools similar to game theory to analyze how decisions are affected by uncertainty, different timing between decisions and impacts, social and competitive situations, and other factors. And behavioral economics helps to understand how cognitive bias can influence decision-making, as in the case of the sunk cost fallacy which results in economically irrational decisions based on previous investments.

Decision-making skills are essential for leadership positions in every field, whether chief executive officers (CEOs) of corporations, executive directors of non-profit advocacy groups, or government roles such as mayors and governors. These leaders are responsible for setting organizational goals and policies and, ultimately, making decisions on how to achieve them.

According to the Bureau of Labor Statistics, top executives earn a median pay of $104,690 per year, including a median pay of $184,460 for CEOs. This high level of compensation is a testament to the importance of savvy decision-making skills, which are in high demand in organizations of all kinds.

Absolutely. Coursera lets you learn about decision-making and related topics like problem-solving, psychology, and leadership from top-ranked schools like the University of California, Irvine, the University of Michigan, and the University of Pennsylvania. And although you’ll be learning remotely, you’ll get the same course materials as on-campus students as well as opportunities to discuss these important topics in leadership with expert faculty as well as your fellow students.