Imagine you’re a new manager, and one of your team members consistently underperforms. But there’s a catch: your struggling employee is a personal friend of your CEO. When performance review time rolls around, should you be honest and give them a low rating?

There are no simple answers for the tough decisions that managers face. Harvard Business School professor Joe Badaracco says that hard and fast rules only go so far in these sorts of situations. Instead, managers must use their best judgement to find a solution.

Badaracco is a business ethics expert and the author of the book, Managing in the Gray: Five Timeless Questions for Resolving Your Toughest Problems at Work.

In this episode, he explains how to approach what he calls “gray-area decisions.” First, gather as much information as you can, taking different perspectives into account. Then, consider the consequences of the different possible actions you can take, the values of your organization, and your own personal values.

Key episode topics include: leadership, managing conflicts, dismissing employees, managing people, managing employees, tough calls, 

HBR On Leadership curates the best case studies and conversations with the world’s top business and management experts, to help you unlock the best in those around you. New episodes every week.