This research underscores the importance of digital literacy for leaders and managers in the digital era. It builds on previous work that offered a comprehensive definition of digital literacy, emphasizing the significance of technical, managerial, social, and motivational competencies. Despite the critical role of these competencies, there is a dearth of research on enhancing digital literacy among leaders and managers. This study addresses this gap by proposing a self-assessment tool. By adopting a design science research approach, this paper contributes a theoretical framework for self-assessing digital competencies in a business context, thereby fostering improved digital leadership for managers and leaders. Furthermore, it contributes to practice by enabling leaders and managers to identify their existing competencies and areas for improvement, facilitating effective navigation through digital transformation.