You have to make an important decision as a CEO, but you’re faced with multiple options. Create your own decision matrix, an evaluation grid that will allow you to analyze all the possibilities and make a thoughtful choice to ensure your organization’s viability.
6 easy steps
1. Options
If you want to use a decision matrix, this means your company is at a crossroads and you’re examining several possibilities. The purpose of this first step is to determine all the options to consider.
For example, you’re planning to open a satellite office in the United States, but you’re trying to choose among several States. You are considering three that are especially dynamic: California, Florida and Texas.
2. Criteria
Once you’ve identified all the options, you must determine some key criteria to distinguish each of them. In other words, what are the most important factors in your analysis that will have an impact on your company’s success?
For example, to choose the State where you will establish a satellite office, you could adopt the following criteria: the number of potential customers, the average rent for commercial premises, or the workforce’s average level of education.
3. Weighting
Now that you’ve decided on your key criteria, the time has come to determine the importance of each one by assigning percentages. Why? Because you don’t give each criterion the same weight. You must therefore analyze them subjectively according to the company’s reality.
For example, in this project to inaugurate a satellite office in the United States, you might decide that the number of potential customers is the main criterion and assign it a weighting of 50%. The rent for commercial space would rank second and be weighted at 30%. The remaining 20% would go to the workforce’s average level of education.
Attention! Make sure that the weightings of your criteria add up to 100%.
4. Searching for data
This step documents the options considered. You must find reliable and objective data for each of the chosen criteria.
For example, by opening a point of service in the United States, you want to expand your clientele, which is composed essentially of law firms. You then will want to know how many law firms are established in each of the three preselected States. During a search, you will discover that California has 56,550. There are 43,065 law firms in Florida and 33,930 in Texas.
5. Scoring
Once you have collected data, you may assign a score to each option considered. This evaluation must be done for each criterion you defined.
Concretely, if you study three options, we recommend you assign a score of 3 to the best option and a score of 1 to the least satisfactory option.
For example, based on the number of law offices established in each State, California would obtain a score of 3, Florida 2 and Texas 1.
6. Calculating the results
You’re now at the step where the Excel spreadsheet does the job for you. It will multiply the weighting of each criterion by the score you assigned to each option.
For example, based on the number of law offices found in each preselected State, California will obtain a result of 1.5 (3 x 50%), Florida 1 (2 x 50%) and Texas 0.5 (1 x 50%).
Finally, Excel will calculate the sum of the results for each option. This will give you a quick and objective idea of the option that best suits your company.