A key aspect of organisational success is good decision-making. It’s the factor that has the biggest impact on the bottom line of any business and can make or break the company.
In some cases, making the right decision is fairly simple and the choice between different options is clear. However, more often than not, the process of making a decision is highly complex and involves multiple criteria that have to be taken into consideration before deciding one way or the other.
Also, to keep up with the good practices of business planning, a decision has to be made relatively quickly, as spending too much time pondering which way to go may mean that the opportunity that was there is now long gone. At the same time, it’s necessary to extensively evaluate all the choices, as that is a prerequisite for making an informed decision that will have a positive impact.
Obviously, all this makes the process rather tricky and complicated. It will rarely be as easy as making a simple pros and cons list and basing your decision on it. The main reason for this is that factors you have to take into account usually carry different levels of significance, meaning that some are more important than others.
So, it’s necessary to find an objective and quantifiable way to do these important decisions, while still being efficient and expeditious. Arguably, the most reliable instrument you can use to make all kinds of complex decisions is the Weighted Decision Matrix.
Table of Contents
What is a Weighted Decision Matrix?
A Weighted Decision Matrix is an extremely useful decision-making tool used to compare different options while taking different factors of varying importance into consideration. It provides an opportunity to evaluate and comprehensively analyse alternative courses of action in an efficient, fairly simple, and easily understandable way.
By allowing decision-makers to weigh different alternatives, the Weighted Decision Matrix enables them to compare various solutions and make an informed decision on which one is the best.
Besides simply establishing the criteria for various options, scoring them, and summing them up to get a rankable total score, the Weighted Decision Matrix also assigns weight to each criterion depending on its importance.
It’s probably the greatest advantage of this method, as it means that results will better reflect the importance each factor has to the decision-maker and remove guesswork and emotion from the process, providing an objective analysis of different alternatives.
Using a Weighted Decision Matrix, decision-makers can solve an issue more easily because the WDM model allows them to specify and prioritise their needs according to the set of criteria; evaluate, rate, and compare different options; and select the best solution for their problem.
How to Create and Use a Weighted Decision Matrix?
The Weighted Decision Matrix is commonly presented in the form of a table, where the various options are listed across the top, while the list of the criteria for evaluating these options is in the leftmost column.
The method is very easy to use and the process of creating the Weighted Decision Matrix is pretty straightforward, taking several simple steps.
Listing the Options
The first step is to identify your potential decision options and all of them as rows As this will be the foundation of your Weighted Decision Matrix, make sure not to leave out any relevant alternatives.
For example, if you’re deciding on a new supplier for your business, you should list every candidate company you’re considering.
Identifying the Criteria
The next step is to figure out what factors will influence your decision. Once you’ve identified criteria, list them as columns. Carefully consider which criteria to use, as that will be the key to making the best decision and avoiding subjectivity.
For example, the criteria for choosing a supplier may include the price, the company’s reputation, and payment options.
Rating Each Criteria
This is where you assign weight to each criteria according to its importance. The significance of each of these factors to your decision should be represented by numbers (for example, 0-5, where 0 is the least and 5 is the most important).
To ensure that the final results are accurate and relevant, make sure that the rating scale is clear and consistent for every criteria. You can adjust the rating system to fit different projects and decision-making processes, just make sure that the higher value always represents the more desirable option.
In our example, if the price is the most important factor for your company and will weigh in the most when making the decision on which supplier to choose, you may rate it as 5. The reputation may not be as important, so it will be assigned the weight of 2, while the payment option is rather important, but not as significant, so it will have a rating of 4.
Rating Each Option for Each Criteria
Now, using the same rating you’ve established for each criteria, evaluate every available option against that criteria.
For example, a certain supplier may score 3 on the price as its offered price is right around your set target, not below nor above.
However, you may have heard bad things about that company, and perhaps it’s not known in the industry as the most reliable. So, on reputation, this supplier may score 2. On the other hand, the offer includes favourable payment options, for example, the opportunity to pay for the good in multiple instalments with no interest. Therefore, on payment criteria, this supplier will score 5.
Calculating the Weighted Score for Each Option
By now, you have all the input information you need and you can calculate the weighted score for each of the choices. Simply multiply the assigned rating of every option by the weight of the corresponding criteria.
For example, if a supplier was rated 3 on the price criteria and that criteria have a weight rating of 5, the weighted score for that supplier will be 3×5 = 15.
Calculating the Total Scores
In the next step sum up the weighted score of an option for every criteria and repeat that for each of the choices. In our example, the supplier from step 4 will have a total score of 39 (5×3 + 2×2 + 5×4 = 39).
Comparing the Score and Making the Decision
Once you’ve calculated the total scores for each option, it will be easy to compare and rank them, getting a clear and number-based answer to which option is the best. Logically, the option with the highest score will be the one you decide to prioritise.
Optimising the Weighted Decision Matrix
To guarantee the most reliable and actionable scores, you should make sure that your Weighted Decision Matrix is perfectly optimised, so it features properly defined criteria and is easy to navigate and use.
Below are a few tips on how to do this.
Keep Your Weighted Decision Matrix Up to Date
Every piece of information appearing in the Weighted Decision Matrix should be relevant and accurate. However, as the modern business environment is ever-changing, what is relevant and important now may not be the very next day.
The conditions in which the company operates, the external factors, and internal goals and organisation, can quickly change, so it’s important that the Weighted Decision Matrix reflects those changes and is regularly updated with new data.
Remove All Unnecessary Options
A lot of available alternatives can clog up the Weighted Decision Matrix and make the decision-making process slower and less efficient. This is why, before you start the decision process, you should make sure that all the choices that are irrelevant and unnecessary are eliminated.
The best way to do this is to establish a set of attributes that are essential for the final outcome or decision. This will allow you to easily identify and remove all the options that don’t have the necessary features to be viable alternatives.
Rate Each Criteria on Its Own
Every criterion in the Weighted Decision Matrix should be observed and rated separately from other considerations. Ignoring other options allows you to establish a precise and reliable rating system for every criteria of importance.
When making the decision, one aspect of the potential alternative when should not depend on the other. Ultimately, this will help you make an objective and unbiased decision.
When to Use the Weighted Decision Matrix
The Weighted Decision Matrix method has a rather wide range of applications. You can even use it to make decisions in your everyday life. Of course, it’s specifically useful in various business scenarios (when conducting business analysis
).
On the other hand, there are circumstances when it’s not the ideal instrument for making an informed decision. For example, if you can’t establish the common evaluation criteria for different options, the Weighted Decision Matrix won’t be of much use. Still, when you’re making a choice between comparable options with numerous quantitative considerations, it’s, undoubtedly, the best tool available. It’s partially suited for the following situations:
- Making the decision that requires comparing multiple similar options
- Decision processes that involve weighing multiple criteria of varying or similar levels of significance
- Narrowing down numerous options to reach one final decision
Weighted Decision Matrix Template
A Weighted Decision Matrix Template is included as 1 of the 50 templates in the project template bundle.
The Weighted Decision Matrix template can be used to formally assess different options in which each criterion is weighted based on importance. The higher the weighting, the more important the criterion. We often use this type of template to compare different software solutions (& vendors) in an unbiased and fair way.
The Weighted Decision Matrix example template is in google sheet and excel; and export as a PDF or HMTL file or simply share the matrix.