What is a decision matrix? (And when, why and how to use it)

What is a decision matrix?

First of all, let’s define what exactly it is we’re talking about. A decision matrix – also known by various other names, such as Pugh method, decision grid, selection grid, problem matrix, solution matrix, criteria rating form, criteria-based matrix or opportunity analysis – is a structured approach to evaluating and prioritising a list of available options.

Its purpose is to help the user make well-informed choices by systematically comparing various options against a set of predefined criteria. The goal is to identify the most suitable option based on these criteria.

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When does it make sense to use a decision-making matrix?

Typical situations where a decision matrix might be applied include selecting suitable professional development opportunities for your staff or identifying the best approach to a problem. It may even come in useful when hiring new staff and shortlisting candidates. Using a decision grid might be advisable in the following scenarios, in particular:

• Narrowing down options: When you find yourself with a list of several potential options and you need to choose one of them but need guidance to make the appropriate choice.
• Making multi-criteria decisions: When your decision relies on multiple criteria and choosing the best option is a complex process.
• Reducing a shortlist: Once you’ve reduced a potentially long list of possible options to a manageable number, a decision matrix can help you make the final selection.

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What does the decision matrix process involve?

Creating an effective decision-making matrix typically comprises several key steps. Let’s take a closer look at them:

Brainstorming criteria

First of all, start by brainstorming and then defining the evaluation criteria that are appropriate to the situation in each case. Where relevant, you may even want to consider involving your customers in this process to gain valuable insights from their perspective.

Refining criteria

Once you’ve chosen your list of criteria, discuss them with your team and fine-tune them. In the process, make sure you include all the essential ones and remove any irrelevant ones. The aim is to reduce the list to focus on the most important criteria.

Assigning weights

Assign relative weights to each criterion based on their importance in the decision-making process. The two most common methods for assigning weights are distributing ten points among the criteria through team consensus, or having each team member assign weights and then calculating a composite team weighting.

Creating the matrix

To create the matrix, construct an L-shaped grid with the criteria and their corresponding weights along one edge and the list of options along the other edge. The group with fewer items is usually positioned along the vertical edge.

Evaluating options

Now, assess each option against the set criteria. There are three possible ways to approach this:

• Establish a rating scale for each criterion (e.g. 1 to 3) and rate each option accordingly.
• Rank all options for each criterion in order of suitability, with 1 being the least desirable and higher numbers indicating increasingly better suitability.
• Compare each option to a baseline for each criterion (e.g. a product or service you are already offering), using the scores -1, 0 and +1.

Calculating scores

Multiply each option’s rating by its respective weight and add up the total number of points for each option. Note that the option with the highest score may not always be your final choice, but it gives you a useful starting point for discussions and building consensus among the team.

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Decision matrix template

So you can better visualise the concept, let’s take a look at an example for choosing an office chair:

You can use this example to create your own template and flexibly adapt it to each decision-making situation as needed.

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Decision grid considerations

When using a decision matrix, there are several important considerations to keep in mind. First, reduce your list if you’re dealing with a plethora of options. Consider using list reduction or multi-voting techniques to narrow down your choices before drafting your decision matrix.

Next, carefully select the criteria to be used in the matrix and ensure they are relevant to your specific situation. Commonly used criteria include effectiveness, feasibility, capability, cost or time required. To guarantee that your evaluation process is accurate and reliable, consider forming sub-teams to collect the data, each focusing on different criteria. Additionally, be mindful of any assumptions made about criteria like resources required or time needed to implement solutions, as the quality of these assumptions can significantly impact the decision-making process.

When team members assign different ratings to the same criterion, try to engage in consensus-building discussions rather than simply averaging ratings or selecting the most popular one. Some versions of the decision matrix tool also calculate the sum of unweighted scores, providing further insights.

Lastly, use the decision matrix iteratively to refine options and improve decision outcomes. Keep in mind that options that score well overall but have low scores in specific criteria can be modified to incorporate ideas from other options, leading to more refined decisions.

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Making informed decisions

All in all, a decision matrix is a valuable tool for business owners and managers that can greatly enhance the quality of corporate decision-making. It allows you to systematically weigh up your options and make informed choices that align with your company’s priorities and objectives. So, create your custom decision matrix template now and keep it on hand for your next big decision.