Have you ever heard of or used a weighted decision matrix? It’s a pretty kick ass tool that helps you evaluate tough and complex choices in life. (or in business)
Given that many of y’all readers are making big changes this year — switching jobs, buying homes, moving cities, etc — I thought maybe this would assist in your thinking process.
I’m gonna run through an example in this post of how someone might use a weighted decision matrix to evaluate an upcoming job change. There’s even some nerdy math involved… which I know you finance peeps love. 😉
Decision Matrix Example – Changing Jobs
Let’s say you’re facing a massive upcoming decision: Changing employers… The company you work for now is pretty good, but you’re also evaluating offers from 2 other companies, both with varying pros and cons…
Your job offer #1 is a similar position to what you have now, and it’s with a fun new employer including a small pay raise. There’s not huge growth potential at this new company, but the workload seems manageable and has a good work/life balance.
Job offer #2 is a decent promotion from your current job title, and this company pays a much bigger salary. But the role seems very demanding and includes some activities you don’t really enjoy doing. You would have a lot of growth potential here and this company pays big bonuses for hard workers.
Emotions run high in situations like this. Do you go with job offer A or B?
Or do you stay where you are at your current workplace?
It can be hard to compare all the different factors because these opportunities aren’t equal. They each have various pros and cons.
This is when using a weighted decision matrix helps. It’s a way to compartmentalize all the thoughts and emotions, allowing you to arrive at a clearer winning choice.
How a Weighted Decision Matrix Works:
First, you need to be clear about the options you are comparing.
For our job changing scenario, the 3 options are:
- Accept an offer from Company #1.
- Accept an offer from Company #2.
- Stay at your current job & employer.
Let’s start by putting these options into some matrix columns. (I’ll share full matrix templates later so you can build out your own)
Next, we have to figure out all the FACTORS that are important to you regarding this decision.
For changing jobs, some important decision factors might be things like:
- Compensation $$$
- Culture of the company/team
- Future growth potential
- Is it in line with your passion?
- Good work/life balance?
- etc… (You can list as many factors as you want).
List all of these factors into the matrix also… like this:
The next step is to assign a WEIGHTING to each of the factors.
By this, I mean on a scale of 1 → 10, how important are these things to you? 1 would be a very low importance, and 10 would be the highest.
Everybody has different priorities in life, and they change over time. When I was younger, I put a high importance on compensation. I could care less whether a job fit my passion or not… I just wanted as much money as possible. But these days, things like healthy work/life balance, company culture and passion are more important to me.
Since this is just an example scenario, I’m making up fake weighting numbers. If you ever make your own matrices, customize them to your personal values. (If you use someone else’s values, you might end up making a bad decision for yourself!)
OK, here are the weighting values I’m assigning to the factors in our matrix:
(Compensation = 7, Culture = 10, Future Growth = 4, Passion = 6, Life Balance = 7)
Next, we’re going to evaluate each option individually, looking solely at how well they meet each factor. We’re going to assign a rating to each factor, for each option.
Sounds confusing, but it’s pretty easy.
Let’s start with the “compensation” row and rate each option accordingly…
- Company #1 is going to pay you a little bit more than what you’re getting now, so let’s give them a score of 7.
- Company #2 is offering to pay even more than that, so let’s rate them a 9 for compensation
- Your current job we’ll give you a score of 6.
For “good culture”… let’s give our options an 8, 5, and 7 respectively.
Keep filling out all the rows, and now our matrix looks like this:
Last step!!… OK now that we’ve rated all of our options for all the criterion that’s important to us, we’re going to cross multiply.
Multiply each of the company results with the weighting factor number.
Again, it looks confusing, but if you’re using a template all the math is done for you.
After all this is done, we just add up each of the totals (blue columns) to arrive at a final weighted score. Here are the final results:
Option 1 came in first with a final score of 245. This is our highest score and the best overall final decision to go with given our decision criteria.
Option 2 came in with the lowest weighted score. Although it had great compensation and future growth, those factors didn’t have a high enough weighting to overbalance the negatives of the opportunity. In fact, even staying at the current workplace beat moving to Company #2.
Breaking Down Big Decisions:
When there are multiple options and complex factors involved, big decisions can be really hard to make. (At least it is for my puny brain).
Sometimes people focus on just 1 attractive quality (like a higher paying salary) and ignore the little potential red flags in other areas (like bad culture, or valueless duties) and it ends up being a bad decision in the long run.
This is especially true when combining emotions with money.
But taking the emotion out and writing everything down into a grid can sometimes bring clarity. Large purchases, job changes, expensive family moves, etc. This process works for many different choices in life!
Weighted Decision Matrix Template:
Want to play around with the template or create your own matrix?
Here’s a link to the simple decision matrix I made in Google Sheets. Click “File” then “Make a Copy” and you can start to make your own matrix. You can also download it as an excel file.
There are also a million fancy and free decision matrix templates you can check out/download from TemplatesLab.
Hope all this stuff helps! Have a great week, and good luck with those big decisions!