steps to creating a decision matrix,

Decision-making is a critical part of good business planning—but it can be tricky to

know which option is the right one. The key is making a quick decision without
being hasty, and making the right decision without losing velocity.

If this sounds like an impossible conundrum, don’t worry—it isn’t. With a decision
matrix, you can quickly address the pros and cons of each option, weigh different
variables, and make a good decision quickly and easily.

What is a decision matrix?

A decision matrix is a tool to evaluate and select the best option between different
choices. This tool is particularly useful if you are deciding between more than one
option and there are several factors you need to consider in order to make your
final decision.

You may have heard a decision matrix called by another term—even though
they’re all talking about the same thing. Some other names for decision matrix
include:

• Pugh matrix
• Grid analysis
• Multi-attribute utility theory
• Problem selection matrix
• Decision grid
 When to use a decision matrix
You don’t always need to use a decision matrix. This process is powerful—and
relatively easy—but it’s most effective when you’re deciding between several
comparable options. If the evaluation criteria aren’t the same between your
different choices, then a decision matrix likely isn’t the best decision-making tool.
For example, a decision matrix won’t help you decide what direction your team
should take for the next year because the things you’re deciding between aren’t
comparable.

Use a decision matrix if you are:

• Comparing multiple, similar options

• Narrowing down various options into one final decision
• Weighing a variety of important factors
• Hoping to approach the decision from a logical viewpoint, instead of an emotional or
intuitive one

If a decision matrix isn’t right for your current situation, learn about other decision-
making approaches below.

How to create a decision matrix in

7 steps
A decision matrix can help you evaluate the best option between different choices,
based on several important factors and their relative importance. There are seven
steps to creating a decision matrix:
1. Identify your alternatives
Decision matrices are a helpful tool to decide the best option between a set of
similar choices. Before you can build your matrix, identify the options you’re
deciding between.

For example, let’s say your team is launching a new brand campaign this summer.
You need to decide on a vendor to create the visuals and videos for the design.
Right now, you’ve identified three design agencies, though they each have their
pros and cons.

2. Identify important considerations

The second step to building a decision matrix is to identify the important
considerations that factor into your decision. This set of criteria helps you identify
the best decision and avoid subjectivity.

Continuing our example, your team has decided that the important criteria to factor
in when selecting a design agency are: cost, experience, communication, and past
customer reviews.

3. Create your decision matrix

A decision matrix is a grid where you can compare important considerations
between the various options.

For example, here’s what your decision matrix skeleton if you’re deciding between
three agencies and factoring in cost, experience, communication, and customer
reviews:
 Fill in your decision matrix
Now, rate each consideration on a predetermined scale. If there isn’t a large
variation between the options, use a scale of 1-3, where three is the best. For more
options, use a scale of 1-5, where five is the best.

This is where the advantages of a decision matrix really start to shine. For
example, let’s say you’re deciding between three agencies and you have four
important criteria, but you don’t make a decision matrix. Here’s how each agency
stacks up:

• Agency 1 is really cost effective but they don’t have a ton of experience. Their
communication and customer reviews seem average.
• Agency 2 isn’t very cost effective, but they aren’t the most expensive agency. They
have a good amount of experience, and they have great customer reviews, but their
communication so far has been a bit lacking.
• Agency 3 is the most expensive, but they also have the most experience. Their
communication so far has been average and their customer reviews are pretty good.

These three descriptions are all relatively similar—it’s hard to decide which is
better based on a short paragraph, especially because each agency has its own
pros and cons. Alternatively, here’s what the three agencies and their four
considerations look like on a decision matrix when ranked from 1-5, with five being
the best:

5. Add weight
Sometimes, there are certain considerations that are more important than others.
In such a case, use a weighted decision matrix to identify the best option for you.

To continue our example, imagine you absolutely can’t go over your budget, so
cost is a critical factor in your decision-making process. Customer reviews are also
important, since they give you a baseline sense of how effective each agency has
been in the past.

To add weight to a decision matrix, assign a number (between 1-3 or 1-5,

depending on how many options you have) to each consideration. Later in the
decision-making process, you’ll multiply the weighting factor by each consideration.

Here’s what that looks like in our example:

6. Multiply the weighted score
Once you’ve applied your rating scale and assigned a weight to each
consideration, multiply the weight by each consideration. This ensures that the
more important considerations are being given more weight, which will ultimately
help you select the best agency.

To continue our example, here’s what it looks like when you apply the weighted
scores to each consideration for each agency:
7. Calculate the total score
Now that you’ve multiplied the weighted score, add up all of the considerations for
each agency. At this point, you should have a clear, numbers-based answer to
which decision is the best one.

For example, this is what the finished decision matrix looks like:

As you can see, Agency 2 has the highest score, so that is the agency you should
go with. Even though Agency 1 was cheaper, the average cost of Agency 2,
combined with their years of experience and stellar customer reviews make them
the best option for your team. All that’s left is to contact the agency and move
forward with the brand campaign.

Decision matrix example

You can use decision matrices for a variety of business decisions, as long as
you’re weighing the best option between different choices. These decisions don’t
always have to be business-critical, either. You can use this model to quickly make
a simple decision as well.
For example, create a decision matrix to decide which chair you’re going to buy for
your work from home setup. You like four different chairs, and your important
considerations are comfort, cost, and reviews.