Decision Matrix: How to Use it for Your Business?

Analysis and ranking of a list of options is done using a decision matrix. It is a tool for decision-making. Before comparing each option to the list, the group produces a list of weighted criteria. This particular matrix has an L form.

How should a Decision Matrix be used? 

  • When there are only a few options from which to choose
  • When a decision is made it should take into account a variety of considerations
  • After list reduction has reduced a list of options to a manageable size

These are typical situations:

  • When there is only one possible improvement opportunity, issue, or approach.
  • When a single chance for development or problem can be resolved
  • When just one brand-new item can be produced

Procedure for Decision Matrix

Make a list of the appropriate assessment criteria for the situation. If at all feasible, involve the clients in this procedure.

Talk about and make the list of requirements better. Determine which requirements must be completed and which are optional. Choose only those elements from the list that the team thinks are most important. Tools for increasing motivation and reducing lists may be useful.

Based on how important each criterion is in the overall scheme of things, it should be given a relative weight. Two strategies exist for doing this:

  • 10 points will be distributed among the demands following team discussion and agreement.
  • First assigning a weight to each team member and then adding the results for each criterion to get a composite team weighting.
  • By hand, create an L-shaped matrix. The criteria and their weights should be listed along one edge of the list of options, and the criteria themselves should be listed along the other. The group with the fewest items frequently takes up the vertical edge.
  • Compare each choice to the specifications. There are different ways to do this:

Method 1:

Establish a rating system for each situation. Options consist of:

  1. 1, 2, 3 (1 = slight extent, 2 = some extent, 3 = great extent)
  2. 1, 2, 3 (1 = low, 2 = medium, 3 = high)
  3. 1, 2, 3, 4, 5 (1 = little to 5 = great)
  4. 1, 4, 9 (1 = low, 4 = moderate, 9 = high)

Your rating scales must be consistent. The most significant impact on customers, the most significant, the least amount of difficulty, and the best possibility of success. It should all be included in your criteria, which should be written and the scales will be changed. Also that the highest rating (5 or 3) is always the rating that would tend to make you choose that option.

Method 2

For every criterion, rank-order each option according to how well it meets that need. They should be ranked, with 1 denoting the choice that best satisfies the criteria.

Method 3

Create a baseline, which could be an existing good or service or one of the alternatives.

For each alternative to be compared to the starting point for each criterion, use scores of worse (-1), the same (0), or better (+1).  You can use a five-point scale with a seven-point scale of 3, 2, 1, 0, -1, -2, or a finer rating scale of 2, 1, 0, -1, -2. Reiterate that positive numbers are consistent with good ratings.

Subtract the rating of each option from the weight. Each option’s points are combined. Taking into account the relative scores might aid the team in making a decision, even though the option with the highest score may not always be the best one.

Example of a Decision Matrix

Decision matrices can be used for a variety of purposes as long as you’re comparing the best option among several alternatives.

This model can also be applied to quickly arrive at a simple choice. Create a decision matrix, for example, to choose the right chair for your work-from-home environment. You can search for work from jobs based on your profile. Your top considerations are four different chairs, comfort, pricing, and reviews.

When Should You Use a Decision Matrix?

A proper decision-making in your business outcome is impacted by risks and considerations while choosing between several options. There is an increased risk of losing track of the factors that should be taken into account throughout the team discussion. Consequently, Decision Matrix has the following advantages in business:

  • It gives a clear picture of the factors that must be taken into account in the business. Also, when making the final selection and the importance of each option before the decision-making process begins.
  • It gets rid of behavioural prejudices. Clear, established criteria are the only ones utilised to decide, not favourable personal criteria.
  • By considering multiple options simultaneously, it shortens the time spent making decisions. Additionally, the grading system expedites the decision-making process.

Alternatives to Decision Matrix

If decision matrix analysis is not feasible for you, you can try some alternative approaches, such as:

The Eisenhower matrix is a 2×2 grid that helps prioritise tasks based on their relevance and urgency. It comes in handy when you have to decide on one of the multiple unconnected tasks to start working on initially while managing them.

Map of stakeholders: Selecting which stakeholders to participate in a project, consult with, or inform is crucial. The creation of a stakeholder analysis map can help with this.

According to their proportional effect and interest, stakeholders are categorised. It is possible to create a Responsible, Accountable, Consulted and Informed (RACI) chart. It assists in determining who will make the key decisions for each task. 


Making a difficult choice can be challenging. Even more so if it’s a decision that will have an impact on your entire business. By using techniques like the decision matrix, you can significantly reduce the emotional component of your decision-making. To do this, logically analyse the problem while concentrating just on the information at hand.

Related: Azim Premji: India’s Top Successful Businessmen & Entrepreneurs

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