Developing Corporate Decision-Making

For the original article that explains how this matrix is used, click here.

Explanation of Matrix

This example shows how a president might use the process outlined above to consider the best time frame for retirement. Decision variables (family, health, finances, etc.) are in the left-most column, and are weighted according to the importance of consideration. Options (3 years, 5 years, 7 years) are in the top rows.

Each variable is assigned a value for each option. For example, the president might feel his or her family’s needs are the greatest in the next three years, giving this a higher value of 4; in 7 years, family needs may be less, giving it a lower value of 2.

Once values, have been assigned, the score is calculated. For the 3-year option, the value of the variables divided by the 7 options is 3.4. The weighted average score is 3.3.  This is calculated by multiplying the weighting by the amount in the intersection, then adding all values in the column and dividing by the total value of the weights (25).  Note in this example the simple average is a tie between 3 & 5 years.  However the weighted average is clearly 5 years.  I also color code the values to increase the “visibility” of the matrix.  This helps with the dialogue and communication.

The matrix’s logic proposes that the optimal time for the president to retire is in 5 years. This logic is then tested, as explained in the related post. Return to original article >>>>