Sign up for the CO2 Partners Newsletter
Executive Coaching and Business Coaching Image
0

Choosing Criteria for Effective Decision Making

criteria for effective decision making

What is needed is to draw this decision criteria out of your head and share it with an entire team or company. By doing this, you will accelerate the entire planning process and the manner decisions are being made throughout the organization. If the organization agrees on how decisions will be made upfront imagine how much faster organizations will move and how much further down the organization decision making can happen.

Choosing Criteria for Effective Decision Making

What are criteria for critical decisions? These are factors that you consider when making a decision. When you are making a decision you likely have a mental model that works in your head. For me a breach in organizational or personal values is a non-starter. If what ever I am evaluating does not hold up to my values the evaluation is over. Each industry, organization, divisions, units or people will have differing criteria of how they make decisions. A great leader will help the group understand what criteria should be used to arrive at a decision in an organization and then drive everyone in the organization to consider those aspects of a decision before making a decision or when needed asking for support or permission to go forward. Examples of some criteria organizations use to make decisions are impact to the organization, revenue opportunity, risk of failure, return on investment and the list goes on. There are a number of ways to use these criteria when evaluating alternative choices to determine the direction you will go. What are the criteria you use when needing to make a decision?

Setting up a Criteria Ranking System

There are different ways to set up a system. I prefer the Likert Scale. Using a Likert you can apply different categories such as 1 to 10 where 1 represents Low and 10 represents Hi, or 1 is disagreement and 5 is agreement, and so on. It is important to remember if you are going to graph these elements on a X / Y axis then you will want to rationalize the scales. Meaning, if you are looking at growing revenue where 1 represents no growth and 5 high growth and you then chart risk on the opposite axis, then you will want the negative to be represented by a 1 and the positive (or no risk) represented by a 5. In this way you will be able to correlate the two elements together. When choosing your system put them all on the same scale 1 to 3, 1 to 5, 1 to 10 so that you can better align each factor with each other.

How many Criteria?

If you want to graph the decisions it would be good to keep it to no more than four criteria. The first two will give the greatest visual direction by putting them on the X and Y axis. The more juxtaposed these criteria are from one another, the better the visual impact will be on the graph. The next two criteria can be graphed as bubbles where size can represent scale and color can represent the fourth criteria.

Calibrate Criteria

Once you have determined the criteria it is important to define how you would rate each of the criteria. What does it mean to the organization when you are considering multiple choices to evaluate and each team member is rating each criteria on a 1 to 5 scale? Unless you specify in advance what a 1, 2, 3, 4, or 5 represents you will have no calibration between the different opinions. Imagine one of your criteria was in measuring risk to the organization. What does that even mean to you? Does it mean something altogether different to another executive or employee within the organization? The other day I was working with a fast growth software company that had decided one of the criteria was revenue growth. After rank ordering a mock decision we went around the table to ask how people responded on their one to five scale to see how close we were before defining the criteria. Only about 3 out of 8 were in alignment on what each number meant to them. So, had we not calibrated between each member of the team what our numeric scale represented we would not even have a glimmer of hope in understanding each decision makers point of view. We did this around each of the four criteria we choose and then we started evaluating as a team a group of eight imperatives that we wanted to narrow down to four based on the criteria we mutually arrived at as an executive team.

Weighting Criteria

“Things which matter most must never be at the mercy of things matter least.” That goes for the criteria you choose to make decisions as well. It is not enough to come up with the top 4 criteria for decision making. Decide what criteria is worth more to you and create a weighted scale. I often use a spreadsheet in which you can list your decision criteria down the first column and you can put your alternative choices you’re considering across the first row. I use a weighting factor of a multiple of one for each criteria I am using so if I have four criteria the first one gets a 4x, the third a 3x, the second a 2x and the last 1x. This way your first criteria will get a boost over your last criteria. (attached is a PDF work sheet that you can use) Value Scale .

Charting Criteria – Priority Matrix

By limiting your criteria to the top four you will help your team and yourself be very clear on how to make great decisions and move forward fast. It will also allow you to graph your decision using a matrix. (See Matrix above) There are some powerful ways to visual present information to make your point even stronger. A great place to learn techniques to to this is checking out Edward Tufte.

 

Top Tools to Elevate Your Decision Making:

 

iPhone App Decision Making Tools

Decision Maker Pro – This is really a straight forward app that allows you to create templates for decision making. You may want to create a template for capital purchases, hiring, firing, investments that may have differing criteria. Using “Systematic Decision Making” methodology, DecisionMaker Pro let you start a decision, setup criteria and assert all respective choices in an objective way. You’ll be surprise to see that, with the help of a proper tool, how easy making a decision can be when your mind work systematically.

iDecide+ A Professional Decision Making App – This is one of my favorites because it does a great job of not only allowing you to choose your criteria, it has you do a pairing exercise to insure that your weighting is aligned and calibrated. It forces you to make better decisions. Less intuitive, so it may take you 5 minutes to learn how to use it but then you are good to go. They have videos on the developers site that will take you three minutes to learn the tool. If your like most app addicts you would rather feel the reward of figuring it out yourself.

Based on the advanced decision making methodology of the Analytical Hierarchy Process (AHP), iDecide is a decision modeling application that can be used to select the best choice from among a number of alternatives, to prioritize multiple alternatives, or to make “yes/no” decisions. Each decision type uses a weighted list of decision criteria to help prioritize the various decision choices. iDecide can also pass decision-models back and forth with decisionAccelerator users running on the Windows platform. Try iDecide.

T-Chart (Pros and Cons) – This is the 21st century version of the Ben Franklin “T-Bar” chart of pros verses cons. Describe the decision that your trying to make and then begin scribing the positive or negative or undecided and get a calculation at the end of the exercise. You can weight the merits of the categories.

XY-Axis by ideaWallets – Use a Cartesian coordinate system to sort your ideas and find patterns.  The Cartesian Coordinate system was developed by the philosopher and mathematician Descartes it was further developed in business to be thought of as the 2×2 model. This is a model that allows us to explore two opposing ideas to gain greater awareness and perspective. Often it is misused to put a value judgement around one quadrant to another rather than looking and noticing the relationship to one decision may have over another. This tool will allow you to both name the axis’ and place your idea set into the different quadrants. If you use this tool effectively you will be able to manage big complex issues down to the core elements that are effecting the decision.


Brainstorming by ideaWallets – We all have issues with cognitive bias and our brains get very guarded and have a difficult time changing. When you are trying to make decisions often there is a bias to rush to what ever you come to first. By brainstorming you can effectively collect idea sets that may have escaped you without it. Try using Brainstorm to generating new and exciting possibilities before you begin to sort those ideas with criteria.


SWOTCreator by Model Creator – The origins of SWOT are not well known and a bit interesting. And yet for our purposes it is enough to say that it is a model that allows you to explore the internal environment and the external environment and compare and align them with one another. The idea is that you identify the Opportunity and Threats outside the organization and compare and contrast those with the Strengths and Weaknesses of the organization to identify a strategic direction forward. What many forget to do is to name the vision or target before they begin the process. If you do not do this you will struggle on what are the appropriate elements in your decision making.

Software Applications for Decision Making

Decision Making Tool – CO2 Partners uses this form for helping clients make decisions. It is easy to use and very straight forward. The weighting of criteria is increased by one multiple per item.

decisionAccelerator -  is a decision modeling methodology and tool that enables groups to reach agreement faster and more effectively. It is based on Analytic Hierarchy Process (AHP) and is implemented by fastworks as an add-in to Microsoft Excel, a ubiquitous engine that many already use for various business applications, which reduces the learning curve and the need for expensive proprietary software. This is tool is for heavy lifting when you are going to bring in a great deal of data into your decision making. This was created by the same folks that brought you iDecide+.



About the Author

Gary Cohen is a highly-skilled Executive Coach, Leadership Author, Trainer, and International Keynote Speaker. His clients range from entrepreneurial CEOs of the nation’s fastest-growing companies to executives of global 100 companies. He differentiates himself from traditional (psycho/therapeutic) executive coaches by bringing a vast amount of business experience as a former Founder / President of one the Nation’s Fastest growing companies. He is the author of Just Ask Leadership: Why Great Managers Always Ask the Right Questions (McGraw Hill). Gary B. Cohen Full Bio

Executive Coaching and Business Coaching Image