Research has demonstrated that when decision-making reaches a certain level of complexity, it becomes increasingly difficult to make a decision because most of us can only keep a certain number of variables in our minds at any one time. Furthermore, there is typically a steep decline in our ability to make decisions once the number of variables exceeds 14. However, there is an excellent method that can help called the Weighted Averages Method. I will illustrate this with a decision where Megan was asked to become the president of a new organization.

Megan had had a stellar career and is now a senior vice-president with her current organization. Over the past several years she has been headhunted on a fairly regular basis. Recently, the calls became more and more frequent and the offers more and more enticing. Given her age, and the fact that her husband Ted had just retired, Megan knew that this would most likely be her final working assignment before she retired. In particular, there were three offers on the table that were very tempting. However, Megan and Ted felt very comfortable in their home and in the community where they lived.

They began the process by listing the factors that were important in making the decision, such as type of city, income, learning opportunities, and distance from their children and grandchildren. The next task was to rank each factor as to its importance. The only caveat was that all of the rankings must add up to 1.0. For example, the reputation of the possible new organization could rank at .25, income could rank .3, and Megan’s opportunity for growth and development in her career could be .2. It often takes several tries to get the combined ratings to equal 1.0. 

When you do your own rankings, you will notice that just by trying out the various weighting you will get a better sense of how each factor should be rated and also if some factors should be combined or removed or whether additional factors should be added. Coming up with the right categories or factors and then giving each of those factors just the right ranking is an iterative process. For example, in Megan and Ted’s case when other factors became apparent – such as contribution to society – some of the factors changed as well as the weightings of some of the other factors. Using a spreadsheet makes it easier to try out different factors and weightings until you get it so that it feels just right.

The next task was to list the potential new positions and Megan’s current position across the top of the page. Megan then did research to better understand the ramifications of choosing each of the positions before rating them with a score from 1 to 10 to reflect how closely each position satisfies the requirement listed in the column on the left (See Table 5-1 below). For example, she rated position number one as a 6 on income and position number three as a 7 on income.

Then, for each factor, she multiplied the ranking for each possible position times the weighting she had given each criteria. The next step was to add up all of the numbers in each column and multiply the sum by 10, which gave the ranking of each position.

You can change the numbers as you discover additional information that might reflect the value of the criteria as it relates to each position in question. Table 5-1 demonstrates the rankings for Megan and Ted for each of the three possible new positions and for her current position.     
 

 As you can see, number three comes out as the top rated position, however, the difference between number three and Megan’s current position is just too close to call. Therefore, Megan and Ted will have to do some further work in order to make the best decision possible. One option is to add some additional criteria and see if that makes a substantial enough difference so that a clear decision can be made. However, because the top two scores are so close, Megan and Ted might be better off using a different decision-making method such as the 70% Rule, which we will example in our next blog.