Leadership Decision Making

1 Leadership Decision Making A decision matrix is a tool used by businesses to select the best alternative from a wide variety of alternatives. Using a decision matrix reduces the uncertainty and complexity involved in making significant decisions for the company. This paper provides an example of how the decision matrix can be used by the manager of an organization and how it simplifies the decision-making process.

Making the right choices is essential for the success of an organization it today’s hyper-competitive business environment (Brockman, 2014). Tecbiz Inc. has a fleet of 10 vehicles which it uses to make deliveries to its customers. It purchased the cars eight years ago, and as they continue to age, it is becoming more expensive to maintain them, in terms of fuel cost, service, and repairs. To reduce these costs, the senior level manager of an organization has to make three decisions; first, whether to sell the old vehicles and purchase new and more efficient cars. Secondly, to sell the old vehicles and lease vehicles from an automobile company; and thirdly, to install new spare-parts on the old vehicles and continue using them.

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In the decision matrix, the decision alternatives will be listed in the rows, and the factors affecting the decision will be listed as columns (Anderson, Sweeney & Williams, 2015). In this case, the decision alternatives are; overhaul current vehicles, lease from automobile company and purchase new vehicles. The factors affecting the decision are; total cost, ease of maintenance, durability, and effectiveness.

The decision matrix will assist in the process of decision making because it lists all the options available to the organization and also outlines the factors that are relevant in selecting the best options from a number of choices (Wang, 2011). The decision matrix is useful when the process of making decisions is complex because there is no clear, correct alternative. In this case, the first step is to assign a score to each of the alternatives; that is; purchase, retain or lease. If the cost of an alternative is very high, the score given will be 5; if the cost is very low, the score will be 1. In the next step, a value is assigned to each of the factors, that is, cost, ease, durability and effectiveness. If the factor is important to the company, it is assigned a high score, if it is not important to the company, it is assigned a low score (Bazerman & Moore, 2012). The weighted score is calculated by multiplying the values obtained in the first and second step. The best alternative is the one that has the highest score.

One of the main challenges of using the decision matrix is that it requires a lot of assumptions to be made, and therefore might rely on opinions rather than actual evidence (Pomerol, 2012). Therefore the decisions made may not be accurate because of the suppositions made while generating the ideas. Additionally, the manager also has to make guesses when assigning weights to the factors and alternatives. This reduces the efficacy of the tool because the importance that one holds to a certain factor might not be as high as they

3 suppose it to be. In the case of Tecbiz Inc. the outcome of using a decision matrix when deciding whether to purchase, overhaul or lease will be dependent on the importance the manager places on each of the factors. For instance, if cost is not an important factor, purchasing vehicles will be a viable option for the firm.

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5 References Anderson, D., Sweeney, D., & Williams, T. (2015). An introduction to management science.

Cengage.

Bazerman, M., & Moore, D. (2012). Judgment in Managerial Decision Making, 8th Edition.

New York: Wiley.

Brockman, J. (2014). Thinking: The New Science of Decision-Making, Problem-Solving, and Prediction in Life and Markets. Harper Perennial.

Pomerol, J. (2012). Decision Making and Action. John Wiley & Sons.

Wang, C. (2011). Managerial decision making leadership. Hoboken [N.J.]: John Wiley & Sons.

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