How to Make a Decision Using a Quantitative Scoring System
Life involves making a lot of decisions. In fact, one of the decisions you have to make right now is "Should I finish reading this white paper or shouldn't I?"
So why not learn to make the best decision, or at least a good one every time? While making a decision based on your "gut instinct" works often, occasionally, a simple quantitative scoring system can provide additional insights and often help you overcome an emotional decision that you will later be unable to justify logically.
This method will help you quantify your values and make fast decisions between alternatives. It applies to everything from which mortgage professional should I choose to which car should I buy.
EditSteps
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1Write three questions you’re trying to decide, e.g. "Which mortgage professional should I choose?"Ad -
2Write up five to six "must-have qualities:" For example:- Integrity (What he/she says is consistent with what he/she does),
- Professional Knowledge and Expertise (Makes Recommendations consistent with what I value),
- Quality of Communication (Helps me understand quickly),
- Accessibility (I can reach them when I need them),
- Competitive Pricing (Rates and Costs are amongst the best in the marketplace), and
- Reliability of recommendations (Shows me that live market data is consistent with recommendations so I can make a timely decision to choose them).
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3Rate the importance of each of these qualities on a scale of 1 to 10 in terms of how important each is to you (e.g. if reliability is far more important than anything, it gets a 10, if Competitive Pricing is the second most important but really not nearly as important as reliability you might give it a 5 or 6, and so on). -
4List your options (e.g. Bank Loan Officer, Realtor Referred, my current Loan Broker, etc.). -
5Provide a score on a scale of 1 to 10 for each quality you put down for that option. Do this for all options you put down (e.g. If your current Loan Broker rates are good with you, give him/her an 8' if you think they are average, give them a 5). This is a subjective scale, so it’s up to you to score it as honestly as possible to make the best decision by the end of this. -
6Compute scores for each option by multiplying the quality score you gave your option with your target quality score, the one you created in Step 3 (e.g. your Loan Broker is 56: 8 [the importance of Integrity] x 7 [how well you rate them in that area]). Do this for all qualities listed in all your separate options. -
7Sum up the scores for each quality for a total score for that option. Do this separately for all options you listed. -
8Compute your target score by creating an option that encompasses the scores for the qualities you most value. -
9Divide each option’s total score by your target score and multiply by 100 to get a total. The option with the highest percentile score (compared to your target) is your best choice.Ad
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EditSample Calculation
Here is a sample completed for selecting an ideal loan broker using the Quantitative Scoring System. Six qualities were scored for the potential broker on a scale of 1-10.
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Example: |
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My Ideal Loan Professional
Integrity = 9 (9*9=81) |
Prospective Loan Professional (Option A) Integrity= 8 (8*9=72) |
Current Loan Broker (Option B) Integrity= 9 (9*9=81) |
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Target total score: 100+81+64+36+36+81=398 |
Option A's total score: 72+40+56+36+36+27=267 Percentage this option fits your target: |
Option B's total score: 81+100+72+48+36+90=427 Percentage this option fits your target: |
| Option A fits my target quality score at 67% while Option B surpasses my target quality score at 107%. | ||
EditTips
- If you have more than six qualities, the value of the score can get diluted, so think hard about what really matters to you. Leave the nice-to-have qualities aside, or you might get distracted and make a decision based on unimportant factors. Make sure the qualities are non-overlapping otherwise you essentially double-count the same underlying attribute.
- If you use an Excel spreadsheet to carry on the calculations, rankings, narrative explanations of your reasoning, etc., it becomes very easy to use the same template, revised by exception, to guide all your future decisions.
- The same system may be modified to allow the offset for negative qualities by multiplying by a negative one to allow for negative effects on the overall scoring.
- If all the options score poorly (below 70%), then something has to change before an acceptable decision can be made! In such a case, your current options do not adequately meet your standards, which means either that you need better options or that your expectations are not realistic.
- If you get a best choice that really surprises you or doesn’t feel right, consider re-scoring your qualities and ratings; perhaps you didn’t really list what was important to you, or give it the right weight. This process helps you quantify and understand your feelings regarding your options.
EditWarnings
- This method is addictive, and you may find yourself applying it to potential marriage partners; be careful when emotion is involved.
- Emotions can "rationalize" any quality to represent our desired choices in the best "light," therefore care must be taken to ensure that qualities are judged objectively.
- This approach is deceptively simple. It assumes that your criteria are independent of each other and add up in a simple way (are linear). Unfortunately, many things in life are non-linear and far more complex than this. Beware of over-simplification. Trust your gut feelings!
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