Decision Balance Sheet: Evaluating Pros and Cons for Better Decisions

Decision Balance Sheet
  • 5 MINUTES READ
  • Also known as Pros and Cons Analysis, Plus-Minus Analysis, Benefits and Drawbacks Analysis, Gains and Losses Analysis, For and Against List, and Decision T-Chart.

    Related Items include Risk-Benefit Analysis, Trade-Off Analysis, and Costs and Benefits Analysis.

    Sometimes, when management faces an important decision for a situation, considerable time may be spent searching for a solution to ensure the best possible outcome. While each situation may differ, decision-making generally involves the same basic steps: clearly defining the problem, collecting the information needed to analyze possible alternatives, and then selecting and implementing the most feasible alternative.

    Many decision-making techniques are available, ranging from qualitative methods, which rely on intuition, experience, and judgment, to quantitative methods, which use data, algorithms, and structured analysis. Some of the most commonly used decision-making techniques include decision trees, pareto analysis, multi-criteria decision analysis, force field analysis, pairwise comparisons, and simulation and scenario analysis.

    One of the simplest ways to make decisions is by using a Decision Balance Sheet. It is a simple but effective tool that helps individuals and groups systematically evaluate the advantages and disadvantages of a specific idea or solution. It uses a table to record these advantages and disadvantages for reaching a balanced decision more quickly and confidently, either individually or collaboratively.

    A decision balance sheet is simply a table of two columns labeled as Pros and Cons, which is why it is also referred to as a Pros and Cons Analysis. This table is used to record all the pros and cons for the given idea or solution. A scoring system may be applied by assigning numerical weights to the different pros and cons. The result will help in determining whether to proceed with the decision or not.

    Hint

    While evaluating the pros and cons of a particular decision, also consider evaluating the other alternative options. This can help ensure that you are not overlooking better solutions and can lead to a more informed decision.

    A simple extension of this tool is the PMI which stands for Plus, Minus and Interesting. The “Interesting” column is used to capture elements of the solution that are neither clearly positive nor negative in effect. It can also be used to record what is considered interesting or the future implications of the solution.

    Plus, Minus and Interesting

    Using the Decision Balance Sheet

    The steps below outline how to use the decision balance sheet in a group setting:

    1. With your team, clearly write the proposed idea or solution at the top of a flip chart or whiteboard.
    2. Draw a table with two columns, labeling one “Pros” and the other “Cons”.
    3. Record all potential benefits in the “Pros” column and all possible drawbacks in the “Cons” column.
    4. Assign numerical weights to the Pros and Cons by giving each item a score (e.g., 1 to 5).
    5. Add up the scores in each column.
    6. Subtract the total of the “Cons” from the total of the “Pros”.
    7. Consider evaluating the pros and cons for the alternative options.
    8. Use the overall score to help decide whether to proceed with the decision.

    Example

    As an example, let’s say your team needs to decide whether to build a new website for the company or keep the old one. Below is the result of this exercise using the decision balance sheet.

    Decision Balanced Sheet Example

    The final score indicates that choosing to build a new website is a better option.

    Example

    The decision balance sheet can also be used for personal decision-making. Below is an example of a personal decision balance sheet, where the challenge is deciding whether to accept a new job offer in another city.

    Decision Balanced Sheet Example

    The final score suggests that not pursuing the new opportunity might be the best choice.

    The decision balance sheet can also be represented in a four-field matrix, which categorizes the pros and cons in both the short and long term. This approach is particularly valuable when the decision at hand is of a strategic nature. Strategic decisions often involve complex trade-offs, where short-term disadvantages may be offset by long-term benefits or vice versa. This matrix helps decision-makers see the full range of outcomes and make better choices.

    The decision balance sheet can also be represented in a four-field matrix.

    Example

    Here is a four-field matrix example for deciding between hiring a Six Sigma Black Belt or getting help from a consulting company.

    Decision Balanced Sheet Example
    Click to enlarge

    Each pro and con item can then be given a score, and the scores can be totaled within each quadrant to create a clear visual summary of the short-term versus long-term advantages and disadvantages for each option.

    Wrapping Up

    In both personal and professional contexts, making informed decisions is important for achieving the desired results. Tools like the decision balance sheet offer a simple and structured way to evaluate the pros and cons of any decision. This tool is one of the simplest ways to make decisions. However, when it is required to compare different options or explore some options in more details, other decision-making techniques may be more suitable than a simple pros-and-cons list.

    References


    Krajewski, L., Ritzman, L., Malhotra, M. Operation Management: Processes and Value Chains. Pearson.

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