The Analytic Hierarchy Process
It would be nice if all decisions were simple in nature – you get to pick between a couple of options based on just one or two criteria, and you move on. Life as a business owner or manager would certainly be simpler if that were the case, but of course, that isn’t how it works in the real world. Some of the decisions you have to make are incredibly complex, and they require a complex approach in order to settle on the right solution. If you are faced with a difficult choice with an upcoming decision that must be made, turning to the Analytic Hierarchy Process is a very viable option.
Basically, the Analytic Hierarchy Process applies a mathematic approach to any decision that needs to be made. By using math at its core, this model is able to help you make an unbiased, logical decision based completely on the factors that have been determined to be important in the selection process. What this system lacks in simplicity it does make up in accuracy and conviction – the numbers don’t lie, and the best available option will be identified when AHP is used properly.
There are three levels within the Analytic Hierarchy Process, and each is essential to the overall success of the mission at hand. If any of the three levels are overlooked while planning out your strategy, the whole process is going to fail to yield positive results. Below, we will take a closer look at each of these three crucial levels.
The first level of this process is the goal, or objective, that is at hand in the decision making process. At first, you probably will think that this is an easy level to complete – and it many cases, it is. However, you do have to be careful to ensure that your goal is properly defined before you move on to the next stages. If you are unable to clearly define exactly what it is that is the goal of the decision, everything else you do will have a degree of ambiguity that undermines the entire process.
In many cases, picking out your goal is going to be easy. For example, if you are using the Analytic Hierarchy Process to hire a new manager or department head, you know right off hand what your goal is going to be – to hire the best person for the job.
You will work through all of the remaining steps in the process with that single objective in mind. As long as you get the best person, you will be successful. In situations that are not so clear cut, but sure to spend at much time as necessary to arrive at a well-defined, specific goal.
As far as the math is concerned, your goal is always going to be assigned a value of 1.000. Everything that takes place below your goal – which will be outlined in the next section – is going to have to add up to a total value of 1.000.
This is where the math side of things really starts to kick into effect. With your overall goal being given a value of 1.000, it is time to create some criteria and assign them weights in order to arrive at the total of 1.000 for the final decision. The following example will help you better understand the idea behind this process.
If you are going to be hiring a new department manager, you will have a number of attributes that you will want to look for in that person. You will want to know how much experience they have in the work at hand, the level of education they have which will help toward their duties, how long they wish to stay in this position, and more. As you are getting ready to use the Analytic Hierarchy Process, you will need to list out all of the important criteria that you are going to use for your decision.
Once all of the criteria are collected, each will be given a weight such that the total of all criteria used adds up to a total of 1.000. For instance, in the previous example, you could weigh the six criteria as shown in the table above. Of course, in the real world, your model will likely be much more complicated and involved. However, the basic idea is the same – the criteria are weighted, the total adds up to 1.000, and the alternatives for your decision are compared based on the framework you have created.
Speaking of your alternatives, this is the last level in the process. All of the potential choices that you could make are going to be listed in the alternatives section, and they are going to then be rated on the criteria that you have established. By using the rating scores that you issue for each alternative, along with the weights that you have given the criteria in question, you can derive a score for each option that will help you declare a winner.
In the example of hiring a manager that we used early, your alternatives would be people – such as the three or five finalists for the position that you have settled on after a first round of interviews. Or, in the case of a different type of decision, your alternatives could be various suppliers or vendors, product development options, or just about anything else. Anytime you are making a decision where there is more than one alternative available, you can turn to the Analytic Hierarchy Process for assistance.
Using the AHP to assist in your decision making is a powerful, albeit slightly complicated, way to make a sound choice. This isn’t a model that you are likely to use for basic day-to-day decisions – instead, this is a process that is to be brought out when you have an important choice that you simply have to get right.
You can read more about the Analytic Hierarchy Process in our free eBook ‘Six Key Decision Making Techniques’. Download it now for your PC, Mac, laptop, tablet, Kindle, eBook reader or Smartphone.
- The Analytic Hierarchy Process applies a mathematic approach to decision making.
- There are three levels within the Analytic Hierarchy Process: the goal, the criteria and the alternatives.
- Choose a goal and assign it a value of 1.000. Everything that takes place below your goal is going to have to add up to a total value of 1.000.
- Decide on the decision criteria, each will be given a weight such that the total of all criteria used adds up to a total of 1.000.
- All of the potential choices that you could make are going to be listed as alternatives to be rated on the criteria that you have established.
- By using the rating scores that you issue for each alternative, along with the weights that you have given the criteria in question, you can derive a score for each option that will help you declare a winner.