Importance of Balancing the Costs and Benefits Decisions
Balancing the costs and benefits of any decision, large or small, is an important responsibility for any leader. Do it right by following these rules:
- Explore options widely. Don’t be in a hurry. It’s tempting to commit to the first reasonable solution to a problem, but don’t make any final decisions before examining the situation thoroughly and confirming that you’re solving the right problem.
- Think long-term. Take a cradle-to-grave approach: How long will the entire process take? What happens when you’re finished? What costs are associated with getting things started (supplies, training, and so forth)? This gives you a better view of your full investment in the solution.
- Consider doing nothing. Does the problem really have to be solved? For example, it may not be worth your while to repair or replace a piece of obsolete equipment if it still functions.
- Think beyond dollars and cents. A cost/benefit analysis should offer options, not dictate solutions based on financial considerations alone. View the results with an eye toward your strategic objectives, so you pick the one that makes the most sense, not just the one that’s cheapest.
- Review the results. After you’ve made and implemented a decision based on your analysis, take some time to evaluate the outcome. Did the project cost more than you anticipated? Did you realize the benefits you expected? What could you have done differently? Use the lessons you learn to guide your next analysis.
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Get off the Wheel Systems and Procedures for Greater Profits & Reduced Stress
By: Diane Gardner
This Book is for you IF…
You are an accountant, bookkeeper, or tax preparer with employees and one of the following describes you: