Qualitative factors definition
/What are Qualitative Factors?
Qualitative factors are decision outcomes that cannot be measured. These factors can be important considerations for a business, which cannot always rely on just quantitatively-derived analyses to arrive at the best decisions. Thus, a proper understanding of these factors is essential to managing a successful business.
Examples of Qualitative Factors
There are many cases of qualitative factors that can impact business decisions, as we describe below.
Morale
Employee morale is an enormous qualitative factor. For example, good morale can persuade employees to remain with your business for a longer period of time, work more hours, and/or contribute higher-quality ideas to its operations. For example, you might want to save money by cutting back on the square feet of office space per employee, but decide to do the reverse because of its positive impact on the staff.
Customers
A positive customer experience is a good way to obtain repeat business from customers, as well as their referrals to new customers - which can massively increase long-term sales. For example, rather than forcing your customer service people to minimize the length of their interactions with customers, encourage them to do the reverse, and not hang up until customers are fully satisfied.
Investors
Having a stable group of investors, as well as ones that are willing to support the business are essential to its long-term financing and overall success. For example, it can make sense to work on new product lines and geographic regions that investors fully support, so that they remain engaged with the business.
Community
Having a supportive local community can assist a business in obtaining government permits, as well as in hiring enthusiastic locals who view the work as a privilege. For example, a business could allow its employees a few hours of paid time per week to work on local projects for the community.
Products
Producing very high-quality products can have a noticeable impact on sales and profits, even though the level of quality might initially appear to be excessive. For example, a business could acquire components at a lower cost, but the slight degradation in quality of these components will be noticeable to customers, which may lead them to buy fewer products.
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Qualitative Factors in Decision-Making
A manager should consider qualitative factors as part of his or her analysis of a decision. Depending on the manager and the level of investment involved, qualitative factors can be the deciding point in whether to engage in a certain activity. For example, if a large investment of funds is involved, the key decision factors are more likely to be quantitative, since the investing business has a great deal at stake in the decision. However, if the investment of funds is minor, the impact of qualitative factors could play a more important role in the decision.
From a branding perspective, qualitative factors can be particularly important. Proper branding requires high expenditure levels to establish and maintain an aura of quality, which a purely quantitative analysis might not justify.