The 80/20 rule is a statistical concept that 80% of the results come from just 20% of the input. This phenomenon is also known as the Pareto distribution. Examples could include 20% of the population of a country owning 80% of the land, 20% of a sales team having 80% of the sales, 20% of a company’s customers making 80% of all complaints, or 20% of hospital patients generating 80% of all costs.
Pareto distributions exist in a wide variety of different domains. While the numbers do not always match up exactly to 20% and 80%, the broad principle that a small portion of the action generates a significant majority of the results holds. Rather than focusing on the precise numbers, it is an effective general principle.
It might not seem like an abstruse statistical idea could apply much to the average person’s life, but that is not the case. The 80/20 rule does not just apply to large groups of people but to individuals and their behavior as well. For example, many people may spend about 80% of their time socializing with just 20% of their friends. When someone decides what to wear, a relatively small number of items get chosen the vast majority of the time. The same limited number of foods are selected when ordering at a restaurant.
These examples are all interesting to think about. However, they are merely curiosities — more trivia than valuable knowledge. The obvious question is: does the 80/20 rule have any practical application?
The Pareto principle can provide insight in a variety of ways to individuals. One of the most obvious is in the area of personal productivity. Many people would like to get more done. That is true for students, professionals on the job, and anyone who wants to learn a skill for its own sake (think studying a new language or practicing a sport).
Additionally, the 80/20 rule teaches that it is best to concentrate on the activities that generate the most results. Grasping this relatively simple principle can be invaluable. Most people always think about which of their actions get the most results. Considering this matter can reveal a lot.
For example, a business or manager owner might notice commonalities between the small number of customers who account for most of their sales. The owner concentrates on finding similar customers, potentially resulting in significant growth. Or, a business owner or manager might realize that a particular product or service makes up the majority share of sales. Expanding that product or service offering line might be wise.
Pareto distributions also remind us of the importance of prioritization. If 20% of inputs result in 80% of the outcome, then 80% of the intake generates just 20% of the results. That is a lot of effort for little output.
Sometimes, activities that generate little output still have to be done. Checking email might contribute little to productivity, but it remains necessary.
But there are times when prioritizing tasks makes the most sense. For example, using the email example, it may be wise to have email as a lower priority. A good strategy is looking over an inbox a few times during the workday.
The 80/20 rule demonstrates that since there is only so much time in the day, concentrate more on the most valuable activities. Ultimately, it is a matter of recognizing that certain things contribute much more to success than others. Grasping the idea behind the Pareto principle can result in better, more effective decision-making.
Before helming Perpetual Talent Solutions as President, Jim Hickey held several senior leadership roles in both sales and operations for two of the world’s largest Commercial Staffing organizations. Jim is a dedicated professional who has been formally recognized as a Staffing Industry Subject Matter Expert.