The 20/80 Rule: One of the Greatest Management Principles in the World

 

The 20/80 Rule and Why it Will Change Your Life

Today's bonkers-busy work environments demand answers to the eternal question: 

“How can we get more of the right things done with the time we have?" 

There never seems to be enough time to get everything done. Time is limited and demands seem unlimited.

The 20/80 principle asserts that there is no shortage of time (even though it feels that way) but the tendency for a significant amount of time to be spent in low-quality ways. Speeding up or being more “efficient” with our use of time will not help us; indeed, such ways of thinking are more the problem than the solution. What we need to do is distinguish the high payoff from the low payoff activities. The 20/80 Rule (AKA the Pareto Principle) will help towards that end. 

Richard Koch in his book, The 20/80 Principle wrote, "a minority of causes, inputs, or effort usually lead to a majority of the results, outputs, or rewards." Taken literally, this means that roughly 80 percent of what we achieve in our jobs come from roughly 20 percent of the time spent. This is contrary to what people normally think about. 

The reason that the 20/80 Rule is so valuable is that it is counter-intuitive. We tend to expect that that all causes will have roughly the same significance. That all employees in a particular category have roughly equivalent value. That all opportunities are of roughly equal value, so that we treat them all equally. 

We tend to assume that 50 percent of causes of inputs will account for 50 percent of results or outputs. There seems to be a natural, almost democratic, expectation that causes and results are generally equally balanced. And, of course sometimes they are. 

But this “50/50 fallacy” is one of the most inaccurate and harmful, as well as the most deeply rooted of our mental maps or paradigms. The 20/80 Principle asserts that when two sets of data, relating to efforts and rewards, can be examined and analyzed, the most likely result will be a pattern of imbalance. Let’s look at some examples. 

In business, many cases of the 20/80 Rule have been validated. Roughly, twenty percent of the products produce 80 percent of the profits; so do 20 percent of the customers. It has also been documented that twenty percent of the customers generate 80 percent of the complaints and that 20 percent of employees account for 80 percent of the write-ups. 

In society, 20 percent of the criminals account 80 percent of the value of all crime. Twenty percent of motorists cause 80 percent of the accidents. Twenty percent of those who marry comprise 80 percent of the divorce statistics. 20 percent of the roads cause 80 percent of the congestion. We have observed on numerous occasions that 20 percent of the beer drinkers consume 80 percent of the beer and at a picnic, 20 percent of the people will often eat 80 percent of the food.

In the home, 20 percent of your carpets are likely to get 80 percent of the wear. If you have an intruder alarm, 80 percent of the false alarms will be set off by 20 percent of the households. One spouse will wear twenty percent of their clothes 80 percent of the time whereas the other spouse will wear 80 percent of their clothes 20 percent of the time (Which spouse do suppose gets the most closet space?). 20 percent of a professional development book yields 80 percent of the impact. 

The 20/80 Rule is present in all acts of creation. Take plant growth. Rain is clearly important. And what causes rain? Clouds—but only a few clouds create the most rain. Among all plants, a few vegetables are the most nutritious. Among farming methods, a few yield the greatest harvest. Among all areas of production, a few are the most efficient.

The overriding message is that our personal productivity and organizational productivity  can be greatly improved by using the 20/80 rule. The revealing implication of the 20/80 rule is that there is significant waste that is not obvious, and that this waste is robbing precious time.

SMART Leaders Use Leverage to Achieve More with Less effort

To lift a heavy object, you have a choice: use leverage or not. You can try to lift the object directly – risking injury – or you can use a lever, such as a hand truck, pallet jack or a long plank of wood, to transfer some of the weight, and then lift the object that way. 

Which approach is wiser? Will you succeed without using leverage? Maybe. But you can lift so much more with leverage, and do it so much more easily! 

So what has this got to do with your life and your career? 

The answer is "a lot". By applying the concept of leverage you can, with a little thought, accomplish very much more than you can without it. Without leverage, you may work very hard, but your rewards are limited by the hours you put in. With leverage, you can break this connection and, in time, achieve very much more. 

“Give me a place to stand and a lever long enough and I can move the earth.”          ---Archimedes

Applying the 20/80 Rule When Developing Employees and Completing Tasks 

In the book, “First Break All the Rules: What Great Managers Do Differently,” the authors suggested the following application of the 20/80 rule when it comes to leadership and employee development. 

To boost productivity and effectiveness: 

1. Determine which people are the top 20 percent producers. 
2. Spend 80 percent of your “people time” with the top 20 percent. 
3. Determine what 20 percent of the work gives 80 percent of the return and coach someone to do the 80 percent less-effective work. This “frees” up the producer to do what he/she does best. 

4. Ask the top 20 percent to train the next 20 percent. 

Every leader or professional can apply the 20/80 Rule in the area of people development, operations,  strategic planning, personal productivity and even generating greater happiness.

In the area of safety the 20/80 rule applies. Research demonstrates that over 70% of lost time injuries can easily be prevented through stretching and safe lifting techniques. These stretching and safe lifting activities are the 20% that yields the nearly percent of injury prevention. 

My 20/80 Life

In my life, I've noticed plenty of 20/80 ratios and generally they relate to my core competencies and passions. I really enjoy writing articles such as this, and curriculum for our SMART Development leadership training programs and off-site retreats. In terms of rewards, the two-three hours or so per day that I spend writing – when I’m in the creative zone and my best work comes out almost effortlessly – is money time. The articles and training material work hardest to generate income, create business opportunities and allow me to express myself creatively. I get the most financial and intrinsic satisfaction from this time. 

I expect you could tell me a similar story about your life. During times you really enjoy yourself your output is at its peak. Your passion activities probably don’t pay your bills at the moment, which unfortunately means that you can’t sustain your life by indulging only in what you enjoy. I

During some times in my life I struggle and waste time performing activities I don’t enjoy or I am not good at. For example bookkeeping is not high on my fun list. I don’t always like managing keywords in Google AdWords campaigns because I don’t have the patience to thoroughly test the variables and track the numbers. The same can be said for things like Google Analytics. These activities are more numerical in basis, I’m not a numbers person so when possible I leave these tasks, along with other activities like programming, graphic design and proofreading to other people, the specialists who enjoy them. 

Some of my time is spent procrastinating or working inefficiently doing activities that provide very little benefit. This often occurs when I am tired or below peak physical condition. I sometimes lack the mental throughput to motivate myself to be productive, but I’m working on it and getting much better at reducing time wastage. When I’m in this state it’s smarter for me to study – read books, ebooks and listen to podcasts – because I’m not capable of producing quality output, but taking input – learning – is a good use of time when I am not there 100 percent mentally. 

The more you think about the 80/20 Principle the more ways you’ll be able to use it to achieve greater results with less effort.

To your success and fulfillment,

Peter Mclees, Leadership Coach, Trainer and Performance Consultant
SMART DEVELOPMENT

 

Take the Next Step...
Interested in learning how to develop your organization's leadership capability, culture, and employee engagement? We begin with a collaborative discovery process identifying your unique needs and business issues. To request an interview with Peter Mclees please 

contact: Email: petercmclees@gmail.com  or  Mobile: 323-854-1713

Smart Development has an exceptional track record helping service providers, ports, sales teams, restaurants, stores, distribution centers, food production facilities, wealth management services, third-party maintenance providers, real estate services, nonprofits, government agencies and other businesses create a strong culture, leadership bench strength, coaching skills and the teamwork necessary for growth.

Having worked with several companies throughout their growth cycle, we have valuable insights and strategies that would help any late stage startup, small or medium sized company achieve sustained growth and prosperity.

Having worked with several companies throughout their growth cycle, we have valuable insights and strategies that would help any late stage startup, small or medium sized company achieve sustained growth and prosperity.