Pareto Principle: The 80/20 Rule for Business

If you have not heard of the 80/20 rule, simply put it is that 80% of work is trivial and only 20% is vital.  In quality programs, this rule is referred to as the Pareto Principle.  Knowing this principle can be important to making your business better and increasing company growth.


How does the Pareto Principle apply to business?

• You can apply it to Human Resources (HR) via new hire interviewing and by reviewing the similar 20-60-20 rule for employee performance.
• It has been applied to Information Technology (IT) and software development, where reports show 80% of software bugs come from 20% of the code and 80% of help desk calls come from 20% of the user base.
• You can apply it to sales and customer relations since typically 20% of your customers most likely make up 80% of your business. Figure out who those 20% are and really cultivate the relationship for continued business growth.
• It has been applied to time management as work smart not hard by expert Alan Lakein, author of How to Get Control of Your Time and Your Life book (on Amazon #ad). He suggests we flip from old style work to better time management by prioritizing to make sure more time is spent working on most important items first and spend less effort on the low-value tasks.  You should do this too.

After reading the linked articles, you should now understand how this can directly apply to business.  However, you may want to consider applying the rule to outside or work as well to make better use of personal time.