The 80/20 rule is a predictive model applied in various business settings to determine the factors that influence success and improvement. It can help you optimize your workplace productivity by guiding your task analysis, time allocation, and delegation of responsibilities.
In this article, we explain what the 80/20 rule is, the benefits of using it, steps to use it and how the 80/20 mindset can help you identify strategies and opportunities that will benefit your career.
Table Of Contents
1 What is the 80/20 rule?
2 Benefits of using the 80/20 rule
2.1 Better time management
2.2 More Effective Leadership
2.3 Better use of company resources
3 When to use the 80/20 rule?
3.1 Business management
3.2 Career development
3.3 Productivity
3.4 Customer relations
4 Ways to use the 80/20 rule
What is the 80/20 rule?
The 80/20 rule is a statistical principle that states that 80% of results often come from about 20% of causes. In 1895, Italian economist Vilfredo Pareto published his findings on the distribution of wealth after he discovered that 20% of Italians own 80% of the country’s wealth.
Since Pareto’s findings, other scholars have applied the 80/20 rule of cause and effect—also known as the “Pareto principle”—to situations beyond the distribution of wealth, including business principles and professional development. For example, in business, it is often said that 80% of sales come from 20% of clients.
While 80/20 is the most common ratio found, the Pareto principle may also exist in other similar ratios, such as 70/30, 75/25 or 85/15. All of these values indicate that a low percentage of causes affects or creates a high percentage of results.
Benefits of using the 80/20 rule
The 80/20 rule can help you identify where most of your time, money, or energy is best spent. Using the Pareto Principles, you can define achievable goals and outline specific tasks to achieve them and stay focused on what has the most impact. Here are some of the benefits the 80/20 rule provides:
Better time management
By identifying the tasks that deliver the most results, you can organize your day to focus on the tasks that have the most significant impact on your work.
More effective leadership
If you want to improve your leadership skills, you can use the 80/20 rule to spend time socializing with your team, being a mentor, and looking for other opportunities to build trust and team unity.
Better use of company resources
The 80/20 Principles can help you make better use of your company’s time and effort to research competitors or industry trends, simplify hiring procedures, and enhance your company culture.
When to use the 80/20 rule?
There are many ways to apply the 80/20 rule in your workplace. The following example shows how to use the Pareto Principle to analyze success and improvement factors and maximize efforts to achieve results.
Business management
Applying the 80/20 rule to business dealings has several advantages, most notably how you can streamline a company’s business model to invest in the people, products, and systems that offer the greatest returns.
For example: Ben is a small business owner who has gained popularity over the past year. To optimize his restaurant’s opening hours, Ben used the 80/20 rule to find that nearly 15% of restaurant hours generate 85% of revenue. This 15% indicates that the peak hours are between 7 pm. and at 9 p.m. Ben decided to extend his dinner service by an hour in order to potentially increase his income during peak hours.
Career development
You can apply the Pareto Principles to streamline your job search, seek out the most impactful opportunities, and build a strong professional network.
For example: Tanya is a marketing professional who has re-entered the workforce after four years as a stay-at-home mom.
She wanted to find a position that combined her expertise in market analysis and a personal interest in organic baby products. Tanya applies the Pareto Principles to her job search to spend 80% of her time finding and applying for market research jobs for baby health companies and 20% of her time applying to other marketing positions in other industries.
With this method, Tanya streamlines her job search tasks that are directly related to her desired career path while still leaving her options open for other jobs that might lead to opportunities.
Productivity
You can use Pareto principles to determine which tasks have the most significant impact and optimize your productivity for the most results.
Use Pareto principles to schedule your time, complete important tasks, set realistic deadlines, and increase your focus.
For example: Ahmagf works from home as a programmer. Although he has the ability to set his own hours, he finds himself working overtime to meet deadlines.
Ahmad uses the 80/20 rule to identify 25% of his daily tasks which make up 75% of his weekly work. He dedicates 75% of each day to the most impactful tasks, improving his time management and ability to meet critical deadlines.
Customer relations
Applying the Pareto Principles to customer relationships can help you identify the best ways to interact with clients and understand how they impact your business.
For example, Abby is a hairdresser who wants to expand her clientele. He used the Pareto Principle to find that 80% of his new clients were referrals from 20% of his existing clients.
Abby uses this word-of-mouth advertising strategy and offers discounts to clients who refer people to make appointments with her.
This plan can help him increase his income, improve his relationship with his clients, and focus his time on learning new styling techniques.
How to use the 80/20 rule
Here are the steps to take to apply the 80/20 rule to your own goals:
- Check all your daily or weekly tasks.
- Prioritize the most important tasks.
- Identify which tasks give you the most returns.
- Brainstorm how to delegate or delete tasks that yield less payoff.
- Create a plan outlining time and resources vs. prioritized tasks.