Tuesday, 25 January 2011

Small Business Advice Part Three - Using The 80/20 Rule

Continuing with my occasional and sporadic forays into the world of business advice I want to devote today's blog to the 80/20 rule or the Pareto Principle. Put very loosely, the rule states that 20% of one thing can account for 80% of another. For example 20% of your customers might provide 80% of your sales or 20% of your stock items represent 80% of its total value. The figures 80 and 20 aren't cast in tablets of stone and, covering two different categories, they needn't add up to 100 - for example you might find that 10% of your staff  take 80% of your sick leave but it's a simple theory and one that can pay dividends if you make it work for you.




This chart that I found courtesy of UNB.ca pretty well sums it up.

Whilst the obvious uses, such as those sketched out above, are extremely worthwhile and can help you to concentrate your efforts by targeting that important 20%, the area where I found it most beneficial to apply the rule was in organising my working day and my workload.


Throughout my career I knew managers who were always burning the midnight oil, late with reports and struggling to get minor tasks done on time. Their workload seemed interminable and their desks groaned under paperwork. It usually started with a big and time consuming job which they threw themselves into with enthusiasm forsaking everything else until that big job was finally done and dusted. Whilst this may sound very creditable, in carrying out that major opus, they most probably overlooked making a number of simple decisions which, though small in themselves, delayed the rest of the business, left colleagues twiddling their thumbs and brought inefficiencies to the company.


Ideally you should start with a clear desk if at all possible. Most days you will be faced with a number of jobs to do. 20% of them will most likely account for 80% of your time. Identify those 20% big or time consuming jobs and schedule them for later in the day. If you aren't sure about the complexity of any particular task always assume it to be in the difficult category and, if it's a meeting, always try and schedule it for the afternoon when the time available is finite (morning meetings tend to stretch interminably). Get the other 80% of jobs out of the way as quickly as you can. It sounds almost patronisingly simple but you would be surprised how many tiny jobs get pushed to the bottom of the work pile because managers are too busy with other more important things. The difficulty here is that, whilst those tiny things appear to be trivial, there are lots of them and it is highly likely that their delay will impact on the rest of the staff and the business.

It's a very small and extremely simple tip but I can't overemphasise how important it is. I guarantee that, if you get into the habit of always applying this very simple principle, your workload will be much easier to cope with and that big report that you need to prepare for the bank or for your shareholders will be completed without interruption and the worry that everything else is falling behind.


And don't forget the impact this will have on that work life balance that I mentioned in Part One of this series.