The 80 20 Rule Explained
The 80 20 rule is one of the most helpful concepts for life and time management.
Also known as the Pareto Principle, this rule suggests that 20 percent of your activities will account for 80 percent of your results. It is the essence of the phase “Less is More.”
This can dramatically improve performance in any area of business, life or in our case compliance and risk. It can also greatly reduce the effort required to get you compliant.
What Is The 80 20 Rule?
The 80 20 rule, also called the “Pareto Principle”, was named after its founder, the Italian economist Vilfredo Pareto, back in 1895. He noticed that people in society seemed to divide naturally into what he called the “vital few,” or the top 20 percent in terms of money and influence, and the “trivial many,” or the bottom 80 percent.
Later, he discovered that virtually all economic activity was subject to this principle, in that 80 percent of the wealth of Italy during that time was controlled by 20 percent of the population.
We can take Pareto’s 80 20 rule and apply it to almost any situation. Understanding the principle is essential to learning how to prioritize your tasks, days, weeks, and months.
How Does The 80 20 Principle Work?
The Pareto Principle is a concept that suggests two out of ten items, on any general to-do list, will turn out to be worth more than the other eight items put together.
Unfortunately, those top two items are often the items people avoid doing or are prone to procrastinate over. This may be because they are perceived as hard or scary to do. This leaves people focussing on the least important tasks on their to do list and creates that all to well-known phenomena of being very busy but getting nothing done. Do you know that feeling?
Important to remember is the fact that this principle is not a hard and fast mathematical law. If fact in many cases it may be 10% of the actions result in 90% of the outcomes, especially in todays information age.
Using The 80 20 Rule
The first and most critical application of this is to clearly define what you want. This is goal setting. In a business sense it may be defined as a turnover goal, a reduction in risk or as part of a business case.
For example, you may want to reduce your legal liability by ensuring compliance against your H&S or fire obligations. You may not know what your legal obligations are. So how do you set a clear goal? Search the internet? Try and interpret the legislation? The usual result of this is a feeling of overwhelm, worry penalised or that it’s just too big a subject to contemplate. Most people will turn off at this point and put it in their mental too hard, scary, time consuming or painful box. Yet you know deep down that its important and can really hurt your business.
An alternative approach might be to recruit expert help, finding a good guide on the subject or setup a compliance services so you can focus on your real job. All of these options will require actions to implement but are often far more effective than searching around and potentially getting overwhelmed.
80 20 Hacks You Can Use Today
There are many applications of this approach in many walks of life. The key is in identifying the top 20%.
- List out the top things that worry you in running your business.
- What are you doing to address them?
- What could you do to address them?
- What do you need to change?
- Categorise your hazards by measuring occurrences and effect. Then focus on the top 20% with mitigation.
- Minimise your Covid-19 risk by following simple hygiene and social distancing
- Optimise your energy usage using our Energy Audit
- Contact us to discuss your risk management or compliance issue
- It’s likely that 20% of your customers account for 80% of your turnover or profit. Who are they? Do you do anything different with them?
- What do you spend your day doing? What effect on your top goal do they have?
- You may have the best product or service in the world, but it’s worth virtually nothing if nobody knows about it. Contact our marketing partner Web Choice for help or advice
- Define your personal goals clearly and effectively
Want to know more about the 80 20 principle try The 80 20 principle by Richard Koch