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Business Improvement Using the 80/20 Rule

Business Improvement Using the 80/20 Rule

Scott Drummond
Jan 28, 2020 7:52 AM

The Pareto principle (also known as the 80/20 rule) states that, for many events, roughly 80% of the effects come from 20% of the causes, and can be seen in almost all facets of society.

In the business world for example, I’d guess that 80% of your customers probably come from only 20% of your market area, or 20% of your employees are responsible for 80% of the work. (Yes, I know as an owner, you probably account for 60% of the work just by yourself!)

Here, at Party Center Software, we like to use the 80/20 rule in a slightly different way when focusing on business improvement.

Improve Your Business Using
the 80/20 Rule

In an effort to sustain and continually grow business, our goal is to have 80% of our employees' work time dictated to them, and to have 20% selected by the employee. Our staff gets to choose the task or activity that brings the best value to not only PCS, but also to the customer.

Imagine if you give your employees the opportunity to choose one task a week that took a few hours. They have the ability to choose it based on what they know is needed to be done, and what they feel would bring the greatest value to the company or customer.

Chances are, the task they choose will be wildly different than the one you would have selected as the boss. But does that make their choice less correct or less valuable?

Of course, they may sometimes choose tasks that aren't in their (or the customers') best interest, or ones that fall apart, but this is all a part of learning. Over time, your staff will begin to realize which tasks bring the most value and are the most realistic to complete in the time frame given.

Taking Ownership: A Sign of
Business Improvement

Have you ever overheard an employee talking to a friend—or even a customer—as if they owned the business, or as if they were a critical component to that business?

I've heard many FEC employees say "our business" or "our location is the best." When I hear phrases like that, I can't help but feel immense pride. They have gone beyond just working a job and are now seeing that, no matter what role they have, they are critical to the success of the business.

As business owners, we're always trying to improve "our" business.

What if we flipped it around?

What if we guided our staff and helped our employees feel like it was their business and we pushed them to decide which tasks would be most beneficial to work on to improve the business?

Business Improvement Challenge

This next month, I'd like to challenge you to employ the 80/20 rule in your business.

Gather a few key staff members, and let them know they will receive a few hours (or whatever time period you think works) to do whatever they think would bring the most value to the customer or company. It may help to brainstorm with them to help get the ideas flowing, but ultimately, let them choose.

See if it won't lead to something revolutionary.

Additional Insights

Looking for additional insight on the 80/20 Rule?

Check out the "Think Tank Thursday" Facebook Live conversation (now on-demand) I had with Beth Standlee from TrainerTainment, where I go more in depth about this topic.

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