What do the humble green pea and real estate have in common?
The Pareto Principle.
The brain child of Italian philosopher and economist Vilfredo Frederico Damaso Pareto, the concept evolved from his observation that 20 per cent of the pea plants in his garden generated 80 per cent of the healthy pea pods.
Commonly known as the 80/20 rule, the crux of the Pareto Principle is that 80 per cent of results come from 20 per cent of action.
For example:
- 80 per cent of sales come from 20 per cent of staff.
- 80 per cent of relationship satisfaction flows from 20 per cent of the relationships.
- 80 per cent of revenue is generated from 20 per cent of customers.
In the case of people management and internal performance management, often 80 per cent of our time is spent on 20 per cent of our people.
The risk here is that the top performing 20 per cent are producing 80 per cent of income or customer satisfaction and are not receiving the required reward and recognition.
The end game for successful team management is to provide the tools and the environment for everyone to feel life satisfaction, to be able to uncover where their time is best spent, how they best impact the end goal and what they are great at.
Instead of trying to do the impossible, a Pareto approach will help you decide which projects are most important.
The following steps can be introduced to ensure you make the most of your time and your team:
1. A standard performance management plan is key for all people managers to ensure everyone is aware of the steps required should there be a need to highlight particular opportunities to improve.
Principals and business owners can be engaged as part of the process to show support of their team and to add an element of escalation that will empower the importance of the overall process.
2. Invest in identifying the tasks that contribute the most to business results.
When you understand the business and the end goal, it’s easier to align your time so it corresponds with the most important activities.
If your team meeting and celebrating the quick wins has been identified as a key motivator, ensure this is a high priority task.
3. Regularly conduct a time audit to identify the tasks you spend the most time on.
If you are honest measuring your daily activities it can be a great tool to calculate and redistribute your time across the most profitable areas of the business.
4. If 80 per cent of your revenue is collected from 20 per cent of customers it is imperative to regularly review your customer base and the customer care plan for these top earning accounts.
The reality is that if there isn’t a key retention plan in place the business could be at risk of taking a significant hit if these clients don’t feel their loyalty is recognised.
We are constantly faced with the challenge of limited resources.
Instead of trying to do the impossible, a Pareto approach will help you decide which projects are most important.
It will help you evaluate the most important goals in your business, which require the most attention, those that will bring the most profit or satisfaction and which specific tasks you need to focus on to align with those goals.
5. Delegate or dump the rest.
Living and working smarter, not harder, is the key.
If you can identify the areas that take most of your time yet reap little reward or sense of fulfilment, be it at work or in your personal life, it’s time to take stock and hit the reset button.
