Applying the 80/20 Rule to Your Employees

As I discussed recently, I'm a big believer in the 80/20 rule.  Over and over again in life, I've seen it pop up and I've witnessed many way
Author of The Simple Dollar, The Simple Dollar
May 10, 2010

As I discussed recently, I'm a big believer in the 80/20 rule.  Over and over again in life, I've seen it pop up and I've witnessed many ways in which applying that rule has led directly to success.  Today, I'm going to look deeply at the 80/20 rule and how it applies to one's employees.  First, though, a refresher.

 

What is the 80/20 rule?  The 80/20 rule, also known as the Pareto principle, simply means that roughly 80 percent of the effects of anything you might be doing come from 20 percent of the causes.  For example, 80 percent of your sales are likely generated by about 20 percent of the items you carry or services you offer.

Let's look at three ways the 80/20 rule might be applied to maximize the value you get from your employees.

20 percent of your employees shoulder 80 percent of the responsibility and work.  Most of your business is taken care of by a small minority of your employees.  They're the floor leaders, the ones who know what to do and often just take care of things.  Sometimes, these people will be obvious; other times, it'll be a bit harder to figure out who they are (for example, I once worked in an office where a very quiet secretary was the person shouldering a ton of the load).

Figure out who these people are.  Appreciate them.  Reward them on occasion.  Give them a bit more flexibility than you would give to other employees when they need it.

20 percent of your employees cause 80 percent of the problems.  On the flip side of that coin, most of the problems in your workplace are caused by a small minority of workers.  They simply don't work, or when they do, they commit so many mistakes that they cause you to have to re-do their work.

When you discover these people, don't hesitate to let them go.  These employees are directly costing you money, disrupting your cash flow, and interfering with customers with every little mistake.  This is your business - protect it from the minority that causes problems.  Sometimes, this can be hard - quite often, that 20 percent is filled with earnest people who are genuinely trying to do a good job.  Are you building a business or are you building friendships?

20 percent of your employees take up 80 percent of your personnel management time.  In other words, some fraction of your employees will need an awful lot of your attention compared to the rest of the employees.  These employees might be the good ones or they might be the problematic ones - it's often hard to tell.

In any case, the best solution for these people is to set what essentially amounts to "office hours."  Tell these people that you're available to talk during certain hours, but at other times, you need to get other tasks done.  Stick to those "office hours" and make them clear to everyone.  When multiple people want to talk to you at once, don't hesitate to prioritize and put the people who don't gobble your time at the top of the queue.  Doing these things will make your time much more efficient.

To put it simply, you should reward the quiet employees who just do their job as well as the employees who shoulder a lot of the work and responsibility.  At the same time, you should not reward the employees who make choices that eat up a lot of your time, whether it's fixing their repeated errors or require a lot of personnel management.

Author of The Simple Dollar, The Simple Dollar