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The 80-20 Rule – The Pareto Principle

The Pareto Principle, used for Critical Mistake Analysis to target training for the critical content of 20% that result in the largest impact of 80%.

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The 80-20 Rule – The Pareto Principle

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  1. Training to Take Decisions Using Pareto Principle

  2. Should we accept the project? • How best can we address this issue? • What is the best option we should adopt? • What is the best solution to this problem? Decision making helps individuals evaluate options and choose the one best suited in any given situation.

  3. When there is a problem or when there is a decision that needs to be made, there may be several methods that can be used to take the most appropriate decision

  4. Who Needs to Make Decisions?

  5. Employees at all levels in an organization make decisions

  6. Types of Decision Making

  7. Strategic decisions

  8. Tactical decisions

  9. Routine or Operational decisions

  10. Decision Making Techniques

  11. Pareto principle • Grid analysis • Decision trees • PMI • Six thinking hats

  12. What is Pareto Principle?

  13. 80% of property owned by 20% of population • 80% of results produced by 20% of efforts

  14. Ratio of 80 and 20 is only illustrative

  15. 80 % Result Instances Where 80:20 Rule Can Be Applied 20 % Effort

  16. 80% of sales are obtained from 20% of clients

  17. 80% of profits come from 20% of products in the product line 80 % Profits 20 % products

  18. 80% of the personnel problems arise from 20% of the people

  19. 80% of the revenue is generated by the efforts of 20% of the sales personnel 80 % Revenue 20 % Sales Personnel

  20. 80% of customer complaints are about 20% of the product

  21. Step by Step Guide for Applying the 80:20 Rule in Decision Making

  22. Decision Making Process Using Pareto Principle

  23. List out all the customer complaints that are received by the organization

  24. Analyze the complaints received and Group them under related categories

  25. Record the number of complaints under each major categories

  26. Draw a Pareto chart to illustrate the observations by listing the nature of complaints on the x axis and the number of complaints recorded on the y axis

  27. Re-group the complaints in such a manner keeping those complaints that have maximum count to the left and the lowest to the right

  28. Most of the complaints are with respect to the response time

  29. Conclusion

  30. Training managers could use Pareto Charts or analysis when imparting decision making skills training to the learners

  31. “It is our attitude at the beginning of a difficult task which, more than anything else, will affect its successful outcome” -William James

  32. To read articles on similar topic, please visit blog.commlabindia.com

  33. Thank You

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