Tool # 2 The Pareto Principle

The Pareto Principle is also known as the 80/20 rule where economist Vilfredo Pareto said:  80% of the trouble comes from 20% of the problems.  He also discovered that 20% of the people take care of 80% of the tasks. Many years later, Dr. Joseph M. Juran applied this theory to management principles, revising it to 85/15. 

Dr. Juran stated that 85% of problems will be corrected by changing systems because only 15% or less of these problems are caused by the workers.  In other words, improvements must start with the systems (or processes) in place, not in changing the workers themselves.  If a worker is doing something wrong, often it is because of the lack of training, which is an example of a system in place that needs improving.

Leaders are very aware of the 85/15 principle.  When a Leader observes the “blame game” happening – workers are pointing fingers at each other for doing something wrong – he/she reminds (or teaches) the 85/15 rule and looks for the errors or wastes in the system or process, not in the workers.

Pareto Principle Example in Time Waste

Studies have shown that 20% of the workers’ activities cause 80% of wasted time.  Another survey showed that out of each day, office workers waste an average of 160 minutes:

                          
                                          
Wasting an average of 160 minutes (or 2 hours and 40 minutes) out of each and every workday, adds up to 80 working days a year!  How much more work can be done in one day if systems were in place that eliminated most of the wasted time?  Kaizen teams use the 85/15 rule to identify systems or processes which need improvements.

It is critical to pay attention to the few issues that cause the wastes, so that we really see an improvement in a short period of time.