The 80/20 Rule Explained and How To Use It (Plus Examples)

By Indeed Editorial Team

July 1, 2021

The 80/20 rule is a prediction model applied in a variety of business settings to determine factors that affect success and improvement. It can help you optimize your workplace productivity by guiding your analysis of tasks, time allocation and responsibility delegation.

In this article, we explain what the 80/20 rule is, the benefits of using it, steps to use the 80/20 rule and how the 80/20 mindset can help you identify strategies and opportunities that benefit your career.

What is the 80/20 rule?

The 80/20 rule is a statistical principle that states 80% of results often come from approximately 20% of causes. In 1895, Italian economist Vilfredo Pareto published his findings on wealth distribution after he discovered that 20% of Italy’s citizens owned 80% of the country’s wealth.

Since Pareto’s findings, other scholars have applied his 80/20 rule of cause and effect—also known as the “Pareto principle”—to a variety of situations outside of wealth distribution, including business principles and professional development. For example, in business, it is often said that 80% of sales result from 20% of clients.

While 80/20 is the most commonly found ratio, the Pareto principle may also exist in other similar ratios, such as 70/30, 75/25 or 85/15. These values all show that a low percentage of causes affect or create a high percentage of results.

The benefits of using the 80/20 rule

The 80/20 rule can help you identify where the majority of your time, money or energy is best spent. Using the 80/20 rule, you can determine achievable goals and outline specific tasks to reach them and stay focused on what makes the most impact. Here are just a few benefits the 80/20 rule provides:

Improved time management

By identifying tasks that yield the most results, you can organize your day to focus on tasks that have the most significant impact on your work.

Related: Time Management Goals To Take Control of Your Time (With Examples)

More effective leadership

If you want to improve your leadership skills, you can use the 80/20 rule to make time for socializing with your team, serving as a mentor and seeking other opportunities to build trust and team unity.

Read more: Identifying Leadership Potential and Building Leadership Skills

Better use of company resources

The 80/20 rule can help you better utilize your company’s time and efforts to research competitors or industry trends, streamline hiring procedures and improve company culture.

Related: How To Measure Productivity and Increase Efficiency in the Workplace

When to use the 80/20 rule

There are many ways to put the 80/20 rule into practice in your workplace. The following examples demonstrate how to use the 80/20 rule to analyze success and improvement factors and maximize efforts to achieve results.

Business management

Applying the 80/20 rule to business matters has several advantages, especially in how you can streamline the company’s business model to invest in the people, products and systems that offer the biggest returns.

For example: Ben is the owner of a small business that has gained popularity over the past year. To optimize his restaurant hours, Ben uses the 80/20 rule to discover that nearly 15% of the restaurant's hours yield 85% of revenue. This 15% indicates that his peak hours are between 7 p.m. and 9 p.m. Ben decides to extend his dinner service by one hour to potentially increase revenue during peak hours.

Read more: A Guide To Pareto Charts

Career development

You can apply the 80/20 rule to streamline your job search, seek out the most impactful opportunities and build a strong professional network.

For example: Tanya is a marketing professional re-entering the workforce after being a stay-at-home mom for four years. She wants to find a position that combines her skills in market analysis and personal interest in organic baby products. Tanya applies the 80/20 rule to her job search to use 80% of her time searching for and applying to market research jobs for infant wellness companies and 20% of her time applying to other marketing positions in other industries.

With this method, Tanya streamlines her job search tasks that relate directly to her intended career path while still keeping her options open to other jobs that might lead to opportunities.

Related: 7 Steps for Building Your Networking Skills

Productivity

You can use the 80/20 rule to determine which tasks yield the most significant impact and optimize your productivity for the most results. Use the Pareto principle to schedule your time, complete important tasks, set realistic deadlines and improve your focus.

For example: Jolene works from home as a medical coder. Although she has the ability to set her own hours, she finds herself working late to reach deadlines. Jolene uses the 80/20 rule to identify which 25% of her daily tasks make up 75% of her week’s work. She dedicates 75% of each day to the most impactful tasks, improving her time management and ability to reach critical deadlines.

Related: Using Key Performance Indicators (KPIs) To Achieve Goals

Customer relations

Applying the Pareto Principle to customer relations can help you identify how to best interact with clients and understand how they affect business.

For example: Abby is a hairstylist looking to expand her clientele. She uses the 80/20 rule to discover that 80% of her new clients were referrals from 20% of her existing clients. Abby utilizes this word-of-mouth advertising strategy and offers discounts to clients who refer people to book appointments with her. This plan can help her increase revenue, improve relationships with clients and focus her time on learning new styling techniques.

You can use the 80/20 rule to more effectively structure your time and effort, increasing your personal productivity or enhancing your business strategy. This principle can help you improve your organization and time management skills, which can make you a strong candidate for a new position and a valuable employee in the workplace. Consider using the 80/20 rule to identify areas you can optimize as you progress in your career.

Related: Pareto Analysis: How and When To Use It

How to use the 80/20 rule

Here are the steps to take to apply the 80/20 rule to your own goals:

  • Examine all of your daily or weekly tasks.
    Prioritize the most important tasks.
    Identify which tasks give you the most return.
    Brainstorm how to delegate or remove tasks that give less return.
    Make a plan that outlines time and resources vs. prioritized tasks.

Read more: 8 Ways To Apply the 80/20 Rule To Your Business

Browse more articles