In 1906, Italian economist Vilfredo Pareto created a mathematical formula to describe the unequal distribution of wealth in his country, observing that 20% of the people owned 80% of the wealth.
In the late 1940s, Dr. Joseph M. Juran inaccurately attributed the 80/20 Rule to Pareto, calling it Pareto’s Principle. While it may be misnamed, Pareto’s Principle or Pareto’s Law, as it is sometimes called, can be a very effective tool to help us manage efficiently, but it can also be applied to virtually every facet of our lives.
OK, that’s the boring bit over …
The value of the Pareto Principle for a manager is that it reminds us to focus on the 20% that matters. Of the things we do during our day, only 20 percent really matter. Those 20% produce 80% of our results, so we should identify and focus on those things. When our â€˜time robbersâ€™ begin to sap our time we need to remind ourselves of the 20% we need to focus on. If something in the schedule has to slip, if something isn’t going to get done, we have to make sure it’s not part of that 20%.
There is a management theory that proposes to interpret Pareto’s Principle in such a way as to produce what is called â€˜Top Gun Managementâ€™. Those advocating this theory suggest that since 20% of our people produce 80% of our results, we should focus our limited time on managing only that 20% – the so-called â€œsuperstarsâ€.
In my opinion the theory is seriously flawed because it overlooks the fact that 80% of our time should be spent doing what is really important, and that includes developing all of our people. Helping the good to become better is much more important than helping the great become terrific.
When we work to develop our subordinates, we should be concentrating on converting what I term the â€˜reactive mindsetâ€™, because we can certainly apply Paretoâ€™s Principle to reactive versus pro-active. Or to describe these two mindsets in a different way – the â€œrunning towardsâ€ mindset and the â€œrunning awayâ€ mindset.
The reality is that our very best performers do not typically need close control and management, but rather they need our support, and this is where the very best managers distinguish themselves by identifying what type of management is needed and when – the “one-size fits all” style of management is hopelessly outdated.
The “hire and fire” mentality of times gone by should remain there – in the annals of history: The costs involved with recruiting, training and developing frontline sales professionals today means it is imperative that we get it right at the front-end – or as right as we possibly can.
It is essential we understand that if one of our team fails, we fail: We selected them in the first place, and it is our absolute duty and responsibility to ensure they achieve their optimum performance levels.
News: It’s a big day for serious article writers as we announce last week’s “Top Sales Article of the Week” and this week’s ten lucky nominees. I do have an advantage as I have already seen the list, and I can tell you, it certainly isn’t short on quality. It would appear that the sales space has lost none of its appetite for reading informative, well- written pieces, despite the dramatic decline in available locations.
Our own panel of judges will be retiring very shortly and we will be looking to recruit some new faces, so watch this space.
Here they are poring over this week’s nominees.
Should all be live by 9am GMT as usual.