The One Simple Principle That Can Save You Millions Of $$$

By Brittany Dodds

Have you ever heard of the 80/20 rule? If you’re not an operations improvement geek, then chances are you haven’t. But this simple principle can save your organization hundreds of man hours in wasted effort.

Here’s how:

The 80/20 rule or Pareto Principle, as it is sometimes called after its creator, Vilfredo Pareto, simply states that roughly 80% of effects come from 20% of causes. Sometimes the balance is more extreme (90 to 10 or even 99 to 1), but the principle holds true in an astonishing variety of places.

Haven’t you heard a million times that the majority of wealth in the United States belongs to a very small proportion of Americans? That’s not a coincidence. In business, 20% of employees are typically responsible for generating 80% or more of a company’s output. There are multitudes of examples in our everyday lives as well. What proportion of saved contacts in your cell phone do you actually text or call on a regular basis? Would you say 20% or less? Then the Pareto Principle is strong at work in your life as well.

How can the Pareto Principle save you time and money?

The next time you’re suffering from work backlogs, budget shortfalls, lack of training - literally any problem under the sun - put this simple principle to work for you. Instead of getting bogged down trying to fix everything that seems to be contributing to the issue at hand, identify and then solve those few inputs that are causing the most harm to your organization.

A Pareto Chart is a common data analysis tool that can help you. It looks like a common bar graph, but has a unique purpose. The idea is to chart the relative importance of a variety of potential causes for a problem in order to quickly identify the few causes that are causing the majority of problems.

Below is a Pareto Chart example, showing the relative frequency of reasons for arriving late at work. The left axis measures frequency of occurrence- in this case, how many times a late arrival was attributed to a particular cause. The right axis measures the cumulative percentage of the total number of occurrences, represented by the red line.

The green dot illustrates one conclusion you could make from this chart: by solving the top three problems (traffic, child care and public transportation), you would effectively lower the amount of late arrivals by 78%. Which is great to know, because good luck trying to control the weather!

Pareto-677985-edited.pngBy Metacomet at English Wikipedia - Transferred from en.wikipedia to Commons by Common Good using CommonsHelper., Public Domain,

To apply this concept to the security sphere, take background investigations as an example. The problem you'd like to solve is a huge delay in completing an investigation.

Potential causes could be:

  • Insufficient number of investigators available
  • Records databases are slow, requiring a lot of time to check
  • Missing/incorrect information causes rework

On first glance, all of these factors might seem equally important to fix, but after collecting a sample of data and charting the frequency of delays caused by these factors, you may find that one cause, such as missing/incorrect information, trumps the others. If you use process improvement to solve this one problem, you would see massive improvements in your background investigations process, having devoted only a fraction of the time and energy you would have expended had you tried to tackle all three. You’ve just put the 80/20 principle for work for your organization!

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