Vilfredo Pareto was an Italian economist who, in 1906, observed that twenty percent of the Italian population owned eighty percent of the country's total wealth. Ever since then, Pareto's observation has been used in a variety of ways, and is often referred to as the 80-20 Rule, the "Vital Few and Trivial Many Rule.", or simply Pareto's Principle.
It is of particular interest to us here in that it is a reminder that just a few causes account for most of the effect in a Cause and Effect Diagram. When you have carried out a Cause and Effect analysis your next step should be to identify and work on the vital few causes.
How to Construct a Pareto Chart
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Create a Bar Chart, ordered from largest to smallest. A simple bar chart helps ensure that your findings are quickly and easily understood by everyone involved.
Example: A team set out to reduce the number of accidents in their area. After collecting data on the causes of accidents they produced the following Pareto Chart.
The team achieved a quick and significant reduction in accidents by firstly tidying up all trailing wires, ensuring that spillages were mopped up immediately, and by the introduction of strict procedures for the handling of harmful substances.
The Pareto Principle can be used in a wide variety of your problem solving and continual improvement activities. Here are some examples:
80% of interruptions come from the same 20% of the people
80% of an equipment budget comes from 20% of the items
80% of benefit comes from the first 20% of effort
80% of complaints are about the same 20% of your services
80% of a nurse's time is spent on 20% of the patients
80% of the decisions made in meetings come from 20% of the meeting time
80% of innovation comes from 20% of the staff
80% of staff problems come from 20% of the staff
80% of your success comes from 20% of your efforts
( You do not have to find an exact 80 / 20 ratio, of course. This is merely a guide )
A Final Thought:
Who will get involved in continual improvement?
The 20-20-60 Rule
Experience has shown that in most organisations, 20% of the people are avid supporters of process improvement and 20% are avidly not supporters. The people in these two 20% groups are basically fixed and no amount of persuasion is likely to change their view. People in the remaining 60% are interested but need to be convinced. Application of the 20-20-60 Rule means that your outcome is best if you focus on the 60% group by addressing their concerns, doubts, and questions. The people in the 60% group are the ones who are most likely to get involved in continual improvement in the future.
