80% Rule (2024)

FAQs

What is the 80% rule formula? ›

The Pareto Principle specifies that 80% of consequences come from 20% of the causes, asserting an unequal relationship between inputs and outputs. Pareto analysis states that 80% of a project's results are due to 20% of the work, or conversely, 80% of problems can be traced to 20% of the causes.

The 80/20 rule suggests you focus on the few more important items that will generate the most significant results. It does not mean you ignore the rest, but simply allocate your effort and prioritize appropriately.

The 80% rule was created to help companies determine if they have been unwittingly discriminatory in their hiring process. The rule states that companies should be hiring protected groups at a rate that is at least 80% of that of white men.

“80/20” refers to the idea that boards can produce 80% of the benefit from doing 20% of the work. In other words, prioritizing solutions which address the top 20% of causes contributing to a problem allow boards to mitigate 80% of the damage. Pareto analysis is, essentially, the application of the 80/20 Rule.

Put in stark terms, 20% of what you do matters, the rest is a waste of time. The key to success is identifying the crucial 20% of input and prioritizing it. The 80/20 principle permeates business: 20% of customers, and 20% of products, generate 80% of revenue. My firm has seen this play out hundreds of times.

The 80/20 principle can be vital where work needs to be driven by relentless incremental progress. Finding the smaller percentages of actions that can yield the most impact in parallel with a few very big transformations is the key to much of effective risk management.

The essence of the rule is that 80% solutions are usually good enough – especially in business, since we typically make dozens of material decisions every week as we deal with the myriad of issues afflicting every company.

Pareto Analysis is a simple decision-making technique for assessing competing problems and measuring the impact of fixing them. This allows you to focus on solutions that will provide the most benefit.

The Pareto principle (also known as the 80-20 rule, the law of the vital few, and the principle of factor sparsity) states that, for many events, roughly 80% of the effects come from 20% of the causes. From a business vantage, "80% of your sales come from 20% of your clients".

The 80% rule

Originally, the Uniform Guidelines on Employee Selection Procedures provided a simple "80 percent" rule for determining that a company's selection system was having an "adverse impact" on a minority group. The rule was based on the rates at which job applicants were hired.

What is the 80/20 rule in dating? ›

Love and the 80/20 rule

For instance, you can expect to get 80% of your needs met by your partner in your relationship, but the other 20% is up to you. In another context, you can expect satisfaction from your relationship 80% of the time, while the other 20%, not so much.

80% of crimes are committed by 20% of criminals. 80% of sales are from 20% of clients. 80% of project value is achieved with the first 20% of effort. 80% of your knowledge is used 20% of the time.

Age at retirement + Years of pensionable service = 80

If the sum of these two parts is equal to (at least) 80, you could be entitled to an unreduced MEPP pension as early as your 55th birthday.

The rule of thumb is that to you'll need about 80 percent of your pre-retirement income to maintain your lifestyle in retirement, although that rule requires a pretty flexible thumb.