Use Pareto’s Law to improve your time management skills

Would you like to make $124 per hour?

Are you worth $124 per hour? If that sounds too high — I get it, you’re humble — then what about a flat $100 per hour? If even that sounds too high, then you might be selling yourself short.

Let me explain.

Pareto’s law is also known as the 80/20 rule. In short, and in most any situation imaginable, it means that 80% of the results are generated by 20% of the effort.

20% of your customers will generate 80% of your company’s problems.

20% of your customers will generate 80% of your company’s sales.

20% of the world’s population own 80% of the wealth.

20% of the world’s nations produce 80% of the world’s GDP.

You can test that last one. Go to Wikipedia. Total the GDP by county. Then examine the percentage GDP held by the top 20%:

But the beauty of Pareto’s law is that it applies to itself: 20% of the 20% generates 80% of 80%, or 4% of the effort generates 64% of the results. 0.8% of the effort generates 51.2% of the results.

This applies to your daily labors, too. I recently posted an article about electrical engineering salaries. The average salary in 2014 was $95,780, or $46 per hour. In an eight-hour day, that engineer earns $368.

Based on the 80/20 principle, 20% of a day’s hours produce 80% of his salary: 1.6 hours earns $294.40. Applying Pareto, you’ll find that the most productive hour of this engineer’s day is worth $124.

For an engineer who earns $72,800 per year, the most productive hour of his day is worth $100. His least productive hour is worth about $15. If you break it down into minutes — there are 480 in an 8-hour day — then you’ll find that his most productive minute is worth $27.

His least productive is worth 13 cents.

The practical take away is this: what are the 20% of your daily tasks that earn 80% of your day’s pay?

To increase your productivity and your worth, you need to identify the 20% of your daily or weekly tasks that generate 80% of your value, then focus. Start delegating the bottom 80% to lower-paid individuals (or computer programs) while you start doing more tasks related to the top 20%.

Applying this to your career will not produce linear results — instead, the results will be exponential.

Perry Marshall wrote a great book about this called “80/20 Sales and Marketing.” He goes through all of this, and much more. I think it’s worth a read.

It might be in the top 20% of the books you’ll ever read, if not the top 4%. You can find it on Amazon by clicking the following link:

Think of it this way: if you mastered this principle, it would mean you could work just one day a week out of five.

Think about how much more you could accomplish over the next 30 years by freeing up those four days.


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