Many at times, persons assuming the highest portfolio in a company find it quite challenging to make decisions especially if they face a plethora of problems that needs quick attention. Ideally, this is a bad situation given that the department ought to realize its objective. Nevertheless, there are many ways of fixing these problems by making informed solutions to the problems.
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The most common way of making decisions aimed at solving various problems in a company or department is the Pareto Analysis. This technique mainly focuses on making possible adjustments aimed at addressing the root causes of the problems. Consequently, this will assist in improving the situation.
Pareto Analysis, the 80/20 Rule, applies the Pareto Principle, which literary means 20 percent of the causes generate 80 percent of the outcomes. Thus, by applying the Pareto Analysis, the manager will focus on how to find 20 percent extra work to generate 80 percent of the results, which will eventually change the situation from worse to better.
Since the two figures are just illustrative, it is imperative to note that the Pareto Principle does not have symmetry. In other words, 16 percent of the work can generate 84 percent of the outcomes, or better still; the manager can solve 72 percent of the problems facing a department by only addressing 28 percent of the causes (Bithas, 2008, pp. 373-380).
This principle in justifiable in daily career life as it multiples profitability and ensures effectiveness of individuals. For instance, suppose a manager heading the sales section of a company wants to increase the number of sales of the products. The first thing to look at is the product range and analyze the profit coming form each item.
Thus, putting in 20 percent of the effort, there will be 80 percent sales returns. If these sales returns come from the 20 percent customers, you can cherish or reward them. Additionally, the manager can do advertising in certain places to win more customers hence, more sales.
Using the Pareto Analysis, it is paramount to note that it is indeed a perfect mechanism to ensure that one succeeds in the daily career life. However, success does not come on a silver plate. Instead, one must be willing to follow certain steps in order to succeed, in this case the Pareto Principle. Firstly, one need to identify the area under question, identify and list all problems that need attention.
Next, it is imperative to talk to clients and colleagues to understand their views, before making any surveys or helpdesk logs. Secondly, since the problems are now known, it is now time to find out the fundamental root cause of each problem. Here, Pareto Principle provides a number of techniques of doing this, for example, root cause analysis, brainstorming, cause and effect analysis, and 5 Whys.
The third step is to score each single problem. Notably, the scoring method chosen only addresses a specific problem. Take for example a situation where a company wants to maximize its profits. The scoring method can be the cost of an item presently. On the other hand, if the problem is customer dissatisfaction and one wants to improve it, then the probable solution is through eliminating the number of complaints.
The next step is to put together group problems based on their causes. For example, the company or organization can have three problems caused by one root cause. Put these in one group and go on. Having done that, the fifth step is to compile the total score for each group. Consequently, the group with highest score will definitely receive highest priority.
Lastly, it is now time to take action by addressing the root causes of the problems of groups classified as of highest priority by using various techniques. In conclusion, Pareto Analysis not only helps in solving problems, but also, illustrates the severity of the problem. It is quite true that the Pareto Principle makes many people realize success in their daily career life (McGrath & Macmillan, 2009, pp. 25-30).
Bithas, K. (2008). Tracing operational conditions for the ecologically sustainable economic development: The Pareto optimality and the preservation of the biological crucial levels. Environment, Development and Sustainability, 10(3), 373-390.
McGrath, R. & MacMillan, I. (2009). How to rethink Your business during uncertainty. MIT Sloan Management Review, 50(3), 25-30.