Guest Blog from Terry Edwards of Drew Coaching.
If you are an owner or director of a Recruitment or Search Firm, then these two numbers are something you’ll have to pay very close attention to….
The significance of these two numbers was first discovered by an Italian economist who went by the name of Vilfredo Pareto…
Who, in his studies of the disparity of wealth in society, unwittingly stumbled on what we now know as "the 80/20 Principle".
In short, it means in any system the majority of effects come from a small number of causes...
In Vilfredo's case, he found 80% of the wealth was owned by just 20% of the people.
But the relationship holds true all over the place:
In software, just 20% of the functions are used 80% of the time
Just 20% of your carpets get 80% of the wear
80% of the people live in 20% of the towns
80% of people die of just 20% of the most common causes
80% of crime is caused by just 20% of the criminals
80% of your profits come from just 20% of your sales
80% of your headaches come from just 20% of your worst clients
80% of all your results come from just 20% of your work
20% of your consultants generate 80% of your revenue
And so on...
The numbers aren't always exactly 80/20 and they don't have to add up to 100, so you might find they're 99/1, 75/25 and so on.
The point is... wherever you look in the universe the principle holds: the overwhelming majority of effects come from a small number of causes.
As Recruitment or Search business owners we ought to find this truly profound and awesome.
Here's an example of why I say this: imagine for a moment you make £10,000 a week, working five days, Monday to Friday (40 hours).
If the 80/20 Principle holds (and it does, I promise), then you'll find you make £8,000 of that £10,000 in just one day, say Monday or in just 8 hours spread across the week.
So the question then is... would you take a 20% cut in pay for an 80% cut in your working time?
You'd have to be completely bonkers to turn an offer like that down, wouldn't you? Because you'd then have an extra four days a week to find ways of making that 20% (and a whole lot more) back…
This isn't just theory. I've actually done this with Recruitment and Search Firm Owners from all over the world.
The 80/20 relationships does exist in your Business and simply by focusing our time and energy on the small number of things giving us the greater part of our results we necessarily forge ahead of our competitors in leaps and bounds.
And it just happens to be one of the things covered in the best selling book
The 7 Deadly Threat to Your Recruitment or Search business
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