3 Examples of a Pareto Chart in Business


A Pareto chart is a graphical tool used to display the relative proportions of occurrence of different values. The chart is named after Vilfredo Pareto, an Italian economist who observed in the early 20th century that 80% of the land in Italy was owned by 20% of the population. The Pareto principle, also known as the 80/20 rule, states that, for many events, roughly 80% of the effects come from 20% of the causes.

Pareto charts can help identify the vital few tasks that need to be completed to achieve a goal. They are created by organizing data into columns and then drawing a line graph with the values on the vertical axis and the frequency on the horizontal axis. The most important factor will be at the top of the chart. Today, we’ll examine a few examples of a Pareto chart in business.

Example 1: Prioritizing Tasks

The first example of a Pareto chart in business is to assign a priority to each task. The priorities can be based on importance, urgency, or any other important measure to the business. The tasks can then be sorted by priority, and a chart can be created that displays the percentage of total tasks in each priority group.

The vital few tasks will be a small percentage of the total number of tasks in many cases. This means that most of the work needs to be focused on the few tasks that have the biggest impact. Completing these tasks can help a business achieve its goals.

Example 2: Analyzing Employee Skill Levels

A Pareto chart can analyze employee skill levels. It can help identify the areas in which employees need the most improvement. The chart is divided into two columns: the left column lists the skills that employees need to improve, and the right column lists the percentage of employees who need to improve on that skill.

The chart can identify which skills are the most important to improve. It can also help identify which skills are the most difficult for employees to improve. This information can be used to develop training programs targeting areas in which employees need the most improvement for a more personal training experience. As a result, your employees will improve faster and feel more valued by the company.

Example 3: Analyzing Sales by Product

Businesses can take a few different steps to use a Pareto chart for their sales data. First, businesses need to gather data on the sales of different products. This data can be gathered in various ways, such as through surveys, customer data, or sales reports. Once the data is gathered, it needs to be organized to make it easy to analyze. This can be done by sorting the data by product and then calculating the percentage of sales that each product represents. Once the data is organized, it can be graphed using a Pareto chart.

Once the chart is created, it can be used to help businesses make decisions about which products to invest in. The chart can help businesses identify which products sell the best and which ones do not. This information can then be used to make informed business decisions about allocating resources and which products to focus on. Ultimately, by analyzing sales data by product, businesses can better understand their customer base and what products are most popular.

Pareto Charts in Business

As you can see, there are many uses for a Pareto chart in business. These versatile charts can help the technical analysis of your business processes, employees, sales, and much more that we didn’t cover today. If you want to maximize your business’s efficiency, consider implementing Pareto charts.