Investors and managers alike will be familiar with the Pareto rule of wealth distribution. 80% of your outcomes come from 20% of your efforts, while the remaining 80% of work drives only 20% of your results.
The numbers aren’t meant to be exact, but the principle applies to much of what goes into running a business.
For instance, managing a brand’s reputation might require going above and beyond the usual policy for an individual customer. But you also need to remember that guidelines exist for a reason. Staying on point with the company’s overall strategy is more likely to move the needle in this regard.
However, when it comes to managing employees, leaders can get too carried away by the 80/20 rule.
We know that it’s vital to get to know our people and maintain a good relationship with them to really achieve engagement. But people are complex units. Why make an effort if you’ll only get a marginal boost?
The trap of playing smart
Many of us have learned to evaluate decisions in terms of ROI. But in terms of employee management, ROI doesn’t always manifest in current performance.
Imagine a matrix of the employees in your organization. The x-axis is their performance, while the y-axis is their potential.
Quadrant 1 contains stars: high-performing, high-potential employees. It’s what leaders often zero in when thinking Pareto: these are the 20% of people who can make a real difference.
But if you only consider this group, it can lead to missed opportunities and even counterproductive actions elsewhere.
For example, the high-performing employees in quadrant 2 are your backbone. They might not excel if you promote them to a more advanced role based on current good results. Leave them as is, or make use of them as mentors to others.
Meanwhile, the low-performing “problem children” in quadrant 4 might see their potential unlocked through appropriate coaching. Ignoring them means failing to place them in a position where they can make a significant contribution.
And even among the ‘icebergs’ in quadrant 3, you might be able to turn things around and, in time, move them into more promising areas.
Beyond immediate results, leaders also need to find the best-fitting roles for their people in the long term. Making the supposedly smart move and focusing only on the stars is a trap. It wastes a lot of your potential ROI.
The complexity of engagement
People aren’t machines, and for many leaders, the interpersonal aspect of management presents the greatest challenge.
You aren’t supposed to do the heavy lifting yourself. You need to motivate each employee to carry out their function and ideally go the extra mile. That’s the essence of employee engagement.
From a top-down point of view, you can perceive many factors that can help engage your team members. These include compensation and benefits or company policies and programs.
But you also need a grassroots perspective to find out what really matters to a particular person.
The two-factor theory of motivation holds that job satisfaction and dissatisfaction aren’t opposites. Instead, they are separate qualities.
Some attributes of a job, called ‘motivators,’ will make people feel something along the range of satisfied to having no satisfaction. Others, termed ‘hygiene factors,’ make people feel dissatisfied or not, or somewhere in between.
But each employee defines their motivators and hygiene factors differently. Only by getting to know them will you figure out which levers you can manipulate to achieve engagement.
Zooming in and out
The Pareto rule can work for employee management, but only if you remember that it’s not an excuse to skew your focus on people who give you short-term victories.
Leaders will come and go. What separates the great ones from the rest is their ability to leave their organization in a better state because they invested in their people’s long-term potential.
Your understanding of the 80/20 effect should teach you the importance of being able to adopt both perspectives. You need to be a master of zooming in and zooming out.
Don’t just drive change from the top without understanding how that impacts employees in ways that matter.
Neither should you get involved too closely in the low-level politics and personal status battles that routinely take place at the bottom of a hierarchy.
As today’s businesses operate in an increasingly complex world, both modes of operation are critical to effectively managing people. Make it a habit to effortlessly switch between getting in close to people and refocusing on the broader strategy.
