As a training professional with more than 25 years of experience, I’ve used Pareto Analysis to help prioritize the development of training options. This technique allows you to identify problems that will be fixed by making changes. Developed by Joseph Juran, the idea is that 80 percent of outcomes result from 20 percent of causes.
A Pareto chart helps you identify the root cause of problems. To do this, you list all the problems, such as skill gaps. Then, you try to identify the root cause of each one and score the impact of the problem, such as from one to five. The next step is to categorize the problems by cause and add up the scores for each group. The category with the highest score becomes your highest priority. The purpose is to focus efforts on a few causes to make better use of resources.
- To create a Pareto chart, create a bar chart arranged in descending order from left to right.
- View an example to get an idea of how these allow you to breakdown a problem. For example, to create a histogram in Excel, you need to first load the Analysis ToolPak to add the Data Analysis command to your Data tab.
- Put your input data is in one column. For example, list skill areas that have gaps, such as Project Management, Process Improvement, Influencing, Supplier Management, Presentation Skills and Financial Acumen.
- LIst the occurrences of evidence of skill gaps in these areas in the next column. You can select both columns and create a bar chart to visually depict this data.
- Additionally, click the Data Analysis item on the Data tab and choose the Histogram option. Click the OK button. Select the cells for the input range. You can also select a bin range, such as 20, 40, 60, 80 and 100, for the values to see what “bins” the problems occur in.
You might also calculate the percentage of the total and the cumulative total to figure out which of the top problems comprise 80%. This helps you focus on addressing the top problems and leaving the lower priority items for later.
Sometimes, you may need to view the data in different ways to reveal meaning. When no single bar is vastly different that others, you need to look for another way to categorize the data. You can focus not on the skill gaps but the impact to sales. That may reveal a result that you can take action on!