The Pareto rule, often called the 80/20 rule, is a tool for diagnosing a business problem. The rule says that a problem has multiple causes, and that 20 percent of the causes account for 80 percent of the problem. Reading a Pareto chart identifies 20 percent of the causes so that you can correct them and solve 80 percent of your problem.
Read the label along the left side vertical axis, commonly called the y-axis, on a standard Pareto chart. This data will be listed in units. These units will line up with descending bars coming from the horizontal axis, commonly called the x-axis.
Line up the units of each bar with the left y-axis, which outlines how many times something occurred. For example, the chart may record the number of times a person was on hold for more than five minutes while waiting to talk to a customer service representative. The first bar, which might be labeled “Too few representatives on staff,” would be the largest and line up with the biggest units.
Coordinate each bar with the right side y-axis. This will tell you what percent of all the units that one bar comprises. If the first bar lines up with the 30 percent line, then 30 percent of the instances for your problem happened because of that cause.
Follow the upward curving line. This will attach a percentage that lines up with each bar. These percentages are cumulative. If the first bar accounts for 30 percent and the second bar accounts for 15 percent, the dot on the line above the second bar will read 45 percent, meaning these two results are causing 45 percent of the problem.
Solve your problem by eliminating the set of results that equal 80 percent. For example, if the first three bars equal approximately 80 percent cumulatively, fix these causes.
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