The 80/20 Principle: The Secret to Achieving More with Less

by Richard Koch

I arrive at this conclusion from the 80/20 Principle’s argument about arbitrage. Eighty percent of the value in any organization or profession comes from 20 percent of the professionals. The workers who are above average will tend to be paid more than those who are below average, but nowhere near enough to reflect the differential in performance. It follows that the best people are always underpaid and the worst people always overpaid. As an above-average employee, you cannot escape from this trap. Your boss may think you are good, but will never credit your true value relative to others. The only way out is to set up in business yourself and, if you are so inclined, to employ other above-average workers. Don’t take either of these steps, however, if you aren’t comfortable with being self-employed or a boss.