How to Create an Easy Pareto Chart to Highlight Your Biggest Opportunities

A Pareto chart is a bar especially designed to show information in descending order. Read on to learn when to use it and how to easily create one. 

If you’re not analytically inclined, don’t let the idea of creating a Pareto Chart put you off.

It’s a deceivingly simple tool that can add real punch to presentations and decision-making sessions.

When you want to show where to place your efforts and highlight where your biggest opportunities are, a Pareto Chart can be just the tool to use.

They’re great tools for quality control, too.

When you’re looking for ways to improve quality and want to know where to focus your efforts, a Pareto can point the way. 

First, a Quick Origin Story

The Pareto Chart is named for the Pareto Principle, or the 80/20 Rule. 

The Pareto Principle, or 80/20 Rule, states that 80% of the impact is caused by 20% of the effects. 

This principle is named after Vilfredo Pareto, an Italian economist and sociologist, who’s online pictures show a dashing man with a hipster beard. I couldn’t find one I could easily (legally) use, so here’s my quick back-of-the Post-It-Note attempt to draw him. His eyes weren’t that crooked. 

My quick back-of-the Post-It-Note attempt to draw Vilfredo Pareto.

Vilfredo Pareto observed in Italy that 20% of the population owned 80% of the property. He then projected this concept out to other countries.

And today we’ve taken this concept and applied it to other things, as well, such as time management and quality control.

What is a Pareto Chart?

A Pareto chart is a bar chart that organizes and shows data in descending order from left to right. 

You can use Pareto Charts to plot activities and things to help you see them more clearly in relation to other behaviors or things.

You can use Pareto Charts to plot activities and things to see them more clearly in relation to other behaviors or things. 

It’s organized to distribute information in descending order so you can see the group with the highest number or amount at the beginning.

It shows you causes of or inputs to a problem from largest to smallest or most to least. 

Why and When to Use a Pareto Chart

If you’re comparing items, a pareto chart shows where most of the items lie.

If you’re looking at support tickets, you can plot the topics or problems across a Pareto Chart from highest number of ticket issues to lowest number, and see what problem results in the highest number of support tickets. 

A pareto chart used this way will tell you what problem most people are creating support tickets for. 

You’ll get a clear picture of where most of the problem lies.

This in turn can tell you where to put most of your attention in correcting problems. 

If you want to show what customers are complaining about most, plotting the information on a Pareto Chart will quickly show you what the most complaints are about. 

I’ve told you before to use charts and graphs to make your presentations more powerful. This is another great one to try.

A Pareto Chart is a great tool to include in presentations to quickly show comparison data in descending order.

How to Create the Pareto chart

The most surprising thing you’ll find is just how easy it is to create a Pareto chart once you have the data you want to compare. 

nce you have the data in Excel, it’s as simple as clicking a few buttons to set up the Pareto chart. 

You don’t even have to order the data. Excel will do that for you. 

Let’s walk through an example to show you how to do it.

Follow these steps to create your chart:

For our example, let’s say you want to know where to focus your efforts in resolving problems your customers may be experiencing with different software systems.

I’m working from a Mac, but the instructions are basically the same in Windows. 

1. Gather the data you’re going to compare. 

First, generate a list of your items and the count for each. In our example, it’s a list of software systems and the number of complaints for each for the month of July.

2. Enter your data into Excel.

Put the list of software systems and the number of complaints into an Excel spreadsheet. Notice that I haven’t ordered them in any special way. There’s no need to.

Then use the chart maker in Excel to create the Pareto chart.

3. Highlight the cells you want to include in your report.

In our example, we’d highlight cells A1 through B8:

4. Select the Pareto Chart from your bar graph options.

Once you’ve highlighted your cells, from your top menu, choose “Insert”, then select the Table option, and choose the Pareto Chart option.

And just like that your computer will generate a Pareto Chart:

5. Edit as desired.

You can edit the title and format the text for the columns to look more attractive or easier to read.

In the example below, you see the SERGE system gets significantly more support calls than any other system. You can then determine why and take steps to reduce the number of support calls for that system.

Summary

The Pareto chart may sound intimidating, but now that you’ve seen how simple it is, you can incorporate it into your work. It can tell you a lot in one quick picture.

Compiling the data may take more time, but once you have the information, you can tell a story very quickly.

This gives you the ability to take action on the information you have.

You’ll be able to focus your efforts where they can make the most impact.

2 Comments

  1. Dave Gordon August 25, 2019
    • Leigh Espy August 27, 2019

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