Generational Leadership and the Pareto Effect

The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.

By Earl Plumlee
June 16, 2015

When Teddy Roosevelt said, “Nothing in the world is worth having or worth doing unless it means effort, pain, difficulty,” he probably wasn’t referring to leadership. Leadership requires a lot of effort. It is painful at times and often difficult.

Great leaders have always been valued and they are in especially high demand by today’s diverse workforces. Organizations are willing to pay big for great leadership skills, but are they getting their money’s worth? A report from Forbes.com found that in 2014 American organizations spent over $70 billion on leadership training. Another study conducted by Staffbay.com surveyed 15,000 employees and found 82.7 percent did not trust their boss. Why does the return on investment appear so small?

The answer may be a theory known as the Pareto Effect. Also known as the 80/20 rule, the Pareto Effect says 80 percent of a leader’s efforts will be spent on 20 percent of an organization’s employees. Leaders, especially new ones, struggle with the Pareto Effect’s influence on today’s demographically rich workforce.

The 80/20 rule is not a lack of effort; leaders want to be successful. Even the best leadership program will conform to the Pareto Effect. Leadership models attempt to maximize leadership effectiveness by placing employees into narrowly defined categories. Such practices only amplify the Pareto Effect. Human beings are too complex to be placed in narrow categories. Leadership models identify and target demographic commonalities, not diversities.

At some point, every organization’s demographic makeup will change. Humans are living longer. As a result humans are remaining in the workforce longer too.

Generational leadership is a promising model designed to lead employees based on traits and values associated with their generational demographic. In Validating Generational Differences , Paul M. Arsenault studied differences between generations. He defined these differences as “shared tradition and culture by a group of people that is lifelong.” This is the foundation of generational leadership. Leaders are taught traits and styles valued by different generations represented on their team. Once a leader understands what’s valued by the different generations, his or her leadership style can be adjusted to effectively lead a more diverse range of employees.

Generational leadership recognizes an aspect of diversity often overlooked by other leadership models but it still doesn’t adequately mitigate the Pareto Effect. Not because of a flaw in the model but rather because every human demographic including generational are subject to the 80/20 rule. Generational leadership in its current form is not comprehensive enough to account for and offset the Pareto Effect. Generations are defined by shared traits and experiences. This is true, but variations within the generation must be considered as well. Take Generation X for example; the traits, values and experiences of an employee born in 1965 will be different from those of an employee born in 1980. Both are members of Generation X but are unlikely to value the same leadership style. Even if the model evolves to consider this, so will the Pareto Effect.

Considering just the differences within Generation X, a leader can safely assume the traits and styles identified by the generational leadership model are most likely those valued by employees born between 1967 and 1980 (the middle 80 percent of the generation). If the leader then removes employees born in years where generations overlap, the years become 1967 to 1977. Within this 10 year time frame, 80 percent of the leadership style applied will work for 20 percent of the remaining employees. Add back in the unaccounted for years and the effectiveness of generational leadership drops to 16 percent. This means on average, generational-based leadership decisions will fail to produce the intended result 84 percent of the time. The model’s effectiveness decreases further when additional generations are introduced. Maybe Staffbay is on to something.

The variations leaders must consider are limitless. For example, the formative years of Generation X are defined by war. Generational leadership considers this fact. What Generational Leadership may not consider is which war? Vietnam era America is drastically different from Gulf War 1 era America. Both wars affected a portion of Generation X, so saying the generation’s formative years are defined by war is factually correct. Employees from both eras may be members of Generation X. However, the traits, culture and leadership styles valued by employees from these two eras are completely different.

The overall success of any leadership model, including generational leadership, is determined by its application. It will work for most employees some of the time and some employees most of the time. It will not work for every employee every time.

Great leaders consider the individual profile of the employee he or she seeks to lead. Leaders capable of applying the concept of generational leadership at the right time will experience success. Leaders who overuse generational leadership will inevitably experience diminished returns. Great leadership is not the ability to lead a team. Great leadership is the ability to lead the individuals that make up a team. Generational Leadership should only be one aspect of a leader’s style. Great leaders should consider the traits of an employee’s generation only to narrow the possible options available.

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Author: Earl Plumlee is a MBA/MPA candidate at the Presidio Graduate School.

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