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"Bad hiring decisions have cost Zappos well over $100 million."

Tony Hsieh, Zappos CEO     

"A Silicon Valley Software Company"

One bad hire can lead to a domino effect of more bad hires and decisions costing a company millions, says Zappos CEO Tony Hsieh. He estimates his own bad hires have cost Zappos "well over $100 million."

Watch Hsieh discuss hiring practices at Zappos and making tough decisions on firing people who don't fit in his team.

 

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Hire Smart's predictive recruiting algorithm was validated and tuned using the simulated Hire Smart scores of the following successful people in business, sports and entertainment:

  • Jeff Bezo - CEO, Amazon
  • Tom Brady - NFL Great
  • Kobe Bryant - NBA Great
  • Tim Cook - CEO, Apple
  • Jamie Dimon -  CEO, JP Morgan
  • Thomas Edison - 1,093 Patents
  • Bill Gates - Microsoft
  • Roy Halladay - MLB Great
  • Michael Jordan - NBA Great
  • Peyton Manning - NFL Great
  • Marissa Mayer - CEO, Yahoo
  • Indra Nooyi - CEO, Pepsi
  • Barack Obama - U.S. President
  • Jerry Rice - NFL Great
  • Howard Schultz, CEO, Starbucks
  • Ryan Seacrest - Radio & TV Host
  • Emmitt Smith - NFL Great
  • Oprah Winfrey - CEO, Harpo
  • Tiger Woods - Golf Great
  • Mark Zuckerberg - CEO, Facebook

The Real Facts About Bad Hiring Decisions

  • The average cost of a bad hiring decision can equal 30% of the individual’s first-year potential earnings. (From the US Department of Labor and Statistics)

  • The successful aren’t immune, and they’ve had to learn from their mistakes. Zappos CEO, Tony Hsieh once estimated that his own bad hires have cost the company well over $100 million.

  • 66% of employers said they experienced negative effects of bad hires in 2012. Of these employers, 37% said the bad hire negatively affected employee morale. Another 18% said the bad hire negatively impacted client relationships. And 10% said the bad hire caused a decrease in sales. (A study from the National Business Research Institute)

  • 43% of respondents from the same NBRI study cited the need to fill the positions quickly as the main reason that bad hires are made.

  • It costs $7,000 to replace a salaried employee, $10,000 to replace a mid-level employee, and $40,000 to replace a senior executive. (From HR.com)

  • As much as 80% of employee turnover is due to bad hiring decisions. (From Harvard Business Review)

  • 36% of 1,400 executives surveyed claimed that the leading factor of a failed hire, aside from performance problems, is a poor skills match. The second leading factor at 30% was unclear performance objectives. (Study done by Robert Half)

  • 41% of companies polled by Vitamin T Staffing Firm estimated that a bad hire cost more than $25,000, and 1 in 4 said that it cost them over $50,000.

  • SayIt Communications calculated the ROI of a bad hire at -298%.

  • 75% of the demand to hire new employees is simply to replace workers who have left the company.

Source: Green Job Interview


 

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