Bad Game in Today’s Recruitment

Magic Leap, the Florida based startup develops futuristic AR glasses, which raised $502 million in October 2017. The glasses produce a hallucinatory effect by superimposing advanced computer graphics onto the wearer’s view of the real world. No one expected to see the fraud scheme worth $1M inside such a successful company.

Since 2011 Magic Leap raised $1.9 billion in total which makes it the most well-funded startup in the AR industry. It’s augmented reality technology has fascinated early users, including celebrities like Shaquille O’Neal and Steven Spielberg, who have been granted access to its Florida test lab to try prototypes. The next most richly funded AR startup is Pokémon Go parent Niantic, which has raised $225 million.

From its beginning in 2011 with just a few employees in a room, Magic Leap has grown into 1,400-person organization, despite the fact that it has not launched a commercial product yet. The rapid growth created the opportunity for fraudsters to earn from the company. Magic Leap filed an incident report with the Plantation, Florida police department in October 2017 which alleged that an outside recruiting firm falsely claiming to have filled jobs at the company and collected the fees.

The report describes a hiring agency called the Hampton Group, which Magic Leap said worked with the company’s Senior Manager for Talent Acquisition at the time, Cheryl Martin.

According to the October 19 police report, with Martin’s help, the Hampton Group invoiced Magic Leap for more than $1,000,000 in recruiting fees for 39 hires from August 2015 to July 2017. After an internal investigation, the company found the Hampton Group had no involvement in any of those hires, a Magic Leap auditor told the police.

According to the Business Insider, Magic Leap wants to press charges. The investigation is ongoing, said a person familiar with the matter. A representative from the Hampton Group declined to comment when questioned by Business Insider as well as Magic Leap’s spokesperson.

This led to problems with trust in the overall project. Next Reality notes that it’s just another in a long string of staff shakeups that point to what may be an aggregate management problem at Magic Leap:

“If Magic Leap is having this much trouble with the basics, at its highest executive levels, there’s at least “some” reason to be concerned about its overall ability to execute on what may be the most ambitious and best-funded augmented reality startup in history.”

How to distance your company from such recruitment agencies?

This situation is one of the biggest cases of frauds in recruitment industry of 2017. But it’s not the only one. Remember the case of NHS (National Health service in the UK) where agency promised doctors to pay three times more if they agreed to become ‘temporary replacements’ instead of usual workers in 2011? NHS’s budget was not ready for that.

What is more important, it might not have happened at all if the company used blockchain technology. One of the strengths of blockchain is the transparency of data which means that everyone is aware of transactions inside of the company and outside of it while working with strategic partners such as outside recruiting firm. Also, you can always see where the data about new hirings is stored. For example, if the C-level managers knew that the cost of hiring in Magic Leap is more than $25.641,03 per person, they would probably ring the bell earlier before the number grew to seven-figure paycheck.

Moreover, you can stop using the help of outside recruiting agencies at all. The middlemen are no longer needed in recruitment because with the power of blockchain anyone can become a recruiter and recommend candidates for vacancies. For instance, Aworker is the platform that helps to find the most suitable company and job position based on your psycho-type, professional skills, and achievements. Decentralization provides the best opportunities for creating a new professional ecosystem. It makes it easier to pay people for their actions in Aworker platform: with the power of smart contracts payments for acquaintance’s recommendation or coming to the job interview by yourself are automatic. Also, all information is securely stored, and all the actions are transparent which exclude the chances of getting trapped with expensive yet unnecessary obligations.

We believe that it is the best time for recruitment industry to adopt new technology and invest in the future.

Let me know what do you think about Magic Leap case and how do you think they could prevent that to happen in the first place?