Blockchain started making headlines in 2015, and it’s been the talk of the town ever since.
While it is a mystery technology to some in the Human Resources (HR) industry, it’s a boon for others. What’s sure is that it is here to rule and gain popularity. Let’s look at what will happen when blockchain meets HR.
The rising use of Bitcoin and other types of cryptocurrencies such as SHIBA, Dogecoin, and Ethereum has popularized the idea of blockchain. This technology holds the potential to revolutionize the way businesses and commerce operate at the fundamental level.
Getting the basics clear
Blockchain is known to offer greater security, transparency, and efficacy. Essentially, it is an immutable, shared database of information. Compared to conventional networks where data is kept on a single server and owned by one company, with blockchain, the data is collected in blocks, which is verified by several participants on the network and then added to the chronological chain. Thus, permanent storage of data on a global network of computers offers a distributed and decentralized network that is very hard to corrupt.
The popularity of this system has compelled key players, including Microsoft Corp., JP Morgan Chase and amp; Co., and Walmart Inc., to invest in this technology for betterment. Big, small, and even medium-sized industries, too, have been following this trend.
As per Gartner
(https://www.gartner.com/smarterwithgartner/5-ways-blockchain-will-affect-hr)
As per Gartner, blockchain will produce about USD 3.1 trillion in business value by 2030. While a major amount of these returns will result from value generation and efficacy enhancements in present operating models and business processes, the real value will come from the way it enables a paradigm shift in how societies, businesses, customers, partners, and individuals interact, create and exchange value.
Matthias Graf, Gartner Senior Director Analyst, said, “The hype surrounding blockchain is typical of technologies in the early, experimental stage. But business leaders shouldn’t underestimate the disruptive nature of blockchain-based solutions. Blockchain will not only impact IT but every function. HR leaders who fail to do sufficient scenario planning and experiment with the technology accordingly risk significant long-term disintermediation.”
One need not be an IT expert to understand the fundamental principles of blockchain. Knowing the basics can help understand its potential to change key HR activities.
Blockchain allows trusted interactions between unknown participants by integrating five design elements to authenticate users, validate transactions, and record information to a digital ledger in a way that can’t be corrupted by participants or altered after the fact.
Following are the five key elements that are required for true blockchain:
- Decentralization
- Distribution
- Tokenization
- Encryption
- Immutability
Blockchain for HR – an unknown story
Blockchain applications are virtually endless – from managing self-driving cars to protecting our online identities against fraud and much more.
But the unknown story is of blockchain’s potential impact on the HR industry.
If your eyes have already glazed over, think about the capabilities and components of blockchain for businesses so that they can engage with talent in real life. Just imagine blockchain connecting all vendors, companies, communications, and people seamlessly within your organization. Imagine the following under one roof: In-house talent, contractors and third-party suppliers, cross-functional communications, authorizations, pilots, stage-gate reviews, budget approvals, etc.
The idea of executing blockchain in the HR sector is a very interesting and fascinating prospect. For example, the technology will help create efficacies, enhance productivity, save cost and time, advance the way we work, and improve candidate and clients experience. The application of blockchain technology within the HR sector will offer significant opportunities to address the challenges of traditional job searching, hiring, and application processes.
There are three HR procedures where blockchain technology is spreading its magic to change the rules at lightning speed – payroll, recruitment, and contracting.
1. Payroll
Nowadays, most employees get paid electronically, but firms that operate on an international scale have to deal with annoyances (changes in the exchange rate of currencies, more extended time to process amount) when sending payments overseas. Often, changes in the exchange rate of currencies affect the value of the payment. Above all, payments often take a long time to process due to intermediaries such as banks slowing down the payment process. Blockchain can save time by offering a speedier payment solution in a century where time is money.
For instance, Bitwage combines blockchain technology with cloud and mobile technology to facilitate cross-border payments. It utilizes Bitcoin as an indirect payment method; employees eventually get paid out in their local currency as the company processes bitcoin conversion to local funds.
2. Smart contracts
Blockchain technology and smart contracts can truly turn the tables on how firms handle contracting. A smart contract generates immutable and enforceable rights and obligations for all participants. For instance, immutable agreements in HR can automatically release payments from escrow once employees complete their allocated tasks, which smooths pay for workers and cash flow for organizations.
Oracle has applied for a patent to utilize blockchain technology to advance efficacy in employee workflows.
3. Recruitment of candidates
A survey by CareerBuilder stated that about 58% of the employers found false data on an applicant’s CV. Screening the accuracy of such data is often a tedious job for HRs. Verifying references and scholastic credentials simply cost a lot of time and money. Here comes blockchain technology that can speed up and automize the way employers verify the credentials of prospective personnel, leading to a better fit between candidates and positions. This will also enhance productivity which is essential for Small and Medium-sized Enterprises (SMEs) who often struggle to recruit suitable candidates.
Furthermore, this technology can eradicate the HR department’s need to verify documents such as previous job experience and educational qualifications, and also transactional data including tax information, medical certificates, and address changes. Once the data is created by the source and stored in a block, the HR system can simply link to that record and automatically accept its authenticity, without the need for manual validation by an actual person.
Such a system would be “always-on”, meaning that candidates can be screened based on their current skills — not just the ones they choose to share on their CV. This way, blockchain technology can eradicate a complete stage of the interview process, allowing HR to concentrate on other important factors such as the candidate’s aspirations and personal goals.
Career verification platform APII is assisting TechnoJobs to become the number one job site in the world to offer blockchain-validated CVs to employers.
Blockchain technology: An opportunity for HR
This bobbling technology holds the potential to develop efficacies, enhance productivity, save time and costs, change the way we work, and enhance candidate and clients experience.
Additionally, implementing blockchain technology can help recruiters and HR personnel dedicate more time to work that needs human creativity and emotions, traits that technology cannot mimic.
Final take
In the end, it’s high time the HR industry starts adopting data and technology to help people and organizations make great matches. Human capital professionals will be able to make talent decisions based on better data at lower costs, and technology will transform recruiters into talent advisors, enabling them to play a more strategic role in the organization.
Even if the technology is still in its infancy, it is already making a difference in the world of HR recruiting.
If you have come this far in the article, I can only assume you enjoyed the read!
