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Blockchain's Potential to Transform HR

Blockchain technology is on the minds of many and there is no doubt that this is a red-hot concept and top buzzword of today. It comes with enormous hype about its impact on the future of most industries, and HR is no exception.

What is blockchain?

Blockchain is essentially a digital public database that stores information securely and distributes it across a network of users.
Each ‘block’ is a record of data, or a change to data, that is securely encrypted and verified by authorised users. It allows every single data change made on its network to be documented in a continuous record that is hard to falsify.
Cryptocurrencies such as Bitcoin run on blockchain, however its potential applications are much broader than finance. Using the same concept, other data can be put on a blockchain and verified and encrypted in the same way, for example sensitive employee data.
Blockchain data can be:

  • public and everyone on the network can add data
  • public but only authorised people can add data
  • only open to certain individuals or organisations, and only authorised people can add data.

The essence of this technology and the huge value that it brings, simply put, is trust. Blockchain ideology, at its core, is a kind of super-powered truth machine that is not owned by one entity but available to all its users.
With technology changing so rapidly, it can be difficult to predict the future. These are some of the applications for blockchain that are currently being developed or used today that could significantly alter the HR landscape.

1. Contracts and payroll

‘Smart contracts’ could help to provide greater protection for both employers and employees for everything from employee contracts, benefits and long-term incentives through to regular salary payments.
Storing contracts on a blockchain helps to provide an additional level of security because of the encryption required. It also means greater transparency since any changes are clearly recorded, and the contract is stored across the whole network rather than just with one or two parties.
There could also be significant savings in time and cost, particularly in cross-border payments for businesses that operate internationally. Bitwage is a company using cryptocurrency as an intermediary when sending payroll payments to international employees, taking care of the conversion. This allows value to be exchanged with full transparency and trust using a leaner and more agile route.

2. Employment history and experience validation

The most common document jobseekers use to represent themselves, the CV, carries no inherent truth. Although organisations conduct background checks and use references to cross check this information, many have still caught mistruths on CVs and many more may be missed.
What if information could be validated at the source, before it is shared with a hiring manager? Many companies are working on solutions in this space, such as and Peoplewave’s Wavebase, which aim to provide a decentralised platform for individuals to exchange validated professional data with employers.
Such platforms could give certainty to the information received from candidates. References could also be validated so they don’t need to be repeated, saving time and reducing inefficiencies in the recruitment process.

3. Learning and development

Blockchain could help to improve mass online open courses (MOOCs) by safeguarding their official accreditation and securely certifying their students’ achievements and skill sets.
It could also play a role in improving the creation, use and exchange of peer-to-peer training materials, increasing efficiency.
Cryptocurrencies or other incentives could be used to reward engaged learners, allowing them to earn coins for consuming learning materials, moderating existing content or even creating their own courses. For example, the platform rewards those who contribute their knowledge with tokens, which can then be used to redeem products in their marketplace, advertise through their platform, or get access to market data.
Use of blockchain for learning and knowledge sharing could further promote employee development, resulting in a more knowledgeable workforce and one that is incentivised to share their expertise with others.

4. Workforce productivity and security

Blockchain is all about increasing efficiency, something of benefit to the administrative and manual aspects of HR. This can range from easily securing sensitive employee data (such as medical records) and making sure only those authorised can access it through to reducing fraud in organisations. This in turn can free up HR resources to take on other work.
Blockchain technology uses security and a level of encryption that is far beyond many systems that organisations use today. Blockchain has many possible applications in driving down inefficiencies and people costs, and helping people do their job in a better way.

The future of blockchain

Having data validated and decentralising it across many individuals carries a real cost in electricity. These individuals also need to be incentivised to take an active role in this process of checking and writing information to the blockchain. Incentive structures are very difficult to design but they sit at the heart of these systems. An example is ‘mining’ for bitcoin, which rewards ‘miners’ for recording the confirming transactions took place and recording them on the blockchain.
Many of the existing ledger platforms are not efficient or economical enough to be used in all applications as they stand today. For example, it has been estimated that if you were to try and use Bitcoin to process the number of transactions Visa typically processes each minute (if it were possible) it would use as much energy as the entire world put together. That being said, technologies are being dreamed up and improved each day that will help more efficient platforms come into existence.
Blockchain technology in its current state is still being improved, but the core idea of a single source of truth is what is generating so much excitement. Some of the smartest minds on the planet are working on these solutions and we will continue watching with fascination at this rapidly evolving space.
For more information on blockchain technology, check out this Institute for the Future video and Forbes article.


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