Blockchain, typically associated with cryptocurrency, allows money to be stored, used, and transferred securely online. However, the principles of blockchain are being applied to other areas of business worldwide. For example, owing to blockchain being decentralised, HR processes can be simplified and made more secure. Although in its teething stages, startup companies including Lympo and Peoplewave are already using blockchain. Further, Gartner, Inc. predicts the number of businesses using blockchain will rise to around 50% by 2023. With this in mind, we will tell you what blockchain is and how it will revolutionise HR.

What Is Blockchain?

We’ve spoken a lot about blockchain technology, but what is it? Simply put, blockchain is a means of storing electronic information on a system that is practically near impossible to hack or breach. A blockchain is a form of Digital Ledger Technology (DLT). Everyone on a blockchain network will have the DLT stored and be able to access transactions. When new transactions take place on a blockchain, they are distributed to all ledgers. Each transaction is assigned a unique cryptographic signature (hash). If a hacker attempts to change a hash, everyone across the blockchain would see it. Therefore, transactions performed on the blockchain are secure and made public. Now, let’s see how blockchain technology has started to impact the future of HR.

Smart Contracts

Smart contracts, which improve the wages payment process, are already being adopted by 50% of blockchain-enabled businesses. These smart contract programs run on a blockchain and include an agreed set of conditions between an employee and employer. Once all conditions are met, the blockchain activates and transactions are made. For example, the condition could be that once it hits a certain date of the month, wages are paid immediately. By using smart contracts, payments are fulfilled immediately, information is encrypted, and there’s no need for external agencies. With the rise of the gig economy, freelance workers would benefit from smart contracts.

Note for employees: you will receive your wages in cryptocurrency. Then, you can swap your Bitcoin to cash. We suggest using Paxful because of its peer-to-peer interface. There are over 300 ways to get paid, which can be narrowed down by defining your search terms.

Verifications

Onboarding talent takes time, and the ID verification process is no exception. Currently, an employer will need to verify identities by using countless third-party agencies. Then, if the employee applies to another firm, the process starts all over again. When a future employee validates their identity on a blockchain, it only needs completing once because information can be accessed in the future. Owing to the nature of blockchain, control of information is in the user’s hands. Having the ability to access validation information at the click of a button will allow HR staff to focus on more important aspects of their role.

Recruiting

Recruitment is a time-consuming HR process that seemingly never ends, and businesses hire third-party recruitment agencies to free up time. However, despite saving time, these services charge high fees. Luckily, thanks to blockchain technology, the need for third-party agencies is removed. Potential employees will upload information to the blockchain, which will act as a digital passport viewable by all involved. Therefore, before the interview stage has begun, validation has taken place.

References

Historically, HR departments relied on references to assess an employee’s work history. However, thanks to the introduction of blockchain, traditional references are becoming extinct. When an event happens in an employee’s work history, it will be added to the blockchain and be viewable to future employers. For example, if someone completes a qualification, the results will be added to the blockchain, making them impossible to falsify. 

Employee Recording

Currently, the onboarding process is an extremely lengthy one that involves gathering information, validating employment history, running security checks, and storing information securely. Typically, additions to the record will be added throughout an employee’s life-cycle. Then, once someone’s employment has ended, HR staff will need to collate information and hand it over to future employees. Through blockchain, information will already be available, which will save time for everyone.

Secure Transactions

When you read about transactions within a blockchain, it points to anything added to the blockchain including work history, cryptocurrency, and any other personal information. By using blockchain tech, businesses can say goodbye to data breaches, thanks to the security of cryptography. When blockchain becomes widely used, understood, and accepted, it will put employees’ and employers’ minds at rest.

Tracking Attendance

Blockchain can make attendance tracking a smooth process. If businesses use a biometric scanner linked to a blockchain, an employee’s attendance will be registered and it can’t be argued. On the same merit, if an employee is late or misses a shift, there is no way to alter the attendance roster. If businesses use blockchain for attendance purposes, there will be complete transparency between payroll departments and HR.

Audits and Compliance

When businesses are audited, required documents are spread across digital systems and paper storage. Gathering essential information takes time, and missing data can be falsified. However, if a blockchain is used, all data will be readily available, and an auditor will know the information is authentic. 

The Future of Blockchain in HR

Blockchain already has significant implications in business. However, complete adoption won’t happen overnight. Typically, people are opposed to change and find it difficult to trust new technology. Therefore, the first step to overcome the issue is to increase awareness and education. For instance, businesses use blockchain for validation and referencing before adopting it for wage payments. Thanks to blockchain, many business processes will be streamlined but it may lead to loss of employment. For example, there would be no need for recruitment businesses. Although there are many hurdles to jump over, the outcome will be worthwhile.

Blockchain technology, typically associated with cryptocurrency, is beginning to have a significant impact on HR. The technology will make onboarding, recruitment, and validation happen at the click of a button. With 100% transparency and security, all parties will be put at ease.

HR Future Staff Writer, United Kingdom.