May 16th, 2018
What is blockchain technology and how does it impact human resources?
You may have heard about blockchain technology in reference to its disruptive impact on business, and the way we work. However, like all new technology on the brink of wide scale adoption, there are questions. What is it? How exactly does it work, and how will blockchain technology impact the human resources field?
What is blockchain technology?
Simply put, blockchains store information and records across a network of computers. The information consists of individual files of data, or blocks, which create a permanent record. Members of the host network must authenticate the blocks before including them in a chain. In this way, the decentralized and distributed nature of blockchain technology ensures that the information is accurate and verifiable. Additionally, each block is encrypted, and the creator of the block grants access to the information with a unique key. These encryption and security measures make it extremely difficult to manipulate data in a blockchain and, therefore, the data is less susceptible to tampering.
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Blockchains have been closely associated with cryptocurrency, but a number of major institutions and companies, including Walmart, Maersk, UPS and British Airways, have adopted the technology for financial transactions, supply chain management and creating legal contracts. Blockchain technology also aids social and humanitarian causes. The UN, for example, is using the technology as part of its global food program, through which refugees can purchase food with only an eye scan, and jewelry companies are using it to verify their gemstones are conflict-free.
So how will blockchain impact HR, and what can HR professionals do to prepare?
There are a number of potential blockchain uses in HR, and two areas in particular with significant benefits:
- Hiring and Recruiting with Blockchain: a candidate’s resume could include a series of blocks. Each block containing different verifications of education, experience, certifications and recommendations from past employers. The verifying institution – a school, or former employer, for example – creates the blocks and the candidate adds the them to the chain. As they progress in their career, more blocks are added to the resume chain, creating a comprehensive – and verifiable – history of their employment. This also reduces the chance of a forgery or misrepresentation of a candidate’s credentials. It gives recruiters and hiring managers the confidence that the credentials are legitimate.
- Payroll Blockchain has the potential to take third party vendors out of payroll processing completely. This will reduce the time and cost associated with the function. This is particularly true for companies that make international payments, which carry significant fees and can be delayed for days as the funds work their way through intermediaries and third parties. Payments through blockchains remove the middleman, and allow businesses to reduce costs by paying staff or contractors in real time, in a variety of currencies.
Just the beginning…
We are at the forefront of blockchain adoption. There are a number of potential uses. These include managing learning records and professional development information, verifying skill sets, and enabling more efficient team collaboration. We have yet to see how much blockchain will impact our business processes. HR often relies on manual processes, yet there’s a constant need for accuracy and confidentiality in a compliance-driven environment. Incorporating blockchain-based systems has the potential to ensure data accuracy, lead to more effective hiring of qualified candidates, and minimize manual and outdated processes, providing the opportunity to focus on higher-value projects. These newfound gains in productivity and efficiency can reinvigorate the industry for the next generation, increasing trust and value to businesses.