Blockchain, the technology powering cryptocurrency, is ready to establish itself in human resources. In this article, the author explains in detail HR blockchain use cases and why we can’t afford to ignore its presence on the horizon.
Blockchain is quickly gaining attention and is seen as an enabler in the journey to the future of work. Start-ups, which are early adopters of this technology, are at the forefront of creating an architecture for human resources professionals across different functions. In a detailed view we will discuss day-to-day HR activities and what are possible applications of blockchain currently and in the near future. For anyone who has heard of blockchain, but is still unsure of what it is and what are its applications in HR, this article will try to explain everything you need to know.
What is Blockchain?
A blockchain is essentially a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems. In other words, it is a system of recording information in a way that makes it difficult or impossible to change, hack, or cheat the system.
How Blockchain Works
- The below 6 steps expresses the way it works:
- A transaction is requested
- A block representing the transaction is created
- This block is sent to every node in the network
- Nodes validate the transaction
- Nodes receive a reward for the proof of transaction
- The block is added to the existing blockchain
Concept of Blockchain in HR
A recent report by Gartner which essentially talked about how Blockchain can be used in HR discussed concepts like Distribution, Encryption, Immutability, Tokenization, and Decentralization.
Distribution: Blockchain participants are connected on a distributed network.
Encryption: Technology records data securely and can control their personal identity and other information.
Immutability: Completed transactions are cryptographically signed, time-stamped, and sequentially added.
Tokenization: Value is exchanged in the form of tokens, which can represent a wide variety of asset types.
Decentralization: No single entity controls a majority of nodes or dictates the rules.
Blockchain in Talent Acquisition
The tedious tasks of screening individuals, confirming work records, and reviewing resumes may be eliminated with blockchain. It also eliminates the red tape associated with timecard approvals, hence, saving time. Because blockchain cuts procurement cycle times from weeks to days (or even hours), it has the potential to revolutionise talent acquisition. When it comes to the difficult and time-consuming process of validating candidate information, blockchain technology has a lot to offer. It enables educators, former employers, and accreditors to pre-verify a candidate’s CV, saving recruiters substantial time and money. Candidates may provide recruiters access to all their previous positions and work experience, as well as their qualifications, accreditations, onthe-job training, and schooling, and they can be certain that everything has been examined and confirmed. Blockchains may also make recruiters’ jobs simpler by allowing them to construct a candidate profile based on employee records, which allows for a better cultural fit and prevents data from being erased. Recruiting from overseas might become easier because of the blockchain’s ability to store right-to-work and permission papers. Blockchain technology allows recruiters to instantly access a prospect’s employment information, speeding up the application process and giving them more time to focus on improving the candidate experience.
The tedious tasks of screening individuals, confirming work records, and reviewing resumes may be eliminated with blockchain. It also eliminates the red tape associated with timecard approvals, hence, saving time. Because blockchain cuts procurement cycle times from weeks to days (or even hours), it has the potential to revolutionise talent acquisition.
Blockchain in Learning & Development
Incentivization is a major problem in staff training, as any company knows. Organizations can use blockchain to make reward points and achievements valuable in the real world and improve employee performance. When an employee learns a new subject, performs a new task, or completes a curriculum, that information may be recorded in the blockchain as a transaction. Achievements and incentives will not be confined in a central place in a decentralised blockchain environment, allowing employees to use them without limitation. Employers may also utilise blockchain to track their workers’ qualifications and certifications. This will be more efficient than using paper or having to scan each employee’s statistics. Employers may also use blockchain to see whether an employee’s qualification is about to expire. In such cases, the employer can develop an automated procedure that evaluates all employees’ credentials on a regular basis.
Blockchain in Payroll
The distributed ledger idea is used by blockchain to offer real-time payment verification without the usage of middlemen such as banks and clearing institutions. Payroll payment procedures may be simplified, sped up, and made substantially cheaper by eliminating intermediaries, with banks playing a less role resulting in lower bank fees. On-demand pay, which can be achieved through the use of “smart contracts” is recorded on the ledger, enables money to be given as soon as the activity is completed, and would benefit gig economy employees such as freelancers and contractors considerably. The enhanced speed and transparency of blockchain payments also provide an opportunity to enhance and automate the employee experience while simplifying the payroll process. Payroll has always been important to the employee experience as a touchpoint for each and every employee. By branding a wallet app and possibly combining loyalty programs, pension benefits, financial advice, and more, the company may better engage its employees by delivering an all-in-one financial solution that is always at their fingertips. It also helps to build a more meaningful relationship between the employee’s work and the lifestyle that it funds by allowing them to pay for items with their digital wallet. Payroll that is backed by fintech blockchain will improve the transparency of payroll history and information while reducing the risk of financial transaction mistakes.
The distributed ledger idea is used by blockchain to offer realtime payment verification without the usage of middlemen such as banks and clearing institutions. Payroll payment procedures may be simplified, sped up, and made substantially cheaper by eliminating intermediaries, with banks playing a less role resulting in lower bank fees.
Blockchain in HRBP Function
In a variety of workplace scenarios, blockchain enables a decentralised cloud network to ease internal interactions. Its features include secure corporate communication, distant learning, remote worker healthcare, and ready-to-use software development kits (SDKs) for specialised communication capabilities. Its distributed ledger technology may be utilised in the rewards and recognition module, which also contains communication, collaboration, and employee empowerment elements, all of which are built on an opensource technological base. It allows users to exchange sensitive data with internal and external users while retaining control, ensuring that employee data rights are protected. Blockchain supports healthcare by creating an end-to-end datasharing environment linked to wearables and other data sources. A blockchain-based reward/incentive is given to users depending on their fitness behaviour. In other words, it uses its own token to commercialise health and fitness data in order to increase employee well-being while also allowing wiser business decisions. Apart from that, it keeps a unified set of data records, which encourages confidence and openness by storing everything from workers’ drug-testing records to performance assessments.
Blockchain Platforms Enabling HR Function
Some of the platforms based on blockchain enabling human resources function are:
- eXo Platform: Its rewards and recognition module makes use of distributed ledger technology. It caters to top enterprises such as UCLA and HSBC Bank.
- Beowulf: A decentralised cloud network is being used by this business to facilitate internal interactions in a number of working circumstances. Its clientele includes Vietnam’s University of Science, Asian Life Insurance Group (AIA), and OPSWAT, a cybersecurity firm based in the United States.
- BeSure Network is a firm founded with the goal of eliminating cases of uncertified individuals working in hazardous situations. Managers (for example, plant floor supervisors), employees, and regulatory agencies can all securely access data.
- Etch is a blockchain-based payroll solution that allows employees to get paid whenever they choose. Etch drastically reduces the amount of time and effort needed to manage payroll.
- Job.com has recently relaunched in a new guise, utilising AI and blockchain to link job seekers with the right employers. Employers pay only 7% of a candidate’s annual salary when they join up on Job.com, rather than the customary 20% commission. And 5% of this is delivered to the candidate as a signing bonus right away.
- WurkNow is a blockchainbased HR business that aims to improve the experience of blue-collar job seekers. Employers can easily obtain prevalidated onboarding documentation and any cases of labour violations using WurkNow, making the bluecollar recruiting process easier.
- Peoplewave has a number of products under its belt, but Wavebase is its most recent innovation. Wavebase uses blockchain technology to simplify applicant sourcing, selection, and screening.
- Wavebase integrates easily with Peoplewave’s bigger ERM system, creating a single source of employee data for everything from recruitment through engagement and performance management. Its current concentration is Asia, with a significant presence is in Australia as well.
- Lympo was founded as a healthcare and employee wellness platform. It creates a complete data-sharing ecosystem that connects wearables and other data sources.
Limitations of Blockchain
Although blockchain offers many benefits, it also has certain drawbacks. Nowadays, blockchain is about more than just technical labour. The issue arises due to the flexibility of blockchain legislation and political considerations. Thousands of hours must be put into evaluating, developing the software design, and backend programming necessary to incorporate blockchain into existing business networks. There are some challenges that are widespread across the organizations:
- Technology Cost: The majority of HR tasks have been carried out using HRMS software that utilises blockchain technology. However, creating one takes a significant amount of computer power. Assume $0.03-$0.05 per kilowatt-hour power expenses. As a result, blockchain uses a lot of power at the back end and costs a lot of money to invest in.
- Speed in Efficiency: It takes roughly 10 minutes to add a new block to the blockchain using the blockchain’s “Proof of Work” system. The blockchain network can only handle around seven transactions per second at that rate, according to estimates (TPS). However, there are blockchains that can handle over 30,000 transactions per second right now.
- Illegal Activity: Despite the fact that blockchain prevents hacking and safeguards data, it also permits users to engage in criminal trade operations on the network. As a result, the blockchain network’s legitimacy is called into doubt.
The future of blockchain is near and banking isn’t the only industry affected. Blockchain is making inroads into the realm of work, despite its origins in the cryptocurrency sector. Blockchain technology has a lot of potential applications, including disrupting employment, payroll, taxation, benefits administration, data storage, and a lot more. Despite present pricing and scalability issues, the argument for blockchain HR is compelling. HR professionals must prioritise openness and confidence in corporate procedures as they manage human capital in a competitive hiring environment. While the technical performance of blockchain technology, such as its capacity to encrypt and deliver sharp accuracy which is undeniably impressive to the success of blockchain will ultimately be determined by how effectively it can instil confidence and transparency into an organization’s processes. Blockchain is an unstoppable force that no one can control. It’s already causing havoc in several businesses. Companies that use blockchain technology are now safeguarding their position in an ever-changing ecosystem. In truth, businesses will face a worse problem if they do not invest in this technology.