Blockchain Applications in HR
By now it’s quite clear that there is no industry or function, from oil & gas to entertainment and from marketing to manufacturing, that is immune to the disruptive characteristics of blockchain. Somehow the functionality of a secure decentralized network that disintermediates redundancies to maximize efficiency and enable additional value seems to be applicable to almost every transactional process there is to be found. The HR function is no exception and there is quite a lot of blockchain-related development activity currently focused on transforming just about every process in the HR value chain. Here then are a few use cases for blockchain in HR.
Blockchain & self-sovereign digital identity
Last year, MIT became one of the first institutions to award digital diplomas that are verifiable, tamper-proof and give students full control over their records. These secure and portable diplomas are based on a new blockchain-based credentialing standard called Blockcerts that was designed specifically for enabling self-sovereign digital identity. In this new model of identity, recipients, rather than custodians or issuing institutions, are deemed owners of credentials. Additionally, recipients are able to prove ownership of these credentials through public/private key cryptography. Diplomas are just one possibility in the concept of a self-sovereign identity. In the HR context, once a candidate’s blockchain entries have been cross-signed by the certifying organizations, they have complete control over where, when and by whom those records can be accessed.
Blockchain and certification
Blockchain technology can address the time, cost, accuracy and transparency issues currently clogging employers’ verification and certification processes. Currently over 80 percent of employers discover misrepresentations or lies while screening resumes. Organizations are challenged to improve screening efficiency without compromising either time-to-hire or candidate experience. A centralized, verified, tamper-proof and up-to-date repository of candidate credentials makes it quicker and easier for employers to verify information about potential candidates. Companies no longer have to go through an extended screening process to confirm information provided by a candidate. They merely need access to an applicant’s public blockchain to make certification a one-click process.
Blockchain & recruitment
Instant verification is not the biggest appeal about a public credentials blockchain. The concept could open up some brand-new opportunities to optimize talent acquisition. As the concept scales, candidates will be able to centralize all their work-related information, like qualifications, certifications, special projects, employment history, remuneration and work performance, into one digital block. Career websites will no longer host resumes with misinformation for employers to trawl through but certified blocks with all the information recruiters are looking for. A quick and fool-proof way to verify experience and competence makes it much easier and simpler for employers to map talent to the exact needs of an organization. And blockchain-centric recruitment portals will provide recruiters with the functionality to hone in on candidates with the validated set of skills, qualifications and experience required for the position.
Blockchain & performance management
Employees often acquire skills and qualifications from independent and specialized institutions beyond the company domain. These credentials may often be consistent with the competence requirements defined by the company for career progression. But the processes for validating and accounting for these external credentials in the organization’s skills repository can often be limited. Blockchain enables employers to track, aggregate and update all these external credentials and qualifications on to an employee’s permanent record. As a candidate’s career progresses across an organization, employers update the record with the relevant changes in qualifications, performance and remuneration. When the employee leaves the company, this up-to-date performance data block helps streamline their transition into the recruitment and onboarding processes at the next company.
Blockchain & payroll
Blockchain has the potential to really transform the payroll process. The combination of blockchain and smart contracts can eliminate several manual processes of verification, validation and authorization, and automatically trigger payments, possibly based on a specific date or hours logged for instance. But the real challenge for businesses comes from overseas payroll payments. Managing overseas compensation is currently a complex and inefficient process that involves accounting for several local tax codes, processing complex sets of forms, adjusting for exchange rate volatility and completing the validations across a number of financial intermediaries. But blockchain technology can completely streamline this entire process, as demonstrated by Bitwage. The company offers an international payroll service that is based on blockchain and allows employees to get paid in the local currency. With blockchain-based payroll solutions, companies can now transfer funds instantly and securely at much lower costs and without the need for intermediaries.
Just like Bitwage and payroll, there are several technology startups offering blockchain solutions to streamline and automate almost every HR process listed above. Learning Machine, architect of the Blockcerts open standard, offers blockchain-based digital credentials for multi-chain issuing and self-sovereign identity. APPII is a blockchain career verification platform for employee background checks and resume verification. Jobeum operates a blockchain-based decentralized professional network where users control how and how much of their personal information is displayed and accessed. And OUNA provides a blockchain-based online assessment and recruitment platform where candidates are anonymously assessed solely on their skills and values until well into the recruitment process.
With this much activity at the intersection of blockchain and HR, the question is no longer when but how much the technology can transform the HR function. So the big challenge is not whether the technology will be ready but if the technology. For instance, a few digital diplomas from a handful of universities will not exactly automate or accelerate the verification process for companies. The true potential will emerge only when most or all candidate-related credentials converge into a single block of digital data. Considering the significance of some of the HR pain points that blockchain can resolve, achieving scale should be a matter of sooner rather than later.
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Founder Dinis Guarda
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