Blockchain applications in HRM
We are in an era where everything develops too quickly. So we are going to tell you about the Blockchain in the HR sector and before starting the main part let’s discuss: What is blockchain technology?
The blockchain is a unique technology for storing data. The information is stored on the devices of thousands or hundreds of thousands of people. Blockchain has two core advantages: publicity, reliability and security. Decentralized data storage, virtually unhackable due to the algorithm. With blockchain, it is impossible to collect all the information from different accounts into one place. It is decentralized, and only you are the king of your data.
Addressing HR pain-points
Let’s figure out what are the business processes that HR goes through that are painful, and involve lots of people, shared data, time and risk? Four areas of greatest impact for blockchain include:
- cross-border payments and mobility;
- talent sourcing and management;
- productivity gains;
- cybersecurity/fraud prevention.
Today HR specialists have to deal with the uncertainty in resumes, the reliability of recommendation letters and the overall problem with the trustworthiness of candidates. This situation has to change, and blockchain has the potential to create a new ecosystem where achievements can speak for themselves.
Blockchain absolutely has the power to create disruption in the HR space. In fact, it might just revolutionize the ways in which HR pros approach many of their daily tasks.
1. Blockchain Can Protect HR from Cyber Criminals
When a Boeing HR employee sent a work-related spreadsheet to his spouse in November 2016, he just wanted formatting advice. But he had also endangered the identities of nearly 36,000 Boeing employees in four states — 8,000 had their data stolen.
Human resources management involves dealing with a lot of very sensitive personal and financial data like this. HR departments may receive and store information relating to pay, health insurance, finance and banking, disciplinary records, and more. All of this is at risk of being exploited. With blockchain, the ability of criminals to gain access to that data is reduced. In many cases, it’s virtually eliminated. Because records stored on the blockchain are decentralized, there’s no single place where hackers to access and corrupt data. In addition to this, any changes that are made must be authorized and verified.
Companies Trying to Solve This Problem
Chronobank — Speeding up HR processes while reducing risk by leveraging blockchain
Fourdx — Blockchain secured eDelivery and document exchange
2. The Recruiting and Hiring Process Will Be Transformed by Blockchain
Standard methods of seeking out candidates, determining whether or not they are worth pursuing, conducting the pre-hire verification process can be painfully slow. Potential hires may tweak their resumes according to the requirements of each job that interests them. Hiring managers may wait days before hearing back from references, and some companies are reluctant to provide any detailed information on past employees due to liability purposes.
Now, imagine if employee records were stored on the blockchain. Applicants could provide potential employers with permission to access their blockchain based employment data. This could include employment history, letters of recommendation, educational records, and more.
Companies Trying to Solve This Problem
Recruit Tech — Vietnam based project building recruitment solutions on the blockchain
3. Employee Life-Cycle
The whole employee life-cycle would be disrupted by the implementation of blockchain technology as the current procedure to hire and on-board a new recruit can be lengthy. From conducting the interviews, checking qualifications, validating work background and gathering references or applying for the necessary security checks — it all takes time.
This process continues throughout employment (for example, if the role changes, further qualifications are obtained or different management is assigned during a handover) until eventually the employee exits the company. Then you may be requested to forward some of this data to potential new employers for their checks on that individual and alongside this the whole process renews again. As blockchain would already hold all of this validated information, it would significantly reduce the time and energy spent on this process, simplifying the whole HR experience.
4. Companies Can pay workers in cryptocurrencies
According to DistruptorDaily in America 54 percent of employers stated their current payroll processes have room for improvement. A reported one-third of small business owners pay at least $500 per month in payroll service fees. That seems a bit high for such a routine process. Payroll services could see a new layer of automation and convenience by implementing cryptocurrency technology.
However, with businesses that hire on a global scale, paying in Bitcoin, Ethereum, or other cryptocurrencies can make sense. Workers want to be able to access their money, move it, and use it to buy goods and services with ease. For someone who lives in a nation where the currency is devalued, banking systems are untrustworthy, or the government has caused other roadblocks, this isn’t the case. By offering crypto-based payroll systems that are backed by blockchain technology, businesses can attract more workers on a global scale.
Companies Trying to Solve This Problem
Bitwage — Blockchain solutions for outsourcing
4th Pillar — Full-service HR solutions on the blockchain
5. Automate taxes & mitigate the strain of audits
Taxation plays a critical role in the life of a business or an individual. For HR professionals, constantly evolving tax laws and regulations across jurisdictions ensure they often have their hands full properly issuing taxes. Payroll taxes are then only further complicated by other factors like bonuses, commissions, overtime pay, back pay, accumulated sick time pay, human resources expenses, and beyond.
Blockchain’s keen ability to record and update employee tax considerations and provisions automatically is catching the attention of the HR industry. By wielding the capability to streamline and secure the taxation process, it is likely that blockchain-powered platforms will become the record of choice for HR departments around the globe.
Speaking of taxes, no business wants to be hit with an audit but it does happen. Audits are so daunting that it has actually held back countless businesses that only feel comfortable maintaining physical record systems, despite the time, energy and money they require to properly upkeep.
The blockchain makes it easier for a business to sustain an audit because it can securely share its records with regulators in near real-time. The time and cost spent for document collection is subsequently reduced drastically.
Now is the time to sum up how really blockchain will be beneficial for HRM. It will help:
- Employees with a perfect reputation to find work faster.
- Companies to save time and money by hiring employees.
- Quickly assess the competence and professionalism of people.
In this case, such a system has to meet the following conditions:
- Data transparency. Anytime any participant can have access to the initial data to make sure that they are right.
- Data reliability. Not any company or person can change the data to their advantage.
- Automation of processes. The system should work on mathematical algorithms without intermediaries to exclude or reduce to a minimum the human factor.
- Independence. Do not belong to any company to maintain objectivity.
And as a bonus here are the startups which are trying to solve HR problems with blockchain: https://www.disruptordaily.com/blockchain-market-map-human-resources/