The Blockchain technology is changing the way we conduct business and has the potential to disrupt the Human Resources sector, among many other industries.
The Blockchain technology is in full swing and is being trialed and tested across the world for its potential applications within various industries. Extending beyond the realm of finances and digital payments through Bitcoin, the blockchain technology has the potential to disrupt the unlikeliest of business sectors, such as HR.
Indeed, Blockchain is already being used in the health, fashion, food and supply chain industries, thanks to the concept of a decentralized and immutable ledger. Creating a framework for identification of human resources can be the next big thing in HR, and we see some form of it in the ID2020 digital identity initiative, which aims to provide a global identity solution for refugees.
“Blockchain’s implications for the finance industry are well-known, but the potential to use the technology in the world of work is huge and it will soon transform HR and recruitment,” says Grant Torrens, Business Director of Hays in Singapore. Global recruitment companies such as Hays and NRG are in the initial stages of exploring the Blockchain technology for the HR sector.
Blockchain’s effects on Recruitment
Blockchain will have a direct impact on recruitment. Recruitment can take up a lot of time and resources within an HR department, from shortlisting to interviewing to verification and so on. Candidate information sourced during the recruitment phase can be saved and viewed on the blockchain. Resumes will be a thing of the past and verification for educational background and work experience will be quicker and much easier.
‘Blockchaining’ the employee verification process
The HR sector relies heavily upon verification and referencing when hiring a new employee. The success and effectiveness of the hiring process boil down to how thorough the verification process is. Blockchain is a medium for storing digital identities and can be used for maintaining human identities as well. Blockchain can allow verification of an individual, their background and work experience along with real-time information related to pay and claims. This can take a load off HR, allowing for better focus on more strategic business goals.
Verification through Blockchain also means that employee work experience and education cannot be falsified. Fake or fraudulent references can be rooted out, thus making the sector more transparent while also making background checks much easier. This should increase the overall success rate and effectiveness of the hiring process, leading to more productive teams.
Smart workforce contracts
What makes the Blockchain technology so useful is its ability to build smart contracts. As much as 45% early blockchain adopters are already implementing smart contracts within their organizations. In essence, a smart contract is a protocol intended to digitally facilitate, verify, or enforce the negotiation or performance of a contract. Smart contracts allow the performance of credible transactions without third parties.
Blockchain can be used to implement smart contracts between employers and employees, making it possible for the workforce to be paid automatically based on when certain conditions are met. This can streamline the payroll process, saving time for more important tasks.
Employee attendance and task tracking
The blockchain technology can be used to store biometric data such as fingerprints or iris scans for employees and use it to track attendance. This concept can also be used to maintain timesheets (such as counting total time worked by looking at check-in and check-out times). All of this data can be stored on an immutable blockchain, which can not be disputed or changed later on. And since there are no discrepancies, organizations can feel free to connect attendance and timesheet data to a payroll system for automatic payments.
Financial transactions are native to the blockchain technology, and it would indeed be a poor usage of the technology if this particular use-case was not implemented. In blockchain terms, a transaction can be any exchange of information, data or currency. An HR department and the organization as a whole, can benefit from more secure transactions, be they financial transactions, information sharing, record keeping and so on. Transactional security provided by blockchain should put employers and employees at ease.
With respect to finances, blockchain can also make it easier to do taxes. Taxes for contractual workers can be complicated, and the annual tax burden can be a headache. Estimated tax rates for contractual employees can be wildly inaccurate, especially when hourly rates vary with a job. For example, if an hourly worker who earns $40 an hour on average makes $100 per hour for a few days on a particular job, their earnings might be taxed as if their average rate is $100 per hour.
Blockchain can help tackle problems like this by providing a fair and accurate accounting of work done and wages paid. All income and purchases can be tracked, and tax calculated automatically. Additionally, there will be no need to save paper receipts year-round, since everything is recorded immutably in the ledger.
The blockchain technology has a lot to catch up on, and despite its presence since many years, it still remains in its infancy with respect to agreed-upon standards that will govern how applications should be made out of it. But the fact remains that blockchain is one of the biggest innovations in recent years, and is one of the few developments out there that is really and truly brand new, like nothing that we’ve ever seen before. It is only natural to expect blockchain to disrupt many areas of the business as if implemented correctly, can make people’s lives much easier.