Contact us anytime to know more - Kuldeep K., Founder & CEO CISIN
Blockchain is a decentralized computer network that automates and verifies the flow of data. This makes Blockchain a reliable system for storing data and cutting out intermediaries. It is for this reason banks work to keep up with Blockchain, and also the reasons it could disrupt HR professionals' working methods.
Blockchain will change the way we do so many things in human resources. From big-picture areas like hiring and taxes to smaller-scale tasks such as payroll, Blockchain is a technology that can be used for almost everything. Blockchain will revolutionize human resource applications, from the big picture, like taxes and hiring to more specific tasks, such as payroll.
Understanding Blockchain
Blockchain technology is a secure and decentralized blockchain ledger that allows participants to validate the data related to specific transactions. It speeds up processes and eliminates intermediaries. How can we be sure that our votes are counted when we cast them? How can we know that fair-trade coffee is from a particular region? We need to be able to verify facts, store records, and ensure security for us to be able to be sure.
Blockchain has an excellent opportunity to become a part of human resource management. Discover HR Blockchain use cases. Blockchain technology's role in protecting the infrastructure of cryptocurrency (e.g., Bitcoin makes financial services transactions safe without the use of a bank. The technology will soon be used in human resources, changing the way HR professionals manage large volumes of employee-sensitive data.
Blockchain technology will disrupt the daily workflows of all HR departments, from recruiters and senior management to employees, as it becomes mainstream. This includes the recruitment process and tapping talent pools. It can also be used for background checks and employment verification. Smart contracts are also being developed that engage contract workers. The technology executives can simplify international payments, automating exchange rates in real-time and other parameters. This has implications for companies that operate internationally and hire employees.
Understanding the basics of Blockchain and its function is one of the biggest challenges that HR professionals will face. A blockchain can be described as a digital ledger that is distributed and used for keeping track of data. The block is just another name for the record. At its heart, a blockchain is just a series of papers.
Blockchain space is different from any other system of record keeping because it uses a distributed ledger. This means that the records are stored on an independent network of computers. The data is decentralized and encrypted and, therefore, safe. Blockchain technology is an excellent match for HR, as it manages large volumes of sensitive information about companies and their employees.
HR departments need not be alarmed by the many ways that blockchain technology may disrupt their human resources management. It's still possible to get ready for the blockchain revolution. The technology is already proving successful in industries where it has been used. Blockchain solutions can reduce the infrastructure costs of banks by 30 percent. The encryption of millions of points of storage, which do not contain full names or account numbers, is the key to achieving this.
Although only 0.5% of global residents use Blockchain, demand for the technology is growing. By 2024, it's expected that more than 90% will have some involvement with the technology. The mainstream adoption of Blockchain could be a game changer for HR departments, bringing value to both employers and their employees.
Why Blockchain Technology is a Great Solution?
Blockchain can be used to demonstrate how Blockchain could benefit both employers and employees. Individuals are able to secure, maintain and provide controlled access to an extensive blockchain-based digital ID, which includes vital information about themselves. Education, skills, and training could be included. This digital ID would allow individuals to convert their qualifications into real employment value. At the same time, employers could identify more effectively and accurately the best employees through data-driven insights.
Blockchain is set to revolutionize the way we manage our human resources in numerous ways if its successes in supply chains and banking are any indication. The blockchain industry needs to start experimenting and imagining different use cases.
Blockchain is a system that functions without going into great detail. It is based on blocks of data linked together in a chain of chronological order and then encrypted. It creates a decentralized and distributed network that is hard to hack by storing data on an international network of computers. Blockchain's uses are almost limitless. From managing autonomous cars to protecting online identities from identity fraud, they have a wide range of applications.
Blockchain is still in its infancy, but it has the potential to transform how essential decisions and processes are organized completely. Many people associate Blockchain with Bitcoin. Blockchain technology is not only the technology behind the most popular cryptocurrency in the world but it can also be used for a wide range of other applications. Including HR. We have to consider the actual problems that we could solve using it, just as we do with any (new) technology.
Blockchain technology could be used to solve many issues in HR. For example, we need help with identity verification and qualification. An example of this is increased scrutiny over how personal data is used and monetized. People are now more cautious about using centralized networks to display their data, including careers.
Want More Information About Our Services? Talk to Our Consultants!
Blockchain: Features
Blockchain is not a sophisticated technology that necessitates IT expertise. However, understanding the basic principles will help you to understand better how it can transform HR practices.
The Blockchain development solutions allow for trusted interaction between unidentified participants. It combines five elements that authenticate users and validate transactions, then records data to a ledger that one participant cannot alter. Early-stage "blockchain-inspired" experiments don't include all five elements, but strictly speaking, all five are required for actual Blockchain:
- Distribution: Participants in the Blockchain are linked to a network of distributed computers, which run programs to enforce business rules. Nodes keep an exact copy of the blockchain ledger that updates when transactions are made.
- Encryption: Data is recorded securely, semi-anonymously, and with pseudonyms (participants use pseudonyms). The participants can manage their own identity, as well as other personal information. They only share what they need for the transaction.
- Immutability: Timestamped and cryptographically signed transactions are added to the ledger in a specific order. All participants must agree to change records.
- Tokenization: The exchange of value is done in tokens. These can be used to represent "money," units of data, or even a person's identity. Tokenization is how a blockchain creates a currency (or "native value") that can be traded.
- Decentralization: A single entity does not control a majority or dictate the rules. The consensus system verifies transactions and gives them approval, eliminating the need to have a central mediator govern the network.
What are the Challenges Faced at Work that Must be Overcome?
We have specific problems in the workplace and, more specifically, in the labor market. Problems with talent supply. If you take a look at hiring and recruitment, it is clear that there are many workers available. Still, the information they have about them and their qualifications can be challenging to find.
Labor Cost
Employers pay intermediaries 15-30% of the contract price in markets with low efficiency. This is a costly situation for organizations. Contractors, vendors, freelancers, or consultants who receive payments can sometimes wait months to get paid. This is not only frustrating to the people involved but also affects the viability and profitability of the business. Payment delays have pushed almost 20 percent of SMEs into bankruptcy.
Candidate Fraud
Depending on the business, more than half of applicants make false statements on their resumes. There are a lot of con artists around. Selection biases and the quick movement of talent pools are among the other labor market problems.
Data
The best techniques to lower your risk include the ones listed below. The use of social media and centralized data both provide problems. The Internet has been an excellent tool for hiring and working. Think of job boards, which make searching more accessible, or the ability to steal from competitors.
Digitalization has much more to do in the market in terms of visibility. The biggest problem here may be centralized data and the move towards a decentralized model. The backlash against Facebook has made many people more aware of their personal information. This may be a factor in the argument for decentralized workplace models.
The Gig Economy
Many people are moving into the gig economy. Some people's first response when we mention the gig economy, is that they think it is exploitative and there is no sick leave. It's true that this trend is growing, with many people opting to leave their permanent jobs and contracts.
Read More: 8 Essential Blockchain Technology Concepts You Need To Know
How Blockchain Will Change HR Forever?
Consider what the components and abilities could mean in terms of how businesses interact with their talent. Imagine the next strategic initiative that your company launches, with a Blockchain seamlessly connecting businesses, vendors, and people. This includes the in-house employees, contractors, third-party providers, cross-functional communication, pilots and stage-gate review, budget approvals, and authorizations.
The right people can be brought into the process at every relevant stage without the need for phone calls, emails, or piles of paperwork. They will have access to information and resources only as long as it is necessary. Activities are then moved automatically, transparently, and in real time. We can use blockchain technology to improve our current digital blockchain platforms. Blockchain technology has already changed the HR process rules at lightning speed: Payroll, Contracting, and Recruitment.
Payment of Employees
The majority of employees are now paid via electronic means. However, blockchain companies that operate internationally need help with sending money overseas. Currency exchange rates can have a significant impact on the amount of the payment. But, more importantly, the process of processing payments is often slowed down by intermediaries, such as banks.
Blockchain could be a faster payment option in a world of time-sensitive payments. Systems are dependent on Bitcoin being widely accepted as a form of payment, which it currently is not. It has the power to revolutionize international payrolling by speeding it up.
Smart Contracts
Smart contracts and blockchain technology, in particular, can revolutionize the way companies conduct business. Simple automated activities that take place on the Blockchain when specific criteria are met are known as smart contracts. Think about the onboarding process. Numerous administrative activities must be finished for a recruit to "hit the ground running" (consider logins, emails, templates, and checklists). Many of these chores can be automated using smart contracts.
A company recently submitted a patent application for the use of blockchain technology to boost worker productivity. A British artist sparked much debate when she got money for her compositions through smart contracts built on Ethereum, a cryptocurrency comparable to Bitcoin. She avoided intermediaries like Spotify and accomplished this with complete openness.
Blockchain is an excellent alternative for contract management because of its speed, decentralization, and transparency. It also reduces transaction costs dramatically and eliminates operational risks. Only some people are convinced that blockchain-powered contracts are safe. The threat of security breaches is real.
Smart contracts also have legal implications. In most countries today, contracts are signed under the implied promise of "goodwill and fair dealing." This is the notion that the parties to the contract will treat each other fairly and respect their contractual rights. It needs to be clarified how an automatic, self-enforcing agreement, such as a smart contract, could include a principle of law that relies solely on trust.
At their current state of development, smart contracts cannot account for the many different ways that circumstances around a contract may change. How would you handle a situation where, say, one party feels wronged in retrospect and wishes to cancel the contract? All signs so far point to the need for human intervention, at least in case things go awry.
Recruitment of Candidates
According to a recent survey, a startling 58 percent of employers have occasionally discovered inaccurate material on an applicant's résumé. One of HR's most challenging duties is vetting the integrity of such data. It takes a lot of time and money to investigate references and academic credentials.
Blockchain technology, with its ability to produce an unmovable record, or "trace," promises to automate and speed up the process of employers checking the qualifications of prospective employees. This will lead to a better match between the candidates and the positions. It will boost productivity and be especially useful for small- and medium-sized businesses (SMEs) that need help finding the best candidates.
On platforms, the data collected is centralized and then sold to users. Blockchain technology, however, could create a decentralized network where users can control their data and monetize it through small payments for content or comments they make, as well as tasks that are performed. To learn more about a candidate's background, employers should go straight to their source, i.e., the individual candidate.
Blockchain optimists believe this technology could eliminate the need for HR to validate documents, such as certificates of qualifications, previous work experience and address information. After the records are created and saved in "a block," an HR system can link directly to the data and accept it automatically, with no need for manual verification by a person.
A system like this would also be "always-on," which means that the skills of candidates can be evaluated based not only on those listed on their CVs but on all their abilities. This way, the Blockchain could remove an entire interview stage, which would allow HR to concentrate on more important aspects such as the candidate's goals, aspirations, and overall culture fit.
Companies have quickly embraced blockchain technology. APII, a platform for career verification, is assisting Techno Jobs in becoming the first company in the world to provide employers with blockchain-verified resumes. Blockchain might be used to stop fraud and enhance cybersecurity for the digital recruiting sector, which is susceptible to assaults due to the growth of digital platforms.
At the same, it will be necessary to develop new laws and regulations to ensure that the companies are still able to use the system, even though the technology is more extensive. It could take many years to achieve this balance between efficiency and regulation. Even though blockchain technology is in its early stages, it has already created waves in the HR recruitment world.
Read More: What is the Future of Blockchain Technology?
Blockchain is Replacing LinkedIn and Resumes
Blockchain technology can make old-school CVs and websites for career networking, like LinkedIn, obsolete. Blockchain transactions store the entire employment history of an individual, rather than requiring them to write a detailed description of their previous jobs and experiences.
This will completely transform how companies hire candidates. No longer will HR departments need to call past employers for confirmation of employment. HR offices can access the public Blockchain. The Blockchain could even store indicators of performance, such as whether an employee has been promoted or why they have left the company.
This complete picture will remove a great deal of subjectivity from the hiring process. Our resumes will remain the same, or our presentation will change based on which job we are applying for. Blockchain documents both successes and failures. This encourages us to learn from our mistakes and embrace them. A more complete view will allow companies to make better decisions, and the best performers can rise to the top.
LinkedIn's main contribution to the Blockchain will come in the form of a more intuitive user interface. However, the "content" and employment history will be pulled directly from the public Blockchain.
Blockchain Streamlines Routine Tasks
Blockchain makes it easier to do everything from managing contracts to tracking salaries. This technology enables companies to securely send and receive money instantly anywhere on the planet without having to use an intermediary and pay the fees associated with it.
Smart contracts can automate the execution of predetermined conditions, thereby reducing many day-to-day contract management tasks. The parties can be assured that each other will adhere to the terms without spending as much time on proper oversight.
Blockchain Efficiencies Outweigh Concerns
Even when technologists talk about innovation, they often end up talking about renovation. They don't come up with new technology but rather tweak and update what is already there. The Blockchain is different. This is one of those rare blockchain developments that are genuinely and utterly new.
Blockchain is primed for disruption. The technology is cheaper, more efficient, and less time-consuming than traditional methods. The people can live easier. There is the technology, there is the motivation, there are the ideas. It's up to the innovators now to turn this idea into a reality.
Beyond Disruption: Blockchain in HR
However, it would be incorrect to view Blockchain as another disruptive technology that could upset traditional business models with a cheaper digital solution. Blockchain is not a disruptive technology but a fundamental one that can create a new social and economic infrastructure. It will take many decades before Blockchain is truly mass-adopted. The benefits of blockchain adoption are expected to be greater than the cost, but this will only happen in the future.
Future of Blockchain in HR
Where will this all lead? Like many other things, the adoption of new technologies takes time. Implementing blockchain-based HR solutions will take a lot of work. It will likely take time to implement.
A simple use-case will be blockchain-based verification of candidates. Another use case could be real-time payments to workers, and it would also reduce spam as we are managing our career profiles. Second-wave blockchain technology at work could bring about better talent markets and more transparency of workers, jobs, and matches. This could lead to more confidence in the market.
Third wave, rethinking the very nature of your organization. We could have a more flexible workforce, which would allow us to call on them for specific projects. This means fewer permanent employees and longer-term contracts. We'll have more autonomous organizations and also focus on teams in networks.
There are still challenges. You will hear from techies about the current challenges in Blockchain, such as transaction costs and speed. We'll need to make sure we get this process correct, and it will take work.
What can you do now? Test out the latest technology. We can begin right away. Consider the current blockchain projects and how they could help with the challenges of the workforce. Work with startups. Try out their solutions and experiment to see what works. This leads to six different startups that are working on various problems.
Want More Information About Our Services? Talk to Our Consultants!
Conclusion
The risks associated with experimenting with Blockchain at the corporate level are significant. It's a good idea to start with simple, one-time blockchain applications to get accustomed to blockchain technology before moving on to more complex solutions. It's likely that no matter the context, Blockchain will alter the game. The most recent advancements in blockchain technology can help HR prepare their organizations for a workforce that is constantly changing. As is the case with any new technology, let's start with: What issue are you attempting to address?
Everyone involved, from blockchain technologists and startups to Blockchain HR specialists and recruiters, needs to be in continual contact for it to work out well. Andy, maybe at the subsequent conference on "Blockchain and the Distributed Workforce"? The fundamental procedures of HR are evolving due to Blockchain, including hiring, contracts, and payments.
