How the blockchain will profoundly disrupt Human Resources and HR-tech
When it’s all said and done, blockchain will be responsible for disrupting and transforming the practices of some of the biggest industries in the world — banking, real estate, healthcare, legal — to name a few. These are the obvious, rock star industries which get all the glamour and glitz, and since they get the lion’s share of media attention, we wanted to use our voice to shine a bright light on an industry that serves as the lifeblood of many companies: human resources. Key HR areas, such as payroll, recruiting, process management and recognition, are all poised, and ready, to get a brilliant makeover via the blockchain.
Many people don’t realize this, but the total global HR services market is worth over $500 billion¹ — and this number is growing at a steady clip as more companies recognize the need to put efficient HR practices and technologies in place. Below I outline the key areas within HR that are going to be transformed by blockchain.
Let’s start this analysis by double-clicking on one of the fundamental functions of HR — payroll. Companies in 2018 increasingly consist of a global workforce. Blockchain could effectively eliminate the global challenge of international payments that employers and employees have to deal with. In a recent article published by Deloitte, the authors stated, “The long-term inefficiencies of overseas payroll payments can add up. Currency volatility can have an immediate effect on both the employer and employee. Hourly changes in exchange rates are routinely taken advantage of by intermediaries. So time is money, and an international payroll blockchain solution simply offers a faster solution than existing models.”
A great use case of a company utilizing blockchain for payroll is Bitwage, an international payroll provider. Bitwage is combining blockchain with mobile and cloud technology — they are now focused solely on facilitating cross-border payments by using bitcoin as a payments rail — employees ultimately get paid out in their local currency, and Bitwage handles the conversion of bitcoin to local funds.
Another area of soon to be improved process efficiency lies in recruiting. Traditionally, and right now, it’s quite challenging for a recruiter to verify someone’s past experience or accomplishments. However, blockchain provides an encrypted network of blocks where individuals and companies can share information securely, thereby enabling recruiters to verify employee data including educational performances and career achievements. In addition, there are now educational institutions and employers providing certificates on the blockchain — imagine the benefits of this? This will help employers in verifying educational qualifications of short-listed candidates. Instead of contacting the universities attended by each qualified candidate, employers will simply be able to read this information from the blockchain, in turn making the process quicker and less costly.
Don’t call me crazy, but blockchain may one day render resumes and Linked In profiles obsolete. After all, how do we now with confidence that your latest candidate did exceed his sales quota 6 months in a row, or did graduate magna cum laude from that fancy Tier 1 law school, or did obtain that Level 3 CFA? In short, we don’t.
Utilizing blockchain for talent sourcing and recruiting purposes also eliminates fraudulent candidates and cyber attacks. You will now know, with certainty, that this candidate is who he/she says they are. The employment history and specific employee “content” will all be pulled from the public blockchain. The comfort in knowing that will provide many a recruiter with a better night’s sleep.
We’re already seeing this innovation take place. Take PeopleWave for example (an HR software company in Singapore), whom is aiming to revolutioinize HR processes with Blockchain. Their CEO, Damien Cummings, was quoted as saying, “Evolving our software to incorporate blockchain technology has been long planned and is the next logical step in Peoplewave’s growth. Our new blockchain platform, Wavebase, allows us to break into other parts of HR by completely disrupting pre-employment screening, background checks and the big one — recruitment and talent acquisition.”²
Digital Process Management
Another area in which blockchain will optimize HR is digital process management, through the use of smart contracts. Smart contracts are specially built sets of code; rules written into a digital program which determine what happens when money comes in or when certain conditions are met. Virtual marketplaces have been created based on policies which articulate the terms under which artists are willing to allow their music to be used. Commercial and non-commercial contracts can be provided directly to the market. Smart contracting handles these options in an open and transparent way — everybody knows when they are getting paid, under which circumstances and what amount.
Aside from traditional employment at organizations, this can shake up the business administration of the growing population of self-employed professionals (freelancers) that offer services to many different clients in the open talent economy.
Rewards & Recognition
The last area of HR that blockchain impact hits close to home — rewards & recognition. The corporate recognition market in the US alone is a $90B annual industry³. Currently, a substantial portion of the gifts given don’t match what the individual employees actually want. This is because HR departments cannot predict what every individual employee wants, especially as the number of offices and employees grows. Lots of the merchandise ends up sitting on shelves or collecting dust, going unused and wasted. It is estimated that about half of these rewards ($45B worth), and this includes experiences and unused every year. With a blockchain platform like ours, Universal Recognition Token, we will have public data on which prizes are highest in demand, on who is choosing what the most and the least. This means we can have many more prize vendors submit prizes and the system will automatically tell companies to increase quantity and buy more of the in-demand prizes and phase-out and buy fewer of the less impactful prizes.
I want to leave off on a quote from Don Weinstein, ADP’s Chief Global Strategy officer, who said, “The latest revolution sweeping the workforce is how we recognize and pay people. The winners will be the organizations that keep pace… and adapt to meet changing needs.”⁴
Here at URT, we are providing companies a cost effective platform and a forward thinking approach to achieve this.
Leave any thoughts or experiences below on how blockchain can affect your company’s HR practices!
Brendan & URT Team