Blockchain Impact On Human Resources
Righ now, the term Blockchain is undoubtedly one of the most fashionable terms in the tech community. If digital innovations is not enough to disrupt businesses, blockchain will indeed revolutionize Human Resources and recruitment.
To begin, it is necessary, even essential to popularize the concept.
By definition, Blockchain is a technology that can transfer and store data from all types of files. The Blockchain is a decentralized system in which information is stored on countless servers capable of monitoring and authenticating changes in the information in real time. It sounds like a classic server, except that technology allows virtual transactions and exchanges without intermediaries. Its cryptographic system allows its users to authenticate the validity of the “chain of blocks”. It is in 2008 that the system became known thanks to the virtual currency, Bitcoin.
A new organizational model thanks to the Blockchain ?
It is intended to create a model that wants to be more and more “liberated” and less hierarchical. Well-being at work has become the key to success in start-ups as well as in larger organizations. HR is well aware of this and is seeking to retain their talents through a variety of means. What if the Blockchain could play a role in the corporate culture? Thanks to the establishment of decentralized collaborative organizations (free associations of individuals in open communities with the same objective), HR should have visibility on these Decentralized Collaborative Organizations (CCOs) and members They are registered according to their skills, interests or career aspirations.
These organizations have the capacity to create cohesion around common goals. The Blockchain system allows everyone to collaborate on a project. With the transparency of the technology, the reference that would be created by a user would be visible to all but immediately rewarded according to its added value. The reward would be equitable depending on the contribution of each and their role in the community. A way to guarantee employee engagement.
What can Blockchain do for the HR world ?
One of the strengths of technology comes from its total transparency. In recruitment, the role could be particularly in the verification of candidate profiles ( you should read this article to know how). The time savings are likely to be considerable and recruiting officers may no longer be able to do without them. This is one of the major concerns of HR because many job seekers do not hesitate to lie in their resume and during the interview. Knowledge of Blockchain technology will gradually become necessary also for job seekers. For HR professionals, knowing how the blockchain can be used to streamline processes, create higher levels of security, and innovative processes will ensure future personal success and position you as a strategic partner for your organization.
The specialists of the function are perfectly aware of it, wage salaries management and working time of each company is not always easy. The Blockchain may well prove to be able to respond to corporate governance in the years to come. Its ability to be totally tamper-proof makes technology the best bank possible. No institution would no longer need to intervene in the process, which ensures both security but also a lower cost for businesses.
Three examples of blockchain HR operations:
There are three HR processes in which blockchain technology is already changing things fast: payroll, outsourcing and recruiting.
1. Payroll of employees
Most employees are now paid electronically, but internationally operating companies face inconvenience when making payments abroad: fluctuations in currency exchange rates can affect the amounts of the payments. And, more importantly, processing times due to intermediaries such as banks significantly slow down the payment process. In a world where losing time means losing money, the blockchain could offer a faster payment solution.
Take Bitwage for example, this tool combines blockchain technology with mobile and cloud technology to facilitate cross-border payments. It uses Bitcoin — the best known digital cryptocurrency — as a mean of indirect payment; ultimately, employees are well paid in their local currency, and Bitwage supports the conversion of bitcoins into local currency. In the same way, Chronobank also uses blockchain technology to help companies pay their employees without going through an intermediary banking institution. Of course, these systems are based on the assumption that Bitcoin will become a widely accepted form of payment in the near future — which is not yet the case. However, by dramatically speeding up the payroll process, this method can truly revolutionize the way international companies pay their employees.
2. Smart Contracts
Blockchain technology, and particularly smart contracts, could really change the way companies manage their contracts.
A smart contract is simply an automated process that performs an action on the blockchain when the contractual terms are met. Take the hiring process for instance; for a new employee to join the company, you must first perform many administrative operations (identifiers, passwords, e-mail templates and checklists). Smart contracts can automate most of these operations.
Oracle recently filed a patent to use blockchain technology to improve the workflow efficiency of its employees. And the musician Imogen Heap has recently made a name for herself by using smart contracts based on blockchain technology and Ethereum — a cryptocurrency alternative to Bitcoin — to charge for her music, sharing the contract in full fairness and transparency. by removing all intermediaries like Spotify or Deezer. (Read Blockchain in Music industry)
A smart contract is simply an automated process that performs an action on the blockchain when the contractual terms are met.
It is this potential for speed, transparency and decentralization — combined with a significant reduction in transaction costs and operational risks — that makes blockchain an attractive alternative to current contract management.
But not everyone believes in the security of smart contracts based on the blockchain. A recent study by University College London (UCL) analyzed nearly a million Ethereum smart contracts and estimated that more than 30,000 of them were “vulnerable”. Security breaches are therefore a real concern.
Smart contracts also cause legal problems. Today, in most countries, a contract is signed on the basis of an implicit agreement deemed to be “good faith and loyalty” — that is to say the idea that contracting parties will treat one with each other in a fair manner and in respect of their respective contractual advantages. However, there is still a need to define how a self-enforcing automatic agreement as a smart contract could incorporate a legal principle based entirely on human trust.
Similarly, at the current stage of their development, smart contracts are unable to account for all possible changes in the various parameters relating to the circumstances surrounding a contract. What if, for example, one of the parties feels aggrieved and wants to cancel the contract ? So far, all signs indicate that human intervention is still needed, at least as a backup when things go wrong.
3. Recruitment of candidates
A recent survey by CareerBuilder found that 58% of employers have found false information on CVs at one time or another. In fact, ensuring the accuracy of this type of information is still one of the most time-consuming HR tasks. Verification of references and diplomas simply takes too much time and costs far too much money. (Read The role of Blockchain in Education)
With its promise to allow unalterable digital recording or “trace”, blockchain technology promises to speed up and automate the way employers check information about the identity of their potential future employees, for better matchmaking of candidates and positions. This process will also boost productivity, which is particularly important for small and medium-sized enterprises (SMEs) that are struggling to recruit good candidates.
Currently, on platforms like LinkedIn, data is collected centrally and then resold to users. But blockchain technology could lead to the creation of a truly decentralized social network, where the data is individually controlled by users and offers them the opportunity to monetize their expertise through micro payments to provide content, comments or perform precise tasks. One of the first users of this blockchain-specific application is a platform called Steem, which uses a blockchain-based rewards system to attract its contributors to monetize published content and develop the community. To find out everything about a potential candidate, recruiters can directly view their data at source — ie, the candidate himself — rather than paying the platform for access.
Some blockchain enthusiasts even believe that this technology will completely prevent HR from checking documents such as qualifications and work experience, but also deal with transactional data such as medical certificates, address changes and certain information. Once the record is created by the source and stored in a “block”, an HR system will simply have to log into that record and automatically accept its authenticity, through DeepVault as an example, without any manual validation by a real person being necessary.
In addition, such a system would be “always active”, meaning that candidates could be assessed based on their current skills — not just those they choose to share on their resume. Blockchain technology could eliminate an entire stage of the interview process, allowing HR to focus on other critical factors such as the candidate’s personal goals and aspirations, as well as the suitability of the applicant’s profile with the culture of society.
Blockchain technology could eliminate an entire stage of the interview process, allowing HR to focus on other critical factors.
Businesses quickly spotted the potential of blockchain technology. The APPII Career Checker platform helps TechnoJobs become the first site in the world to offer employers verified CVs using blockchain technology. Similarly, Jobeum uses technology to create a “Recruitment Tool Similar to LinkedIn”, while HireMatch uses it to help users reduce the cost of finding, maintaining and hiring new employees. .
As noted in a recent report by PWC, the talent research industry — vulnerable to cyber attacks due to the emergence of digital recruiting platforms — could benefit from the blockchain as a fraud prevention tool and strengthening cyber security.
At the same time, new laws and regulations need to be created to protect job seeker’s privacy against a broader data verification technology, while ensuring that the system remains useful to businesses. It may be years before a balance between regulation and effectiveness is found.
Yet, even though the blockchain is still in its infancy, it is clear that it’s already making waves in the world of HR recruitment.
Blockchain and HR: Beyond Disruption
Blockchain should not be considered as a “disruptive” technology (able to upset a traditional business model with a less expensive solution). Blockchain is a fundamental technology that can potentially create an entirely new economic and social infrastructure. This is why the complexity and the obstacles to its adoption are colossal, which means that it will probably take decades before the blockchain is truly adopted on a large-scale. Despite the fact that its benefits are likely to outweigh the costs of its adoption, only in the long run.
It will probably be decades before the blockchain is truly adopted on a large-scale.
At a company’s level, the risks of blockchain experimentation are far from insignifcant. Starting with small single-use applications is a good strategy to test the blockchain before full adoption. Whatever the context, it is likely that the blockchain will change the rules of the game.
In terms of HR, the blockchain is changing the very nature of some of its core processes — from recruitment, outsourcing and payments.
Originally published at http://businessblogchain.com on April 17, 2019.
