Technology and the Transformation of Talent; Beginning with Blockchain
Human Resources — HR. Not the first area one would expect radical new technologies to gain a foothold but nonetheless — it is! Emerging technologies will wash over the Human Resources function, and nothing will ever be the same. The high amount of human touch and repetitive processes in HR (built for a different era) happen to be just the type of fodder perfect for growth in the use of, for instance, Blockchain. Sounds crazy right?
Let’s take a closer look at the opportunities possible, and the challenges posed, by using emerging technology in the new age of Talent.
What’s Eating HR?
Before we jump into newly emerging technologies and how they are impacting HR, let’s first talk about how HR itself is changing. As in all businesses globally, the Millennial Mindset is also affecting HR. Candidates want more of an experience than an interview, while employees also want access to technologies that will make their jobs easier and their outcomes and decisions richer. Many HR professionals would like to see the use of emerging technologies change Talent Acquisition from a cost center — to a competitive advantage. Massive data overload and demands for highly personal, social, digital as well as mobile experiences mean that both Blockchain and AI are coming down the pike for HR across all industries.
Let the Numbers Speak
The bottom line is that HR is under the microscope and the quicker this function is able to turn Talent Acquisition into a differentiator versus a cost center — the better. Recent statistics predict that Blockchain technology will reduce back office costs by at least 20% and more likely, 30% going forward. Using 2017 statistics, with HR costs per person at approximately $4000, and over 100 million people employed, we are talking about a $400 billion plus industry. Applying assumed back office savings at 25% on average, Blockchain for HR could return companies over $100 billion in cost savings. Not a number to sneeze at!
So, the proposed growth of Blockchain, and the savings that may be realized by this tenacious technology has the C-Suite sitting up to listen. They are also keeping a close eye on HR disruptors. New entrant start-ups are already moving on with improving the HR function. Some companies use the immutable property of Blockchain to pay employees who have international employers, with Bitcoin, and has gone from nascent to being a market maker in the gig economy. In recruitment, other companies use Blockchain encryption to validate college degrees.
In an era when trust is both elusive and held at a premium, Blockchain’s appeal is climbing as it presents a clear way to confirm, validate and authenticate both values and events. And HR may just be the area that ushers in some of the most important and illustrative, initial forays into Blockchain technologies. Many market pundits are predicting major firms will begin seriously experimenting with Blockchain for Talent Acquisition and Support in the next 18–24 months. IBM is already working with certain organizations in this space. The overall opinion is that Blockchain will have a profound and pervasive effect on the world of work. By vastly improving workplace productivity, Blockchain could be Transformative for both companies and the individuals that work for them.
Beginning with Blockchain
In C-suite conversations across the world, Blockchain is the first technology that comes up when the subject turns to HR. Blockchain as we all know by now is a distributed ledger used to securely transfer value and information. Its technology encrypts data and validates transactions through the process of consensus, distributing a copy of the exchange to each individual that has a copy of the ledger. In short, Blockchain is a trust protocol which removes the need for third party verification. The best fit for Blockchain technology is to disrupt processes that are slow, cumbersome, labor-intensive and expensive due to a need for significant data collection and third party verification.
So why do we care about Blockchain for HR? Well, the immutable quality of Blockchain will be indispensable to HR practices like recruitment, payroll, and employee data. In recruitment, the credentials of an applicant will be instantly verifiable; in payroll, disputes will be automatically settled by the historical records stored on the Blockchain; and in employee data, there will be an immutable historical records of a candidates’ employment history.
Think of it, individuals will have full control over their data, preventing misrepresentation and misunderstandings, while recruiters will have access to a candidate’s education, employment and training history that’s accurate and hard, if not impossible, to falsify. Universities globally are already exploring the possibility of an ‘Educational Passport’. This would store a student’s records on Blockchain, making them verified and accessible for potential employers and other universities. The potential is enormous. Let’s look more closely at each HR use case.
Blockchain could be a Godsend for recruiters and candidates alike. Imagine how much time, money and energy could be saved by everyone having the same immutable information at their fingertips! No more re-working your resume based on the latest trending fad, and no more checking and verifying each individual’s education and employment history — just a smooth, clean exchange of authenticated information available instantly. Smart Contracts delivered over Blockchain would be able to remove much of the onus of onboarding, and would be especially effective for high volume, high turn-over positions.
The case for Blockchain use in Payroll is pretty straight forward. Paying employees, especially internationally, can pose its challenges. The international payroll process is slow and often requires strict compliance to anti-money laundering (AML) laws like KYC (Know Your Customer). But Blockchain technology makes it easier to send money due to the fact that records cannot be changed, making compliance easier to reach. Blockchain would automate the burden of routine data processes, like calculating VAT, while enhancing fraud prevention and cybersecurity. With the increased movement of labor across borders, Blockchain becomes all the more attractive. Employing this ground breaking technology could make it easier to send money to another country, where access to financial institutions is limited as well as remove the middle man in international payments, which currently cuts into transaction values.
A New Dance for Employee Data
Let’s face it, keeping up with all the nuances of an individual’s experience can be challenging — and if you think it’s difficult now — imagine trying to keep track of it in the growing ‘Gig Economy’. In highly skilled roles, like IT, an application could easily list skills and experience in over 20 technologies, which can’t all be validated in an interview or test. Using Blockchain, every employee experience could be captured, and kept clean and clear, for anyone who chooses to view it. Blockchain then, could deliver us the ‘Uber Resume’, with every last aspect of an individual’s history apparent, and evidenced.
Barriers to Blockchain
While it is easy pontificate about the wonderful improvements Blockchain could bring to HR, we must also be honest about the difficulties found in implementing wide-scale adoption. The first problem is getting all stakeholders in the same room together to decide how a Blockchain community would be designed and run. In our examples, universities, as well as past, present and potential employers would all have to be on the same Blockchain for the technology to deliver the intended results. Some are beginning with a small, private Blockchain community, contained to include only certain participants versus using a public Blockchain that can be viewed by all. Whether these Blockchain initiatives will reach their full potential is yet to be determined.
Another aspect on Blockchain for HR that would need attention is data privacy. What if a potential candidate would like to access a Blockchain on which companies are searching to fill positions he/she would be interested — but the individual’s current employer is also a member of the Blockchain? Blockchain pioneers like Bitcoin and Ethereum, are ‘Public/Permission-less’ Blockchains, which means that any party can both read and send new data to the chain. This idea in many cases is a step too far for current corporate thinking, which leans toward traditional ‘ring fencing’ of data.
There are versions of the Blockchain, called ‘Private/Permissioned’ Blockchains favored by other trailblazers like HyperLedger and Ripple. This approach however is not necessarily built to scale, and may be limited more often to corporations and consortium’s. All of these considerations would have to be taken into account and decided on for Blockchain technology to reach its lofty aspirations.
Time and Tide Will Wait for No Man
Are there risks in the early adoption of any technology? Yes. But the risks of not investigating, and investing, in Blockchain could be even more dangerous. Some good advice for HR departments internationally, is to start the discovery journey now, or struggle to play catch up later. To actually capture the competitive advantages, will take turning early prototypes into more mature proofs of concept — and moving on from there. Examples from other market areas, such as insurance, payments and capital markets, could be put to work in the HR arena. Blockchain technology seems to be here to stay — so for HR market participants, it’s a clear case of ‘Lead, follow, — or get out of the way’. Time and tide will wait for no man.