Blockchain is an emerging technology popularised by cryptocurrencies like Bitcoin. However, blockchain in HR has a wide range of applications. First it’s important to ask: what is blockchain?
Blockchain for dummies
Essentially, blockchain is a ledger (a place to store information) that is decentralized through a network of blocks, meaning the information is spread out in segments over a group of computers. Importantly, the blockchain is immutable, meaning that the information on it cannot be deleted. This makes it a lot more secure than other databases because there is a guarantee that the information has not been tampered with. Additionally, it is a smart database meaning it can perform certain tasks automatically.
HR will greatly change in the coming years with the help of blockchain technology; from onboarding to compliance, blockchain can make business owners’ lives a lot easier as it changes the way you handle large amounts of sensitive employee data. This eliminates many back office functions, saving cost and time. This helps to realign focus on core business objectives. Today we look at how blockchain is already tackling HR problems that hold businesses back.
Trust the talent
When taking on new talent, employers want to have the confidence that qualifications and skills advertised on the CV are real. The reality in recruitment is a far cry from this.
75% of HR managers have caught a lie on a resume according to a Careerbuilder survey. With most HR managers spending less than a minute looking at resumes, it is impossible to know how many lies go unnoticed. This wastes a lot of time and disqualifies other honest candidates. Worse still is the scenario where they discovered the lie once the candidate was already taken on and assigned a project at which point many employers are reluctant to remove the candidate from their team.
This is where blockchain has an advantage. Since the candidate cannot change it, blockchain CVs would only have skills and qualifications approved by accrediting bodies (universities, previous employers etc). This removes the guessing from recruitment, letting you take on new talent with confidence.
Blockchain certificates are already in place. Massachusetts Institute of Technology (MIT) has a diploma system that is accessible as a digital key that can be verified quickly and with confidence. As blockchain technology becomes more prevalent, certificates like these will become commonplace. This removes the costly and time consuming work of verifying all qualifications on all CVs.
Planning for the future
Research from Deloitte indicates that 35% of jobs in the UK are at risk of computerisation in the next 20 years. To stay ahead of automation, employees need to have lifelong skill development. This involves identifying relevant new skills.
Firstly, since blockchain assures the employer that skills listed on CVs are true, more effective skill mapping is possible. This is especially true for digital skills. If an employee’s CV says they have a good knowledge of excel, the employer can put them on an advanced course. If this were a lie, the employee would struggle with the advanced course, wasting precious time and resources.
Secondly, blockchain’s smart feature means that complex skill development maps are quick and easy. Smart features use ‘If This Then That’ (IFTT) inputs, so employee skill data can tell the employer what the next skill step is for every employee. With smarter skills maps employers make sure that employees are learning things suitable for their level. Furthermore, internal hiring is optimised since the employer has a skills map to see who is best suited for the role.
Payroll with Smart Contracts
Pay, tax, correct payment of contractors and other issues relating to payment have resulted in hundreds of employment tribunals in the UK just this year. It is reported that 20% of SMEs face the chance of bankruptcy as a result of late payments. Smart Contracts which use IFTT inputs ensure that the payment will make it to the employee, contractor, or vendor in a timely and secure fashion. By removing time consuming payroll tasks, HR can focus on other processes like skill development.
There already exist startups like Etch completely re imagining payroll. With Etch employees can access their pay at any time they want. Their pay is credited in the form of Etch tokens that are stored in a digital wallet. The token value is stabilised by the funds that an employer assigns. Although not all employers using Smart Contracts for payroll will go as far as using a token currency, it shows that blockchain has great potential to change how we perceive payment. Current employers will be more focused on the simple payroll solution that blockchain offers.
Smart contracts have potential beyond payroll. Company benefits like health insurance and travel cost become instantly available and less time consuming. Again, this is about automating back office processes so teams can focus on development.
In the case a business has to undergo an audit, the business owner wants to have assurance in their databases. Blockchain’s ability to record and update employee tax and pay automatically streamlines and secures taxation services. Audits become easier since the business can share its records with regulators in real time. Time and cost spent for document collection falls drastically. Furthermore, blockchain’s encryption and source verification build a stronger barrier against document manipulation and fraud. Feeling secure about your records is essential during a time of low confidence in auditing firms. With a blockchain record the employer spends less time on the audit even if the auditor is faulty.
Liability and fairness
Workplace incidents like harassment are the cause of many other employment tribunals. Because blockchain records cannot be tampered with, the victim is protected from incident erasure. Furthermore, because blockchain attaches a permanent timestamp to data records, it creates an accurate timeline of events. This speeds up the investigation, providing employer and employee with a resolution as fast as possible. Startups like the Vault Platform are already integrating blockchain into misconduct reporting and case management.
Another hot topic issue around blockchain is the question of GDPR. Worries have arisen that because blockchain records cannot be deleted that the ‘right to be forgotten’ laws are being violated. However this isn’t true. Studies in blockchain consent management and data erasure both conclude that erasing data from local storage is possible. With this problem out of the way, blockchain seems to contribute a lot to GDPR safety through encryption. This gives a promising answer to the questions of data security which arise in a more digitised work environment.
Blockchain may still be years from becoming a standardised technology, but Gartner estimates that by 2022, over 40% of large companies will be using an hr solution that incorporates emerging technologies like blockchain. This will inevitably lead to more startups like Etch and Valut Platform that offer blockchain solutions to SMEs.
For a time saving HR solution that is available now, get in touch with Beagle HR! From compliance to processes, Beagle HR supports SMEs with their people in Surrey, Hampshire, Sussex, and London.
For other stories from the world of HR, check out the rest of our blog to stay informed on the latest technologies set to change the way you do business.