Analyzing the Impact of Blockchain in Human Resources

Blockchain is a distributed digital ledger that enables organizations or individuals to exchange information or make transactions securely, transparently, and immutably. Its attributes make information exchange online more efficient and transformational for diverse businesses. The integration of blockchain and human resources has huge potential. 

Let's take a look at how this technology revamps the future of HR functions. Find out how its implementation in human resources improves areas like recruitment, skills development, and talent management. Also, visit our blockchain app development services to explore more about blockchain's potential in building business solutions. 

Impact of Blockchain on Human Resources 

At its core, blockchain technology operates as a “trust protocol.” It eliminates the need for centralized authority or intermediaries to manage and validate value exchange or transactions between counterparties. However, instead of the technology itself, what matters more is the benefits it delivers.

Significantly, blockchain implications in the human resource space are game-changing for organizations as well as the individuals working for them. 

After the release of blockchain’s open-source code, it opened an efficient means for direct value exchange with anybody in the world. Currently, this revolutionary capability is already transforming diverse industries, with areas like insurance and payments at the forefront. 

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How Blockchain Reshapes Value Exchange 

• Eliminates or automates back-office operations with instant settlements
• Automates reconciliation, purchase order, invoicing, or other traditional components of a transaction
• No need for third parties to verify transactions between counterparties
• Provides immutable proof of transaction provenance that nobody can edit or alter without consensus 
• Provides the ability to embed business or contract terms in a single value exchange through smart contracts 

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Blockchain Fundamentals

Blockchain establishes trust in the network through consensus. Its ledger enables records to be written, verified, and updated, but not overwritten.

While being added to the chain, an information block with changes remains visible to everyone having authentic access to the blockchain. It means a transaction will become unauthentic if they don't agree to it and any single entity cannot make any change.

The consensus about the fact becomes the driving factor for transparency and trust. Besides, blockchain decentralizes trust and brings individuals into power. It makes people and organizations trust each other, without any central authority verifying their identities. 

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Addressing Pain Points of Human Resources with Blockchain 

When zeroing in on blockchain for HR, focusing on the business is more beneficial, instead on the technology. The places, to begin with, are the HR processes that are opaque and involve several people, shared data, time, and risk.

The following are the key four areas that blockchain impacts significantly: 

Talent Acquisition

Blockchain strengthens the employment relationship on both sides.

For people, it gives them the ability to control, access, and maintain a comprehensive authentic blockchain-powered record. The document will include their skills, credentials, and workplace performance.

For potential employers, it gives them access to this complaint's “digital identity” and the ability to match individuals to roles effectively.

It can particularly prove to be beneficial in roles where skill requirements change frequently.  

The benefits of an individual’s highly portable and up-to-date digital identity can become greater for both applicants and employers. 

Also, the younger generation generally remains more relaxed than their predecessors about sharing PII (personally identifiable information). Blockchain allows them to do it in a more secure, efficient, and effective way. 

Also, Visit: Blockchain Solutions for Nonprofits | Addressing Trust Crisis

Poor Productivity

Blockchain can positively impact workforce productivity across companies of all sizes. It can enhance organizations’ ability to match people’s skills and performance to appropriate jobs, thus, uplifting productivity. Organizations will be able to put people into the right places to be productive with clarity on their skills and experience. 

Not only this, but small and medium-sized businesses will also be able to benefit from it. The task to find and recruit the right talent is especially daunting and burdensome for smaller enterprises. A blockchain solution that can assist them in doing this more effectively and efficiently will boost their productivity.

Furthermore, blockchain applications can also improve high-potential targets like payroll and VAT to reduce the administrative burden on SMEs (small and medium enterprises). It will enable them to focus more on serving customers and growing their productivity. 

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Data Protection

HR teams are tasked with conducting some of the highest-volume financial transactions for an organization. Also, they handle sensitive employee data related to pay, healthcare, finance, banking, disciplinary records, performance records, expense reimbursement, and more.

All of the data an HR department maintains is at risk of being exploited. As more companies face data breaches, safeguards must be in place to prevent fraud and maintain security. In the face of rising cybersecurity crime, blockchain technology is being lauded as a solution.

Blockchain’s role as a game-changer for human resources is defined by its security capabilities. Blockchain has proven itself to be so effective for risk management and software security that even aerospace and defense giant Lockheed Martin is using it.

Implementing blockchain can help thwart both internal fraud and external hacks of sensitive employee records. Access to the blockchain is limited and controlled and even those with access can’t arbitrarily make changes to the record. This limits both internal fraud and external hacks of sensitive employee records.

Learn More About Blockchain in HR (Revamping Human Resources Management Systems)

The list above is only a sample of how blockchain can transform the HR industry. Indeed, the possibilities are endless. Connect with Oodles' blockchain experts to know what other transformations blockchain brings to human resources.