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.
How does it revamp the future of the HR functions? How does its implementation in Human Resources improves areas like recruitment, skills development, and talent management?
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, the implications of blockchain in the HR space is 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 revolutionizing diverse industries, with areas like insurance and payments at the forefront.
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. It also means that 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 in power. It makes people and organizations trust each other, without any central authority verifying their identities.
When zeroing on blockchain for HR, focus on the business is more beneficial, instead of 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.
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 of their skills, credentials, and workplace performance. For potential employers, it gives them access to this compliant “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.
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 increased clarity on their skills and experience.
Not only this, but small and medium-sized businesses also will 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. It will enable them to focus more on serving customers and growing their productivity.
HR teams are tasked with conducting some of the highest-volume financial transactions for an organization as well as handling 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 and, as more companies face data breaches, it is of utmost importance that safeguards are 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.
The list above is only a sample on how blockchain can transform the HR industry. Indeed, the possibilities are endless. Connect with our blockchain experts to know what other transformations blockchain brings in Human Resources.