The arrival and expansion of digital currency Bitcoin during recent years has brought along the birth of a new technology: blockchain. Having been its advantages already tested during Bitcoin’s development stages, said technology is taking the leap into other fields where its applications are diverse, such as HR management, among others. But before diving into what blockchain is capable of doing for a company’s HR department, it’s advisable to be aware of the principles this technology is based on.
Blockchain emerged to facilitate digital currency exchange, so one of its fundamental pillars is security. It is an infrastructure created within a chain of blocks, hence its name, which registers real-time information securely. It ensures traceability and, thanks to cryptographic systems, it prevents information from being deleted or modified. Due to the way it’s designed, it doesn’t require bonds of trust among those using this digital register shared in a decentralized fashion.
Applications of blockchain in the field of HR
Bearing in mind these features, the main applications of blockchain in the field of HR are the following:
- Validation of information provided by a candidate. This technology allows companies to certify the identity of candidates, validate their academic qualification and their professional background. In fact, the Massachussets Institute of Technology (MIT) has already implemented a pilot programme through which their graduates receive a validated digital diploma so that they can share it with their potential employers, who are in turn granted that said diploma has not been manipulated in any way. Thus, time and money is saved, since recruiters don’t need to contrast different sources in order to ascertain the information in a particular resume.
- Drafting of smart contracts. This technology permits to leave behind paper contracts and their subsequent mailing in order to get them signed, thus speeding up paperwork. Likewise, it allows to verify their compliance. In addition, smart contracts can be configured to update once the conditions imposed are fulfilled.
- Talent attraction. The contact network set by blockchain may lead to the ideal candidate for a certain position, who previously shared his resume through this technology. In addition, selection processes become decentralized and middlemen are avoided. An example of this is being carried out by the startup ChronoBank through the platform LaborX, which gets employers and customers in contact by sorting them according to their reputation while allowing payments by means of a virtual currency called Labour Hour.
- Payment convenience. One of the biggest labor issues faced by international companies and professionals located all over the world is the one related to payment procedures. Tardiness is not uncommon, due to the involvement of middlemen in the process or slow and expensive transactions in certain countries. Blockchain can simplify and standardize payments through cryptocurrencies. In fact, the American company Bitwage allows employees and contractors all over the world to be paid in bitcoins, which are eventually converted into local currencies. Professionals are able to choose among 25 different currencies to receive their payment and the company undertakes to transfer the money within 48 hours, regardless of the country.
- Monitoring of professionals. Blockchain allows arrangement of each professional’s history so that their evolution can be analyzed with the assurance that data have not been manipulated. This process may begin before recruitment and it’s not interrupted when employees leave the company. Qualification and validation procedures carried out during job interviews, as well as the various training cycles taken during their time in the organization may also appear in their record. That information can be consulted by HR professionals of another company should they be interested in recruiting them. Likewise, having a record of every professional permits recommendation of the best itineraries for their development and assessment of their learning pace.
- Data security. As mentioned before, security is one of the fundamental pillars of this technology. Thanks to blockchain, good custody of each professional’s sensitive data is not an issue anymore. Hence, very useful information in work environment can be collected. For instance, an analysis of medical history, made by those granted permission, helps to prevent diseases; and the use of an algorithm can sort individual risks and specific treatments based on projections.
Although blockchain technology is still taking its first steps in the field of HR, Jeff Mike, vice chairman and HR Research Manager of Bersin by Deloitte, sees a great potential in it. “Currently there are still some challenges, but once the effect of the network is activated, its growth may be exponential”.