Blockchain is about to revolutionize our way of doing business, but not probably not in the way you think. While most of us associated Blockchain with Bitcoin and other cryptocurrencies, blockchain technology is revolutionising a whole lot more than currency.
Gartner predicts blockchain will create $3.1 trillion in business value by 2030. The majority of the amount of these returns will result from value generation and efficiency improvements in current operating models and business processes, the real value will come from the way it enables a paradigm shift in how societies, businesses, customers, partners and individuals interact, create and exchange value. In its simplest terms, blockchain makes it possible for participants of a network that may or may not know each other to exchange value in digital environments. In its essence, blockchain provides trust in untrusted environments, eliminating the need for a trusted central authority.
Blockchain´s decentralised network of computers verifies and automates the flow of information. It's what it´s called peer-to-peer (p2p) networks, allowing participants to write and update records on ledgers where cryptography ensures immutable traceability. That makes it a trustworthy system that stores data while cutting the middleman. That's why it could completely disrupt the HR industry.
So, how will blockchain impact the HR function?
Recruitment takes up a lot of time and resources within the HR department, on average it takes 30 days to fill an open position, from posting the job to fill the role, and it costs the company $4,192.
With Blockchain we are envisioning to reduce a 36% of the recruitment process, that is mainly to confirm the candidate´s information, looking at grades, certificates, work history and experience will be easily verified and visible to people with direct involvement. Reducing 36% of the recruitment process, means to the company to save around $1,486 per hire. Imagine your ROI if you multiplied that figure times 5, 10 or 100!
Another benefit of blockchain in the recruitment process is to have the possibility of all the employment history of candidate on-real time, as it will be stored and pulled from the blockchain. Imagine what that means for a verification and time-spend perspective.
2. Onboarding process
Onboarding process is crucial for the first days of the “employee lifecycle” within a company, as it´s the first experience that a new hire has. Some researchers say that a great employee onboarding can improve employee retention by 82%.
The reality is that despite being critical for employee retention, Gallup found that only 12% of employees strongly agree their organization does a great job of onboarding new employees. That means 88% don't believe their organizations do a great job of onboarding, and that leaves a lot of room for improvement!
Most organizations only focus on week 1 of onboarding: The best employee onboarding programs extend throughout the employee’s first 90 days—and may even extend out for a full year—to ensure new hires are fully supported as they ramp to full productivity
Blockchain streamline quite heavily the onboarding processes and bring back efficiency and economic value as the time spent in manual verification of experiences, skills and documents will be eliminate with Blockchain technology.
3. Blockchain will streamline routine tasks
Implementing blockchain would improve efficiency in HR processes since the technology accelerates the spread of data stream between parties, thus reducing the time products spend in the routine tasks and processes tasks. Blockchains help keep track of records in a distributed manner and maintain information more cohesively. Also, information once entered on the blockchain will never be lost.
Smart contract is another area of potential blockchain. Smart contracts are entirely digital and written using programming code languages. Blockchains can help improve the flow of transactions using smart contracts which can automatically carry out predetermined terms. Efficiency can be gained through digitisation of documents transfer and acceleration of the low of data.
4. Transparency and Privacy
Another important aspect when it comes to HR and HR technology is transparency and privacy. Within human resources, there are a significant amount of confidential data, high-risk financial transactions, and sensitive personal information that are dealt with. However, there are many people who are questioning this fact and how blockchain will solve privacy aspects such as GDPR. The answer to this is quite simple, transparency and privacy are key features of the blockchain technology.
Blockchain is fully traceable, or immutable & transparent because all transactions are logged and stored securely offering immutable history and an audit trail. It's also safe and secure and trustable, as is encrypted based on the integrity of transactions, guaranteed via cryptography and cross checks.
5. System interoperability
Current HR systems lack with a central source of truth because HR systems do not talk with each other. Despite that big names claim that they have a Global HR Database Management (DBMS) this do not exist yet as integrating HR data is notorious hard and for the Industry. It's hard to pass on data from one company to another, due to the interoperability problems that exist in the current information systems.
Technical hurdles for linking legacy systems are rooted in deployment platforms, programming languages, corporate semantics. Syntax, semantics and the use of HR data make linking just too hard. This means that HR data is never accurate and HR professionals needs to spend a lot of effort to gather data from different sources.
System interoperability provided by blockchain to standardize employee data such that it can be efficiently and securely between organizations ensuring that hiring, remuneration and other HR processes are transparent is another one of the key benefits of blockchain technology within the HR industry.
As you can see, blockchain impact on HR and the future of work can likely be significant. It might be something you’re not yet hearing a lot about, but there are companies already well down this path, and likely more to follow. Blockchain is cheaper and it’s more effective than standard time-intensive and people-intensive methods. It makes people’s lives easier. That’s why blockchain is primed to cause disruption in the HR industry. Now it’s just up to the HR innovators to make it a reality!
Rebeca Fernández is an international speaker, a published author, and frequently gives media interviews, is quoted, & associate professor in MBA HR at the University of Cantabria, HR World Automation Summit, Vodafone, Spar Supermarket. Rebeca is also board member of the Blockchain Language Knowledge Foundation and Co-founder of Human Capital Blockchain.
Rebeca is also heavily involved in Blockchain projects that are related to HR and solving gender inequality. She is also the creator of “CLOSING THE PAY GENDER GAP CHALLENGE” that is intended to close the pay gender gap by 2030 by using Blockchain technology.