From better data security to streamlined recruitment, blockchain can level up some HR

Most people reasonably associate blockchain with their ability to Buy Bitcoin and other cryptos, as it is the industry's bedrock, recording and confirming transactions like a digital ledger. Thanks to it, banks, governments, and other watchdogs are no longer necessary in money trades in this area, the data existing without their involvement in supervising and controlling the market, and thus, without holding sway over money transfers.

However, from the emergence of the first cryptocurrency and up to this day, blockchain has managed to revolutionize industries that may not even cross your mind, such as telecommunication and medicine. Now, blockchain is looking to transform human resources, too, and demonstrates enough promise to change the sector’s functioning in a few ways, like employee interaction, salary distribution, taking and studying resignation letters, and so on. Even if such achievements may still be a bit forward-looking at the moment, the HR world is slowly but surely shifting towards new data storage methods that can change the workforce and processes for the better. This can possibly alter how we think about skill acquisition, performance management, employee development, etc. How is all this possible, and what awaits the HR management?

Before teaching one how to drive a car, it’s essential to introduce them to the vehicle in question first, which is why we’re approaching blockchain technology succinctly first. A blockchain, also known as a decentralized and distributed ledger, works across a peer-to-peer network covering the globe. This is where transfers are stored and cannot be modified, deleted, compromised, or altered unless other subsequent blocks and the network’s consensus go through a similar deconstruction. In layman’s terms, blockchain represents a (potentially) tamper-proof and immutable database. Every transaction gets logged as a block that’s forever connected to those two that surround it, making an unchangeable data chain that performs as an indestructible record of all transactions. As such, blockchain remains a trustless system that removes the need for mediators, slashing charges, boosting transparency, and improving security.

Delving deeper, it’s important to remember that this technology has changed how we record, store, assess, and change information through the new ledger that offers increased transparency and security. Unlike years-old, conventional systems where governments, banks, and other go-betweens are essential, blockchain relies on a decentralized network of computers in order to check and record data.

Generally, HR departments have trouble safely storing data and validating and handling massive employee information volumes. Starting with the recruitment process and up to payroll management, these specialists are responsible for guaranteeing data integrity. Nevertheless, the traditional systems they’ve been long used to employing don’t meet all the demands and often fall short in assuring the efficiency, transparency, and security requested to respond to the needs of the new workplace.

Most of these difficulties can be overcome thanks to blockchain technology and its game-changing addition to processes across various HR departments. According to research from one of the world’s biggest consultancy companies, PwC, the effect of blockchain on workplaces will impact everyone, from companies to their employers and stakeholders, be it workers or part of an expanding pool of on-demand talent.

Locking employee data safely has consistently ranked among the main pain points in HR. The traditional systems and databases we’re used to are highly susceptible to data manipulation and security breaches due to the many entry points allowed into the organization. As already mentioned, blockchain brings a cryptographically secured and immutable digital ledger, meaning that all the data, from performance feedback to employee activity to payroll documents, can be safely locked on the network.

Thanks to blockchain, every data piece becomes virtually tamper-proof. The technology time-stamps and links a record to another entry, creating a barely destructible chain effect. Thanks to the technology’s decentralized character, unlawful changes or access are impossible. This improves the return on investments for businesses leveraging this advancement since they’ll no longer stress over liability claims for breached datasets.

Even before the pandemic kicked in and revolutionized workplaces, borderless hiring was not something shocking. This is all the more common today when organizations look to leverage international talent. Gartner's findings reveal that 58% of organizations already hire borderless tech skills. This trend is turning into a standard; one of the most significant difficulties to overcome is how employers correctly and promptly send their remote workers remunerations. Thankfully, stocking up payroll records and swiftly and accurately distributing money becomes a breeze with blockchain.

Smart contracts, also known as self-executing blockchain code, are digital agreements that enforce agreements’ terms and can automate payroll processes, decreasing administrative operating costs and potential errors associated with human work. Personnel may gain instant and live access to their payroll data, boosting trust and transparency. As a consequence, taking on third-party settlements is no longer necessary, which helps raise processing times and slash operational complications.

Smart contracts ease another process, once again – recruitment. These self-executing agreements activate when specific conditions are met. They help decrease time-to-hire as the pre-established conditions’ confirmation gets salary payments or letter insurance automatically enforced, guaranteeing efficient and timely hiring agreement execution. Consequently, these enhance recruitment activity and quality. Contracts that can’t be edited help HR specialists verify applicants’ details and identities, reducing efforts and time, and thus, money. Since a piece of info is already checked and authenticated on the blockchain, running future checks becomes irrelevant.

Blockchain technology may additionally promote fairer and more transparent performance evaluations. By locking such feedback and metrics from managers and colleagues in an immutable and distributed ledger, companies can ensure that assessments are unbiased, objective, see-through, and founded on reliable data.