“Blockchain” isn’t a term most people would recognize. Or perhaps you’ve heard it but don’t really know what it means. It first became recognized as the software solution behind the digital currency Bitcoin, but has since been adopted for other uses and in many industries.
One of the areas where it’s making an impact is in HR processes.
How a Blockchain Works
Blockchain refers to a sequence of digital transactions saved into a distributed ledger. With Bitcoin, every transaction was a “block” added to the chain, but for other uses those transactions could represent anything, or any bits of information.
One of the strengths of blockchaining is that every transaction is verified against the ledger. And the ledger itself, once a block is approved and written to the chain, cannot be edited. These features make blockchaining a highly secure and reliable approach to record keeping for online activity.
A blockchain can be restricted to users of your own organization, or shared with the public over the internet. The digital ledger is managed automatically, so there’s no need for third-party intermediaries to do checks or processing, or collect a fee. User payments, for instance, are entered directly into the ledger, and the entry is immediately reflected in the recipient’s account. This adds a high level of efficiency.
A variety of industries and organizations are exploring the possibility of incorporating blockchains into their own data processes. Banks, following the example of Bitcoin, are hoping to use it as a secure and autonomous form of payment processing.
Maersk, a global shipping company with thousands of employees, has begun tests on blockchaining as a way to track cargo. Walmart has used it to track goods through it’s own supply chain. Law firms have adopted it for managing escrow accounts in accordance with the terms specified in a contract.
Perhaps more to the point for HR professionals, MIT has implemented blockchain techniques for securing and sharing student records.
Blockchains and Hiring
Businesses use different tools and software to streamline their processes. Time is of the essence, so analyzing where there is area for improvement and enhancing productivity is a must. For both small and large organizations, there is the potential to use blockchaining in streamlining nearly any digital process. It would enable verified, up-to-date records on applicant credentials such as educational degrees and past employment. This would ease the time and effort spent on vetting candidates.
A growing chain of skills and accomplishments for certain individuals would also help recruiters to identify top candidates more easily. This growing list of records might include awards, published papers, membership in professional organizations, and more.
Algorithms could be developed to uncover prime candidates for specific positions. Hiring managers would get quicker results and greater confidence in the information they uncover. This can also provide a competitive advantage over companies that base their recruitment decisions on sifting through dozens or hundreds of online resumes and profiles.
It’s also much harder for candidates to embellish or change their resumes. Each added block of information has to be verified against already established credentials before it will be accepted.
Because the actual data is shared across many computers, even skilled hackers won’t be able to disrupt the data chain. It also means the records will still be available years after a school or company may have closed its doors.
Salaries and Benefits
You could also use blockchains to track salaries and benefits, as well as execute automated actions related to them. This might be initiating health coverage for a new employee following their trial period, or issuing notices to employees with surplus vacation time. It might trigger a standard wage or benefit increase after a certain period of time has expired.
It could also be used to track performance, such as logging the calls and results for sales reps. The blockchain could then initiate payments of bonuses when quotas are met or exceeded, or suggest areas needing improvement.
For hourly employees, blockchaining could be a record of time worked that also includes overtime or docks for tardiness when producing payroll information. It would enable faster, cheaper, and more secure payroll processing for remote or international employees.
Blockchains could also cover the terms of employment contracts to trigger a notice or appropriate response when those terms are violated, or the duration of terms or the contract itself expires. It could be used to document employee grievances, disciplinary actions, and performance reviews. This might even include histories from prior employers.
Among the questions about blockchaining is the issue of privacy and personal information. It would likely be necessary to obtain permission from candidates to share their personal information. They would also need to have access to their own records. HR departments would need to be able to communicate exactly what information is retained, how it’s protected, and how it’s used.
Blockchains are still a technology in an early stage of development. Graphical tools may appear soon, but it the meantime adapting and testing blockchains for specific business needs and environments requires some specialized programming skills relating to security as well as functionality. Without that kind of technical support, many blockchain initiatives run the risk of failure.
While blockchaining has significant potential as a time and cost-savings tool for HR professionals, it’s important to bear in mind that at heart it’s about collecting and sharing information. That’s become a sensitive issue after headlines on misuse of data among social platforms and marketing efforts. Used responsibly, however, it can provide many benefits toward streamlining HR operations.