Future Tech Explainer Series: Blockchain in HR

The global financial crisis of 2008 marked the dawn of a revolutionary technology that would send shockwaves through the financial world: blockchain and cryptocurrency. This innovative duo emerged as a promising alternative to the prevailing financial systems, which had repeatedly subjected humanity to global recessions and hardships over the decades. Especially after WW2. Blockchain arrived on the scene as a potential savior, offering the prospect of a more equitable and secure future.

However, as a disruptive crossover technology, blockchain encountered significant resistance, especially from the established norms of society and the financial establishment. While the fundamental principles behind blockchain, including enhanced fairness, probity, anonymity, and security in financial transactions, were age-old, they posed a fundamental challenge to the established financial order. Governments and financial institutions initially sought to dismiss, ridicule, and undermine blockchain technology, primarily due to the potential threat posed by cryptocurrency, its native token. Cryptocurrency's anonymity in transactions could disrupt established global order and the financial status quo.

Fast forward almost 15 years since the inception of blockchain and cryptocurrency, and the landscape has dramatically evolved. Today, virtually all major financial giants, global corporations, and governments are actively integrating advanced blockchain technology into various aspects of daily life. Moreover, cryptocurrencies are on the brink of global adoption, as evidenced by the intense competition among financial corporations to file for Bitcoin and other crypto Exchange-Traded Funds (ETFs) with regulatory bodies such as the SEC.

Blockchains have finally shaken off the unjustified negative publicity that accompanied their introduction. Combined with other groundbreaking technologies like Artificial Intelligence (AI), blockchains are poised to dominate the future, as the formidable opposition to their acceptance gradually fades away. This redemption represents a monumental achievement for both technology and humanity.

In its simplest form, blockchains are digital information stored in blocks and linked as a chain. Apart from the robustness of the technology, the unique feature is its tamper-proof nature, once the block is saved. Any attempt to change/tamper with the information inside the block would have a definite digital footprint (hash/digital record) announcing the change to everybody.

Smart contracts are software programs (apps) that sit on a blockchain that execute the necessary action when pre-specified conditions are met, without any manual intervention/influence. The 'smart contract' holds all interested parties to the initially agreed pre-conditions. 'Smart contracts' act as an effective hedge against the wavering nature of human indecision, and the propensity of change of mind in the future.

In a world hurtling down the digital superhighway, blockchain technology significantly enhances the probity, security, efficiency, and speed of digital transactions. Its applications extend far beyond financial transactions; it has the potential to revolutionize various aspects of modern business operations. Ignoring these advancements in technology is not an option for any forward-thinking enterprise, as they address longstanding concerns about security, speed, and efficiency.

In business, apart from digital financial transactions, one area where blockchain technology can make a substantial impact is (Fig.1) in Human Resource Management (HRM). Organizations can explore enhancing the efficiency of the following aspects of HRM through blockchain technology:

1. Recruitment: Blockchain offers a secure platform for storing and sharing candidate data, streamlining the recruitment process. This reduces the time and cost of hiring while improving data verification accuracy. Eliminating middlemen for verification purposes too is possible in the future with wider adoption of blockchain technology and philosophy. Further cutting costs and turnaround time.

2. Onboarding: Automation and streamlining of the onboarding process are possible through blockchain. Companies can create self-executing smart contracts that trigger new hire paperwork, system access, and other onboarding tasks automatically and securely. This reduces HR staff workload and expedites the onboarding of new hires. Blockchain can also facilitate the creation of a digital credential wallet, allowing employees to store and share verified skills and qualifications, simplifying the hiring process.

3. Talent Management: Blockchain can improve talent management processes such as performance reviews, succession planning, and training and development. It brings about fairness in the processes, apart from enhancing privacy and robustness. Performance and learning records/progress could be efficiently stored and accessed from anywhere, by authorized people without the fear of tampering/fraud. Companies can establish a decentralized talent marketplace using blockchain, where employees can discover and apply for internal opportunities, fostering employee engagement and retention.

4. Payroll and Benefits: Automation and streamlining of payroll and benefits administration are also achievable through blockchain. Smart contracts can automatically calculate and distribute payroll, as well as enroll employees in benefits programs. This reduces the risk of human errors and fraud while saving time and money.

5. Intellectual Property (IP): In knowledge-centric industries, safeguarding intellectual property is paramount. Blockchains, with their tamper-proof nature (smart contracts), provide a robust option for protecting an organization's prized IP assets.

These examples merely scratch the surface of how blockchain technology is revolutionizing HRM processes. As the technology continues to evolve and mature, we can anticipate even more innovative and disruptive applications of blockchain in HR.

In the grand scheme of technology, blockchain is still in its early stages. Undeserved negative publicity may have temporarily hindered its development and adoption, but its revolutionary potential remains undeniable. It's indeed a crossover transformative technology. Along with AI, technology watchers look forward to its blooming on a much larger landscape.

Author Profile:?Writes about life. Consults on human potential and workplace HR. A keen observer of emerging trends and technologies that enhance workplace productivity. AI/People Analytics and its effective and ethical usage at the workplace is the current preoccupation. Over 25 years of broad experience developing Leadership/Human Resources in large global organizations and start-ups. Enjoy analyzing and going beyond the hype. Admire the word ‘holism’.