Webinar Recap: 3 Ways Blockchain Will Transform HR

Blockchain became a major HR topic in 2019, though whispers of the technology’s possible applications started back in 2017. This secure and encrypted way of recording and transferring data has seemingly endless usages for the human capital space, yet adoption has been slow… thus far. We at Veremark have been watching the progress of the HR blockchain sector for the last five years and we have seen a proliferation in both the number and the maturity of these ventures. We now track 150+ companies and 30% of whom have live products, addressing everything from payroll services to identity management.

These numbers point to real adoption throughout the industry and we believe that the industry is at the tipping point of blockchain as the norm. After all, HR deals with many repetitive and time-consuming tasks that could be eliminated through blockchain-backed technology, especially in the hiring process. Think how many times a person has their education or work history verified over their lifetime. If the candidate had a blockchain resume then this task would become completely automated. 

Thus far, the primary focus points for blockchain in HR have been ‘trust’ and ‘efficiency’. Yet these values can be seen in many different ways, especially in light of current remote work trends. That’s where we turn to our experts for an industry long-view. Look forward to thoughts from Paris Petgrave Co-Founder & CEO of We Love Work, Sourav Ghosal, Business Development Lead at Affindi, and Daniel Callaghan CEO of Veremark. 

However, before we dive into the deep end of blockchain’s potential impact on HR, let’s take some time to understand some important aspects of the blockchain.‍

What is blockchain?

‍You’ve heard of cryptocurrency like Bitcoin, but that’s just one application of the blockchain. The blockchain itself is a ledger system where data is stored as connected blocks to create a chain of information. We won’t go too deep into the underlying technology of the blockchain, but it is important to understand a few key attributes.

1 - Distributed: All the network participants have a copy of the ledger.

2 - Unanimous: All the network participants must agree to the validity of the records.

3 - Time-stamped: Every block of data has a time signature on it.

4 - Immutable: A block cannot be edited in any way once it is added to the chain.

5 - Secure: All the records are encrypted.

6 - Anonymous: Identity can be shielded.

7 - Programmable: A block could be added automatically if certain requirements are met.‍

What does blockchain mean for recruiting?‍

When we look at blockchain in recruiting and HR, the two main topics are ‘trust’ and ‘efficiency’. Trust means several things, we want to know that new hires indeed have the skills and identity that they claim and we want to ensure any data they give us is safe. While on the other side, candidates and employees want to be sure their data is used and stored responsibly. Efficiency is more self-explanatory, HR and recruiters want to eliminate admin work and get people onboarded and paid quicker, whether contractors or full-time employees. This is a pain point across industries, but especially in highly regulated ones like healthcare and finance.

The possible applications of blockchain in recruiting are really only limited by our own creativity but there are two use-cases that have gained a fair amount of traction: verifiable credentials and smart contracts. Verifiable credentials could store important information that would normally go on a CV like education records, work history, and special licenses. This portable and secure ‘career passport’ would cut down on the need for fact-checking CVs and get people to work faster. Smart contracts, deal more with the financial side and are a way to automate employee payments. Blocks could be programmed to be added if certain standards are met, so once someone completes eight hours of work it triggers a block to be formed thus releasing payment. ‍

How will the blockchain transform HR?‍

It’s easy to think of the blockchain as just another process mechanism, but the truth is it can actually change the experience of HR both as a practitioner and employee. Here’s how -

Better quality of life for employees

Affindi’s ecosystem is a great example of how worker credentialing can also lead to worker benefits. The Affindi ecosystem helps blue-collar workers (mainly in India) like those working in manufacturing or the gig economy to prove income and employment history. Because of the informal nature of this sector, documenting payment and work history can be a challenge, barring these workers from services like home loans or insurance. In the Affindi ecosystem, these workers can become credentialed and connect to these services in one place thus helping workers and families increase their quality of life.

Better employee retention.

Beyond credentialing, We Love Work reminds us that portable data is also helpful for organizations to better hire and retain employees. Hiring the wrong people costs time and money, it usually takes over a month and a third of the position’s yearly salary to find a replacement. More and more we are finding that a successful hire has just as much to do with value alignment as with the hard skills of the worker.  If we could collect better data about behaviour and values, we could make this lengthy process (which is usually unpleasant for candidates) more efficient and empowering while boosting retention levels. Of course, this portable data could be used throughout the HR lifecycle, not just pre-employment, but for appraisals and reviews as well. This data opens doors to increase engagement and performance, for happier workforces and real impact on the bottom line.‍

More efficient and secure recruiting process.

At Veremark, we know how CV discrepancy negatively impacts the hiring process. In the APAC region, 19-30% of CVs have significant discrepancies. We see this as a culture problem for organisations because you want people you can trust. If someone lies about something unimportant like their GPA, then how can you trust them in high-stakes business situations? The fallout for companies could mean fines or license discontinuation. The majority of the discrepancies found are flagged in employment or education checks. This is static data, yet the check is done over and over again by each company that interviews a candidate. If we put this information onto the blockchain like Veremark’s ‘career passport’ i.e. verifiable credentials, then this information can be transferred securely and reviewed efficiently.

Looking to the future of blockchain and recruiting

Since COVID-19 swept the globe, we have become an increasingly virtual society and we can expect many of these remote practices to remain going forward. The talent pool is now worldwide wide and the need to hire and credential will only increase (as will the temptation to fudge resumes because of global competition) while the complexity of those checks will increase as well. At the end of the day, change is driven by regulatory forces or consumer demand. We foresee blockchain in recruiting will be the latter. Candidates will want to be hired faster and will gravitate towards companies that accept their credentials.