No longer just the ledger for Bitcoin, blockchain is an innovative network that uses cryptography to allow records and information (the “block”) to be securely stored and linked to other records (the “chain”).
One thing that sets blockchain apart from other peer-to-peer sharing networks is the level of security. Once stored, information in a block cannot be easily altered or edited, since this would require amendments to the entire block and consensus among network users.
With this high level of security and the ability to efficiently transfer accurate information, blockchain is starting to catch on the business world. One study from 2017 even found that about two-thirds of large companies around the world planned to incorporate blockchain into their businesses by the end of 2018.
It is easy to see why blockchain is a game-changer for human resources. While blockchain’s application to HR and recruiting is fairly recent and there are still some unknowns, there are also some clear benefits to relying on blockchain for data management, payroll, and information verification.
Better Data Management
One of the primary reasons businesses rely on blockchain is to increase cybersecurity. In fact, blockchain is so effective for risk management and software security that even aerospace and defense giant Lockheed Martin uses it.
Not every organization has the same high-stakes security demands as Lockheed Martin, but every organization does have sensitive information to protect. The use of blockchain can help limit both internal fraud and external hacks of sensitive employee records. Since access to blockchain is limited — and even those with access can’t just make changes to the record — internal fraud is less likely with blockchain.
Hacks from outside sources are also few and far between with established blockchain networks, which is so important in a time when it’s hard to feel like your personal data is ever secure. Some blockchain networks require permissions, making them more secure, but even those networks that aren’t permissioned are still incredibly secure. The decentralization of blockchain networks makes them a tough target for hackers, and any suspicious activity can be recognized quickly and dealt with in real time instead of needing to do damage control later.
Blockchain use for business is often associated with securing information and preventing cyberattacks, but it is also a useful tool for improving the payroll process.
One major benefit to using blockchain to track and manage payroll is eliminating the need for a central authority. This can make paying employees overseas easier and more efficient. With blockchain, instead of jumping through the typical, time-consuming hoops with issues like exchange rates and intermediary banks, employees can be paid quickly and at lower cost to their employers.
Even if your organization doesn’t pay anyone overseas, you can still benefit from using blockchain for payroll. Since blockchain is such a thorough and secure record, it allows for better record-keeping of payroll transactions and details for temporary, contingent, and contract workers. Additionally, the use of smart contracts can mean that any employee can be paid in real time. There are even opportunities to pay both domestic and foreign employees using cryptocurrency, which could save both parties time and money.
Increased Transparency and Better Information Verification
Perhaps the biggest advantage HR employees and recruiters can get from using blockchain is the ability to trust the information they are getting.
Currently, it can be tricky to discern what’s true or false in a potential employee’s work and education history. Even the best recruiters have occasionally been duped by falsified resumes that were just a little too good to be true. HR managers are forced to rely on resumes, which can be tweaked and embellished at the whim of the applicant. There’s some dependence on networking sites like LinkedIn, but those add only a thin layer of verification. And, of course, there’s the hassle of calling references to confirm someone’s work history, education, or even identity. All of this is time-consuming and far from foolproof, even with the most advanced HR information systems or secure project management tools.
Fortunately, blockchain can take some of the guesswork out of verifying an employee’s past. All the standard information typically found on a resume and other pertinent data like performance indicators can be securely stored and shared through blockchain.
Onboarding is significantly easier when you feel like you can trust your sources during the verification process, and since information in blockchain cannot be edited or deleted, it’s safe to assume everything is accurate and complete.
The tamper-proof nature of blockchain means employment and educational records can be easily traced and checked. This database even allows for better record keeping of certifications or additional trainings an employee might have completed but forgot to mention on a resume.
Of course, blockchain in HR is relatively new and somewhat untested. Blockchain might also not be a good fit for every organization — but overall, the benefits of blockchain in HR seem to outweigh the risks.
Laura Hudgens is a writer for TechnologyAdvice.com.