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Standard business models typically place power and decision-making capabilities in the hands of a few executives who then delegate responsibility down the corporate ladder. The blockchain movement seeks to change all that, even as the technology fights its way into the mainstream in the face of regulatory issues and a lack of public understanding.

One of the most imposing obstacles to the widespread implementation of blockchain models is that the technology is new and disruptive, leaving many in the dark as to how it works.

“Blockchain technology is not as hard to get your head around as it seems,” says Jack Du Rose, CEO of Colony, provider of a blockchain-based operating system. “The way it works is complex, but what it does is fairly simple. A blockchain allows a whole bunch of people who don’t know or trust each other to agree on what the state of an accounting ledger is. Nobody can change the ledger without everyone else agreeing. Importantly, this happens on a 100 percent peer-to-peer (P2P) computer network. There is nobody in charge. If people can be confident that the state of a ledger is accurate, then the balances within the ledger can represent value.”

For Bitcoin, perhaps the most well-known incarnation of blockchain, the value of the balances within the ledger is defined in terms of money. Du Rose also points to Ethereum, “the second largest blockchain technology, by market cap,” as an example of how blockchain works: “It is a globally distributed virtual computer that runs ‘smart contracts’ — applications that run without the possibility of downtime, censorship, fraud, or third-party interference.”

These smart contracts favor P2P accountability over professional third-party involvement.

“These apps run on a blockchain, and smart contracts allow us to move value around according to rules we define,” Du Rose explains. “[The values] represent ownership of property, like shares in a company or magic swords in a virtual world. This enables software developers to write software which performs the roles for which we currently need trusted intermediaries like lawyers, registrars, and accountants.”

Through use of these contracts, companies can be built that are fully accountable to all stakeholders.

“Decentralized autonomous organizations (DAOs) are one of the things which can be built using smart contracts,” Du Rose says. “A DAO is a kind of organization where the business logic which defines the rules of the organization is encoded in smart contracts. In its purest form, a DAO would be a completely autonomous entity which runs wholly on code, and people [would] not necessarily have a direct role to play.”

Du Rose contrasts the DAO with a “decentralized organization” (DO), which he calls a “more human-focused type of blockchain-enabled organization.”

“A DO’s code defines the rules according to which people can interact, such as how labor is divided and under what circumstances payments are made,” Du Rose says. “It’s conceivable that a decentralized version of something like Uber could be possible under this modality.”

recordHR and Recruiting in the Blockchain Model

Under a DAO or DO structure, individual workers can focus more on projects that suit them.

“DAO/DO models will allow people to coalesce around projects online and contribute to them if they are of interest,” Du Rose says. “It will reduce the importance of fit for candidates, because the risk of any given contributor not being suitable is offset by the large potential talent pool accessible.”

For recruiters and human resource departments, a DAO/DO model would provide a valuable new resource for evaluating and acquiring talent.

“You’re going to have a very powerful new tool on your hands,” Du Rose says. “Right now, all you have to go on is a resume and a candidate’s word. In the future, DAOs will very precisely quantify the skills candidates have accrued and demonstrated over the course of their careers. That data is going to make it much easier for you to define exactly the attributes a candidate must have and laser focus your search to find the correct people.”

This blockchain-enabled recruiting will, in Du Rose’s view, lead to “less time wasted on inappropriate candidates, less fees refunded for employees let go within their probationary periods, greater efficiency, and, ultimately, better margins.”

This type of analysis could ensure company success by enabling recruiters and hiring managers to pinpoint desired skills for any position, even at the executive level.

“We think that it will make organizations more open, as they’ll require less hierarchical structuring to scale efficiently,” Du Rose says. “We expect this to mean that people are more able to do the work they know they are good at, [rather] than just the work they are told to do. It will also make seniority and performance far more transparent, as people’s expertise will be accurately accounted [for] based on the work they actually do.”

While it’s unlikely that the entirety of the Fortune 500 will embrace the DAO/DO model tomorrow, it seems certain that this disruptive technology will play a role somewhere down the road. Getting a grasp on the technology and understanding how to capitalize on its benefits now will help HR executives and recruiters get one step ahead of the game.



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