Digital is not coming, it is here. This is almost becoming a catchphrase for myself; I seem to say it that often. And when it comes to Blockchain in HR, I say it again. Early adopters are already using blockchain inspired approaches in HR today. Not in 2030, but here in 2020.
Despite Blockchain being considered “new” in truth the technology has been around since circa 2008. The technology will be truly game changing, and Gartner predicts that the technology will deliver over $3 trillion in business value by 2030. It will do this by completely transforming how employees, customers and society will interact.
For those still not sure how blockchain works, imagine a SharePoint type system that exists today, where various users in a company are able to view and access information across various teams. It has different levels of access and visibility depending on your level of authorization in your company and what types of information you should or would need in order to do your job. Now imagine that same system being connected to every other SharePoint system at all your competitors in the industry. But with the highest possible levels of security to ensure data protection and validity is 100% accurate and incorruptible.
The basics of blockchain
Without getting too technical, most blockchains will typically consist of 5 characteristics
- Distributed Ledger – This is essentially what I meant by one big connected SharePoint system. A distributed ledger is a shared network of replicated, shared, and synchronized information spread across multiple companies, institutions or countries.
- Encryption – All data is recorded securely. People and companies can protect and control their information and share only what is required for a given transaction.
- Immutability – All transactions come with a digital signature, date and time stamp and added to the ledger in the correct order. Cryptography means it is impossible for this to be changed, ensuring integrity of the information, forever.
- Tokenization – we have all heard of bitcoin, right? That’s this stage right here. Every transaction is completed with an exchange of a token, which have been popularized as coins in the mainstream. But in addition to being used as currency, can be used in a number of other ways.
- Decentralisation – This means there is no central administrator or centralized data storage. The individual computers that run a copy of the ledger that updates in real time are called nodes. Due to the level of security and accuracy of the information, there would be no need for central governing authorities.
How will this impact Human Resources?
OK, that’s the boring stuff out of the way, let’s talk practical uses of blockchain in HR. To date there are several practical use cases for human resources. Some of them could even be at proof of concept stage in only a couple of months!
- Background and employment history checks – this is one of the easiest use cases for blockchain in HR. Imagine being able to get a full background check completed in a matter of seconds. All the data is already housed in fixed locations, education information, career history, professional qualifications etc. Connecting all this information by distributed ledger is very straight forward and there are already several proof of concepts / pilots up and running around the world
- Employee data – Companies have huge amount of private information on their employees. If this was transferred to a blockchain it could be encrypted and immutably recorded. Especially important for sensitive information such as medical conditions or performance history. It would also mean the data could only be shared in tokenized form only to those with verified permission meaning no more HR data breaches!
- Smart contracts and payment – a contract executed on the blockchain would be game changing. It would be enforceable and immutable, providing greater protection for all parties. It could ensure when certain conditions are met, for example a certain number of days of employment have passed, payment is initiated. Transactions would be more reliable; no payroll or banking errors would occur. Likewise, banks would no longer be needed to process payments – saving businesses money on transaction fees.
- Audit & Compliance – Everyone has had to deal with the GDPR regulations in Europe or PDPA regulations in Singapore. Employees and customers would be able to enforce their right to be forgotten at the touch of a button. They could delete an encryption key and make their personal data irretrievable. It would give everyone complete control over who can use their data and how – and no company would be able to breach it, either on purpose or accidentally. With such robust and automated processes across the spectrum year end audits of SOPs and the like would be practically unnecessary.
This is just the tip of the iceberg of what blockchain will bring to not just HR, but the world. It will reduce the need for intermediaries in all areas of our lives. Can you imagine a world where no one needs a bank, an insurer, a recruitment agent, a real estate agent, a lawyer or an accountant? Think its decades away? Just remember, 12 years ago, none of us had an iPad or a smart phone, it will happen a lot quicker than you think!
*If you are looking to succeed in your career then you should check out my book – The Employee Handbook: A Practical Guide for Managing Your Career – which was ranked as the #1 Best Selling Career Book on Amazon Singapore. You can pick up a copy by clicking here. Alternatively, you can search for the book on Amazon UK, US, Singapore, Germany, Spain, France, Italy, Japan, Canada or Australia to order a copy. If you are in another location, Amazon will be able to ship globally to you. It is also available as an e-book via Amazon Kindle.