Blockchain Could Phase Out Employment Screening, Secure Candidate Data

The disruptive potential of the emerging technology for HR is huge, but will it be viable?

Roy Maurer By Roy Maurer March 26, 2018
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​SAN FRANCISCO—It's not a question of if, but when. "Blockchain will be the fundamental way we store data in the future," said Kevin Wheeler, founder and president of the Future of Talent Institute, a San Francisco-area think tank. "The only real question is how quickly will it become universally accessible?"

Wheeler was speaking at Hiring Success 18, a conference for recruiting professionals held by SmartRecruiters, a talent acquisition platform based in San Francisco.

Blockchain is a bit mysterious and hard to understand (see below for a quick explanation), but every day we are getting more familiar with it and its potential for HR and recruitment, he said. Blockchain's applications for HR and recruiting are numerous and include the ability to protect employee data, secure payroll, eliminate candidate-records verification and streamline onboarding.

"You can look forward to a time when background screening, reference checks and verification of resume data are obsolete," Wheeler said.

"Blockchain has the potential of helping recruiters verify candidate credentials in a highly secure way and reducing chances of credentials being altered or faked," said Stacey Harris, vice president of research and analytics at IT consulting firm Sierra-Cedar.

It also has the potential to streamline contracts and payment to contingent workers, eliminating third parties, said Raghav Singh, director of reporting and analytics at Korn Ferry Futurestep, a Los Angeles-based recruitment process outsourcing firm.

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What Is Blockchain?

The protocol best-known for the buying and selling of cryptocurrencies like bitcoin was developed to secure financial transactions.

"A blockchain is an encrypted digital ledger of records that are organized into groups of data called 'blocks' and distributed over a network," Wheeler said. The blocks are located on servers, called "nodes," linked together like a chain.

"Whenever a new transaction occurs, the blockchain is authenticated across the network before the transaction can be included in the next block on the chain," he said. "So the agreement of each node is required to add the block into the chain. The blockchain creates trust because a copy of the chain showing every transaction is held by the entire network."

It's a way to decentralize and share data with only those you want to share it with, Wheeler said. And the data can be modified or deleted only by its owner. "It's encrypted and just about impossible to change unless you're the verified owner of that data," he said. "Blockchain could eliminate resume fraud and increase the integrity of the recruiting process because it is inherently secure."

Uses for Recruiting

Hundreds or even thousands of hours per year are wasted conducting reference checks and verifying educational and experience credentials, Wheeler said.

"MIT [Massachusetts Institute of Technology] already has verified degrees in blockchain," he continued. "There's no need to ask for a transcript. Anyone given access can access the degree."

Several companies are exploring ways to verify resume and other data using blockchain. "I would imagine that ATS [applicant tracking system] vendors and others will soon be joining this revolution," Wheeler said.

"As we move into the gig economy, new issues arise, making it even harder to verify worker claims," Wheeler said. "Workers may have many different assignments and may develop a variety of skills and experiences that are hard to document and verify. They may have also taken self-learning or online programs and through those have gained new skills and abilities. As the contingent workforce expands, the task of verifying credentials and experience will become more difficult."

Australian cryptocurrency startup Chronobank has already developed a platform for hiring managers that can access a database of freelance workers with verified work records.

Hold the Hyperbole

Just how transformative blockchain will turn out to be is unknown, according to Singh. "Blockchain technology is not transformative in and of itself," he said. "It may become the basis for applications that transform business processes, but it will require large investments and widespread adoption. And the question remains as to what problems will be solved."

Wheeler added that it presently uses an inordinate amount of computing power and "could be seen as somewhat inefficient," leading to speculation about its feasibility.

And then there's the question of value.

"So blockchain technology can be applied to create tamper-proof versions of resumes and academic credentials," Singh said. "Having a trusted diploma and resume has some value, but it would be an incremental improvement over what is available today. There are plenty of vendors that will verify these at low cost and in little time."

Verifying the accomplishments listed on resumes would be difficult, unless resume claims could be verified by past employers.

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