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Is HR Ready for Blockchain?

The tamper-proof technology could improve recruiting and payroll distribution.

A group of people shaking hands in front of a green light.

Recruiters would be thrilled to find a more efficient way to verify job candidates’ credentials, including education, certifications, work experience and skills.

And payroll managers would welcome a technology that makes their jobs less complex and costly, allowing for timelier payments to global employees.

Those are just two of the potential applications of blockchain that are likely to impact HR soon, experts say. Best known as the backbone technology for the digital currency bitcoin, blockchain is an encrypted digital ledger of public records organized into groups of data called blocks and distributed over networks. In other words, it is a decentralized digital database that allows everyone in a “chain” to see and verify the details of every record in the network, says Kevin Wheeler, founder and president of Global Learning Resources, a talent strategy consulting firm in Fremont, Calif.

A Growing Chain

More than 40 top financial institutions and a growing number of companies across industries are already adopting blockchain, and Microsoft and IBM have made huge investments in the technology. Organizations are using the platform for financial transactions and supply chain management and to create legal contracts.

One of blockchain’s advantages is that the data it holds cannot be deleted or changed, Wheeler says, and the system requires everyone connected to each block to agree to allow information to be added. Job candidates or companies are assigned a digital ID enabling them to introduce new data—such as an individual’s grades or degrees. “Blockchain has the potential of helping recruiters verify candidate credentials in a highly secure way and reducing chances of credentials being altered or faked,” says Stacey Harris, vice president of research and analytics at IT consulting firm Sierra-Cedar, which conducts an annual HR Systems Survey.  The protocol could also prove valuable when applied to the gig economy. Quickly confirming the skills, knowledge and past assignments of contingent workers can be challenging. “I think we could one day see [its use] expand within HR to the full contingent workforce,” Harris says.

The technology is also attracting the interest of job seekers. In employment searches, mentions of the words “blockchain,” “bitcoin” or “cryptocurrency” are growing at a staggering pace, according to the employment website Indeed, which reported an increase of more than 1,000 percent in queries using those terms since November 2015. Employers looking for or contacting candidates who have bitcoin or blockchain skills in the past two years include Allstate, Capital One, ESPN, GEICO, Uber and eBay, according to Indeed.

Better Data Integrity 

“It is early, both in terms of its maturity and the creation of the kind of large consortiums needed to gain alignment on how blockchain systems will work,” says Daniel Roddy, a senior manager with Deloitte Consulting in New York City who specializes in human capital. “But there is considerable potential for human resources.”

For example, the systems could make the concept of a “self-sovereign identity” for employees a reality. “It’s the idea of individuals being able to fully control data about themselves,” Roddy says. The networks would reduce the chances of third-party companies providing inaccurate historical data about an applicant or employee.

For a recruiter to verify an individual’s claim of achieving a certification, for example, the job seeker would first have to release access to an entry cross-signed by the certifying body, Roddy says. Once the credential is confirmed within the blockchain, the candidate decides who can access it.

Similarly, job seekers would have the power to share university-verified data on the degrees they’ve earned or classes they’ve taken, eliminating the need for employers to track down that information. 

​The Massachusetts Institute of Technology is piloting a diploma system that can be accessed using a digital key, allowing students to “own” a digital diploma in addition to the standard physical document. 

Last year, Recruit Technologies and Ascribe announced a partnership to develop a prototype platform for resume authentication. The two companies claim the effort would streamline that process and allow recruiters to handle confidential records safely and without worry of fraud.

[SHRM members-only toolkit: Managing Organizational Change]

Payroll and Other Applications

Blockchain could also have advantages for payroll, particularly for international payments, which can be costly and delayed because of the many intermediary banks and third parties involved. 

For example, San Francisco-based Bitwage uses the technology to facilitate cross-border payments with bitcoin. The company allows employees and contractors around the world to be paid in their preferred currency, handling the conversion of bitcoin to local funds. Workers can choose to receive their wages from among 25 currencies, and Bitwage promises to pay out within 48 hours.

Australian company Chronobank also uses a blockchain-type technology to allow employers to pay contract workers without going through banks. 

Another emerging application of blockchain is the safeguarding of medical information. “These systems have the potential to keep employees’ health records and make them available to anyone with permission, while keeping that data secure,” Wheeler says.

Moreover, the technology could be used to capture employee learning records or other information stored in HR databases. Some vendors in the learning and development space are exploring its potential for verifying workers’ skills, Harris says.  

“There are some current challenges but, once the network effect kicks in, the growth of blockchain technology could be exponential,” says Jeff Mike, vice president and HR research leader for New York City-based consulting firm Bersin by Deloitte. 

Dave Zielinski is a freelance business writer in Minneapolis.
Illustration by Stephan Schmitz for HR Magazine.
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