In an era when the workplace is fast becoming data-intensive, traditional HR functions are increasingly relying on technology that will not only collect, store, and process data, but also keep it secure.
Enter blockchain technology, a digital record of transactions whose data are grouped into ‘blocks’. Each chain indicates the history and authenticity of all its transactions and can only be unlocked using a digital ‘key’.
Because of how blockchain technology keeps transactions secure, the system is said to help users verify inputs into the chain, from peer-to-peer payment to a new hire’s college credentials.
Blockchain for HR
Blockchain eliminates the need for a central agency, such as governments and banks, to regulate and validate transactions. Information is contained within the chain. It serves as ledger, wallet, and ID altogether. HR professionals can leverage this to improve their own management systems, including:
Payroll: Bank payments and wire transfers follow compliance regulations to ensure the security and validity of fund transfers. Blockchain’s self-contained system of recording transactions allow for the verification of the payment in real time.
For companies that handle payroll overseas, transferring payment to an employee’s account can incur additional costs for both employer and employee because of currency fluctuations. In contrast, blockchain-based cryptocurrencies minimize loss due to conversions because they are transnational currencies.
- Training certification and credentials verification: Individuals who go through L&D programs can get certified using blockchain technology. Unlike resumes and portfolios that can be faked, inputs of L&D activity in a blockchain cannot be fabricated as easily. The chain reflects the entire history of a person’s accomplishments written in code. An employee or candidate can provide HR with a digital key to their data when HR checks for the legitimacy of these credentials.
- Health and financial recordkeeping: Sensitive information about an individual’s personal finance or health can be stored in blockchain securely. While there is some risk of hacking in any type of data storage, the risk appears lower in the case of blockchain since records are encrypted and locked away with a digital key.
- Digital process management: HR practitioners can rely on smart contracts, also known as cryptocontracts, stored in blockchain. While conventional employment contracts simply outline the terms, obligations, and penalties between employer and employee, a smart contract executes the stipulations of the contract automatically. The smart contract itself can be programmed to follow specific HR processes, such as those involving pay, benefits, rewards, corporate and personal data, and their restrictions.