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Blockchain in HR

Blockchain is being touted as the greatest invention since the advent of internet. It started with
the emergence of Bitcoin, an alternate currency system, which leveraged blockchain as the core
concept. While bitcoin was a game changer, companies fast realized that there are broader
uses of blockchain which can have ramifications in multiple areas. These, beyond the bitcoin
capabilities of blockchain have caught the fancy of the business and the technology world and
has resulted in a constant stream of investments pouring in anything and everything related to
The emergence of bitcoin as an alternate currency system spearheaded its use in transaction
space. However, once the concept of blockchain got wider acceptance, its alternate uses are
dominating the insurance and capital markets domain. There have been multiple potential use
cases and few successful small scale implementations of blockchain ranging from customer
facing payment technology to trading and exchange services. While the banking and insurance
verticals have seen almost 90% of the total activity in the blockchain space, the uses of
blockchain can benefit various horizontal areas as well. One such area where blockchain can
have great impact is Human Resources (HR).
HR as a function is undergoing radical shifts due to reasons leading from organization’s quest to
acquire and retain high performers to making the function more effective and efficient by
leveraging latest technologies. These changes have brought the HR function on the cusp of
disruption. While analytics and automation (including AI/cognitive) has been the buzzwords for
quite some time now, the new revolution staring the HR function in face is Blockchain.
HR as a function forms the basis of any successful organization. Again, it is a repository of the
most important data in the company - candidate data and thus, one of the prime candidates
and target for data mismanagement, compensation fraud and wasteful audits. Blockchain use
in HR can help reduce data errors, develop verifiable and dependable employee records and
provide an everlasting data chain for successful audits. Blockchain can be leveraged across the
entire HR value chain starting from recruitment and all the way to retirement. Below are some
use cases for blockchain in HR:
Recruitment is one of the most important task of an HR department. False information in
resumes is one of the biggest problems that recruitment departments face followed by
unsuccessful background checks. Blockchain is a distributed, shared digital ledger made up of a
chain of verified facts which can’t be tampered. Now in case of HR, these facts can be the
educational and professional details of employee. As they are now stored in blockchain, they
are impossible to tamper as they are referenced to earlier blocks and are digitally encrypted.
Once these details are linked to broader personal and background details of the prospective
candidate in government databases, it will become cost effective and highly efficient for HRs to
screen candidates and detect fraud.
Other key area in HR which can reap the benefits of blockchain is learning. In its current form,
learning management is a sort of rigid process where learning is expected to be limited to
educational institutions and professional settings. One reason for this is the hard to quantify
nature of informal learning sources. This is where blockchain comes in. Consider a future where
utilizing blockchain, an employee can track everything that he learns in a ledger in units called
learning blocks. Everything one learns either from other individuals or from online sessions or in
social activities can be accounted for in learning blocks and utilizing this information, employers
can offer jobs or gigs to these individuals. This can provide for a better way to evaluate
candidates and a better match of jobs and skills.
Another HR area for potential disruption is that of payroll. The major activity of Payroll
department in any company consists of verifying and processing multitude of payments – both
domestic and international payments. This is where bitcoin or its alternative can be of immense
help. While domestic payments involve may be a single intermediary, international payments
are routed through multiple intermediaries which results in waste of time and resources (read
money). Using cryptocurrencies like bitcoin can help avoid intermediaries and result in fast
payments. Another potential area of use is in paying the distributed workforce in terms of ICs
and SoWs. Smart contracts based on the blockchain construct can be used to pay the additional
workforce. Smart contracts are basically codes to automate execution and settlement. Once
the smart contract is executed (based on the condition that work is completed), a settlement
(payment) is initiated to the concerned party.
Employee benefit and rewards consisting of healthcare and wellness benefits and various other
form of benefits is an area which is in flux due to various regulatory and compliance issues. In
this complex operating environment, blockchain can act as a source of truth as interaction
between multiple stakeholders tend to complicate the situation. Blockchain can assist in
streamlining the document review process by tracking and time-stamping documents,
providing secure document storage and controlling the sharing of documents between different