While presenting at a conference, I was asked if blockchain is relevant to HR. Absolutely, yes! Blockchain is more than cryptocurrencies and it has already made its debut into HR. The technology is being programmed into ATS and HRIS systems with an anticipated launch of mid-2019–1 year away.
Blockchain pertains to how data is aggregated, validated, and accessed. A solid explanation of the blockchain technology and the data manipulation process is here. Understanding how blockchain works is fundamental to understanding its impact in HR. The same blockchain process that is guiding 1,300 cryptocurrencies is being integrated into HR software, ultimately changing how your departments function.
Blockchain in Staffing
A natural entry-point for blockchain will be Staffing. Performing a criminal background check on a candidate likely won’t change for years because of the layers of databases involved with governments recording criminal convictions. However, typical reference checks would be replaced with blockchain technology. The technology presents an opportunity for candidates to already have credentials (i.e. degrees, past experience with employers, certifications, etc.) pre-confirmed with each respective organization. The confirmation is (so far) fraud proof and unforgeable, hence a key win to blockchain.
You would no longer hire a candidate with two degrees, a certification, and 10 years of experience, and wait for a background checking firm to validate those credentials–or, worse yet, allocate the headcount to have your team contact each of the schools and employers. Instead, the candidate would present you with a digital key that would validate those credentials immediately with the schools, credentialing authorities, former employers, and so on. Resume and background authentication services are already popping-up using blockchain technology, and some universities have begun utilizing blockchain for degree verifications from employers and reference checking firms. Just as a credit check is instantaneous, this will be as well.
Blockchain and Employee Privacy
We see the anonymity inherent in blockchain transactions now in the cryptocurrencies–a key criticism of the currencies from regulators and victims’ rights groups. That same anonymity works advantageously for employers as they receive information from benefit brokers and transmit data to payroll vendors. These transmissions can now either contain truly anonymous data, enhancing employers’ compliance with HIPAA as it pertains to transmitting and receiving benefits utilization data, or it can be anonymized for payroll purposes, for example. Anonymizing the data would allow it to be sent without any identifying information to the payroll vendor and for that vendor to have a digital key that allows one-time access of the identifying information for the population of paystubs, preventing the frequent transmission of social security numbers, dates of birth, garnishment information, and so on.
Blockchain in Payroll
Beyond the privacy advantages discussed above, blockchain also represents a significant win for international employers struggling with fees associated with the patriation of employees’ wages, more fees and unpredictability with intermediary banks, and seemingly intrusive foreign regulations on expat employees’ wages. In some nations, employees may not have their wages for over a week after being paid by the U.S. parent entity, the employee may not be permitted to gain access to all of their funds, or the exchange rate may be unfavorable for both the employer and the expat employee. Blockchain payroll processes sidestep all of these issues and have received strong, positive feedback from employers and employees, albeit at the infancy of the technology’s penetration into the payroll market. Blockchain payroll firms tend to have the ability to pay-out in dozens of currencies and within 24 hours of payroll processing.
The disruption has started. HR professionals should stay close to their HRIS, payroll, and ATS SaaS providers to stay ahead of the coming changes and to be prepared for employee questions as more businesses migrate to this technology.
Eric Knott is president of SHRM of Greater Phoenix, faculty at Arizona State University’s W. P. Carey School of Business, and principal of FinePoint HR, a Phoenix-based HR consulting firm.