The Future of HR Technology Starts with Blockchain

Scroll down to read more!

The Future of HR Technology Starts with Blockchain

Scroll down to read more!

Table of Contents

dBlockchain isn’t the newest technology, but it’s becoming more mainstream and has the potential to disrupt everything we do online and in the real world, including traditional HR processes.

What Is Blockchain?

What is blockchain? A blockchain is a digitized, decentralized, public ledger of all cryptocurrency transactions. Constantly growing as ‘completed’ blocks (the most recent transactions) are recorded and added to it in chronological order, it allows market participants to keep track of digital currency transactions without central recordkeeping. Each node (a computer connected to the network) gets a copy of the blockchain, which is downloaded automatically.

Originally developed as the accounting method for the virtual currency Bitcoin, blockchains – which use what’s known as distributed ledger technology (or DLT) – are appearing in a variety of commercial applications today. Currently, the technology is primarily used to verify transactions, within digital currencies though it is possible to digitize, code and insert practically any document into the blockchain. Doing so creates an indelible record that cannot be changed; furthermore, the record’s authenticity can be verified by the entire community using the blockchain instead of a single centralized authority.

While it’s true that any database today could record transactions in this manner, what makes blockchain different is that instead of the transaction being kept on one server and owned by one company, the data is encrypted and stored in “blocks” across a global network of computers. As more data gets stored, you get a chain of blocks. Hence, “blockchain.”

Blockchain As a Means of Data Security for HR

Why does this matter to HR? Any business that relies on data – such as recruiting firms – should be aware of the growing importance of security with regards to employee and candidate data. The human capital management market hit nearly $11 billion in 2014 and is expected to grow to more than $17 billion by 2019. With this growth, combined with the increased number of hacks, we should be thinking about data security specifically when it comes to our HR technology.

Our content continues after the ad.

Ads help make OUR resources free for everyone.
We respect your privacy. To see our Privacy Policy click here.

As tax season begins, the Internal Revenue Service is urging employers to educate their HR and payroll staff about a Form W-2 phishing scam that victimized hundreds of organizations and thousands of employees last year.

“The Form W-2 scam has emerged as one of the most dangerous phishing emails in the tax community,” the IRS said in a January 2018 alert. During the last two tax seasons, “cybercriminals tricked payroll personnel or people with access to payroll information into disclosing sensitive information for entire workforces,” the alert noted.

In addition to educating payroll or finance personnel, the IRS urged employers to consider:

  • Creating a policy to limit the number of employees who have authority to handle W-2 requests.
  • Requiring additional verification procedures to validate the request before emailing sensitive data such as employee Form W-2s.

The majority of data and transactions within companies like Linkedin, Facebook, Equifax, JP Morgan and others are centralized, meaning the sites collect data and store it on their servers. This also creates a single point of failure with data, because if their servers go down, get hacked, or the company goes out of business, information could be lost or compromised.

Blockchain technology takes power away from single organizations and offers a layer of security that you can’t get from centralized organizations that are getting hacked. An example of this was the recent Equifax data breach that impacted more than 145 million Americans.

I’ve talked about data security before for HR which is a growing concern. This includes phishing schemes and hacks more commonly directed towards employees and employee data including candidate data, employee information, using email and other HR tech systems.

The Possibilities of Blockchain for Human Resources

Security matters aside, there are many advantages of blockchain, specifically in its distributed ledger technology (or DLT). For HR, the potential uses for DLT are limitless. For hiring, access to academic credentials and certifications could reduce the amount of time recruiters spend verifying information.

Efficiencies resulting from DLT can add up to serious cost savings.  DLT systems make it possible for businesses to streamline internal operations, dramatically reducing the expense, mistakes, and delays caused by traditional methods for a reconciliation of records.

The widespread adoption of DLT will bring enormous cost savings in three areas, advocates say:

  • Electronic ledgers are much cheaper to maintain than traditional accounting systems; the employee headcount in back offices can be greatly reduced.
  • Nearly fully automated DLT systems result in far fewer errors and the elimination of repetitive confirmation steps.
  • Minimizing the processing delay also means less capital being held against the risks of pending transactions.

Considering that HR is a data-intensive function, blockchain could have many more applications within the department’s scope. For example, smart contracts, or computer protocols that help to facilitate and manage the transfer of digital currents are assets, are stored in a blockchain. This could be particularly useful in the case of freelance and contract positions where smart contracts could ensure payment only for completed work.

Unlike financial applications, recruiting resumes or job histories don’t have any current scenarios in which the history is currently trusted. This means that HR’s use of blockchain technology will likely be confined to verifying and documenting education and training – at least, at first. As the technology expands and security issues are addressed, we expect to see more companies and institutions adopt blockchain, adding employer verification, background checks, salary information and history to its utility in the HR space.

Did you like this post? Share it!

2 Comments

Comments are closed.

A Word From Our Sponsors

Ads help make Workology resources free for everyone. We respect your privacy. To see our Privacy Policy click here.

Recommended Posts

12 Types of Paid and Unpaid Leave and Time Off

A list for the HR professional to be able to answer employee questions related to time off....
Places to visit while in Chicago for the #SHRM13

Top 10 Must Sees in Chicago During #SHRM24

Must Sees in Chicago at the 2024 SHRM Annual Conference We’ve taken the stress out of planning and done all the work for you....

The Debate on Social Media Policies and Disclaimers The Debate on Social Media Policies and Disclaimers The Debate on Social Media Policies and Disclaimers The Debate On Social Media Policies and Disclaimers

5 Employee Twitter Bio Disclaimers You Should Add Today

Learn the top five Twitter (X) bio disclaimers every HR professional needs to protect personal and professional interests on social media....

How to Calculate FLSA Overtime Pay

Understand the Fair Labor Standards Act and learn how to calculate FLSA overtime pay to avoid any mistakes....
Discover the Best of Chicago

Top 10 Things to do in Chicago

Check out our free Yoga for HR class and take a break from #shrm24 at www.yogaforhr.com. Top 10 Things to do in Chicago Chicago...

Successful SHRM recertification

Your Path to Successful SHRM Recertification

Navigate your SHRM recertification journey with our guide. Uncover the process, benefits, and tips for successful career advancement in HR....
Your Guide to Easy SHRM-CP Recertification

Your Guide to Easy SHRM-CP Recertification: Stay Certified

Master SHRM-CP recertification with ease! Uncover the steps, credits, and strategies to maintain your HR credential and excel in your career....

Going Paperless: Transitioning to a PDF-Based Workflow for Enhanced Efficiency

Going Paperless: Transitioning to a PDF-Based Workflow for Enhanced Efficiency Every day, we juggle deadlines, manage information overload, and constantly seek ways to streamline...

Checkout Our Products

Ads help make Workology resources free for everyone. We respect your privacy. To see our Privacy Policy click here.

More From Workology

Your Guide to Easy SHRM-CP Recertification

Your Guide to Easy SHRM-CP Recertification: Stay Certified

Master SHRM-CP recertification with ease! Uncover the steps, credits, and strategies to maintain your HR credential and excel in your career.

Navigating Career Change: Transitioning from HR to a New Career Path

Thinking about leaving HR for a new career? It happens to the best of us. Here's what you should consider first.

5 Effective Employee Training Methods for 2024

Click on read more to open this post on our blog.

HR Certification Podcast Episode 15: Reviewing Employment Law for HRCI & SHRM Exams

In this episode of the HR Certification Podcast, we review employment law topics including adverse impact and the four-fifths rule.