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Blockchain—a secure, universal ledger for sharing digital records—is widely used in the financial industry, but it has the potential to shake up the world of recruiting as well. Not only does it provide identity management for employees, but it also gives employers a reliable way to validate candidates without expensive background checks and time-consuming reference checks.

Currently, just 3 percent of organizations use blockchain in human resources (HR), according to Sierra-Cedar 2018-2019 HR Systems Survey, which is a missed opportunity, says Yvette Cameron, founder and principal analyst for NextGen Insights.

ReWork sat down with Cameron to get her take on how blockchain works from a recruiting perspective, the advantages it offers and what it will take to become a widely adopted tool.

Blockchain is all the rage in the financial services industry. How can it apply to HR?

Fundamentally, blockchain is about new approaches to storing information, and ensuring that it's validated, trusted and secure. All of those are critically important to HR. Currently, organizations are trying to determine new ways to give you a digital identity that can be trusted, verifying that I am who I say I am. The next logical step is: What have I done? What's my employment background? What's my education background? When that information is moved to the blockchain and validated by the authorities, we are able to move very quickly.

Another area where blockchain is going to disrupt HR is pay. The point isn't just crypto-currencies; it's the better tracking of the work contract. Even to some extent, performance reviews can be set up as goals and contracts upon completion and bonus payment. You've got inputs, validations, output—once completed, you can make those payments.

What are the benefits of using blockchain in HR?

For the employer, the value becomes pretty clear: trusted information, reduced friction and reduced cost. For the employee, the value proposition is going to vary based on the application. On the one hand, it gets employees to work faster and be paid faster—there's value there. It can also be that employees are able to brand and market themselves in a more equitable system, knowing that when they say these are their credentials that they’re competing with others who also have validated credentials. It lets them compete more fairly.

There are also benefits for universities, who don't have to keep validating the same credentials. And there are benefits for HR tech vendors who are able to build applications that leverage a bigger pool of data.

What will it take for blockchain to become widely adopted?

The problem I see for employers is: Where do you start? There are more than 100 blockchain projects adjacent to or directly in the HR space. Each one of these is from a proprietary-based approach, and very few have open source standards for transparency.

The only way for this to become pervasive is having an industry-based approach. We need to come together and agree to standards that determine how we will contribute data to the blockchain. The financial industry is starting to standardize. Supply chain competitors are coming together, saying, ‘We need to take a common approach.’ And the same thing is going to happen in HR—it's just a matter of time.

How does blockchain fit into the vision of HR for the future?

We need to think globally about the investments that we're making and the good that we're doing. And that's why I think tools like blockchain offer a cultural revolution. With all these technology investments and the trends that we're seeing, we're not just making the work life better in organizations but we're also creating a global talent ecosystem everybody can tap into.

Photo: Creative Commons