Seven potential uses for blockchain in HR technology

Do you know what blockchain technology is? Heard of Bitcoin, the digital currency? If so, then you’re halfway there.

Blockchain uses distributed networks of computers to hold a shared database of information, simultaneously updated and verified across the network. In pre-digital terms, imagine a ledger used by a number of people – with Blockchain, those people can all use, read, add to the ledger at the same time and every action, addition or deletion is indelibly recorded.

In a nutshell:

“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”

Don & Alex Tapscott, ‘Blockchain Revolution’ (2016)

If you’ve ever edited a document via Google Docs, you get the basic principle.

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So how could blockchain technology impact on HR automation and processes? The key is in the security of the transactions and the lack of the need for approval or verification (the nature and structure of the technology keeps records transparent with no need for external checks or proof).

Potential uses for blockchain in HR

1. Verification of qualifications, of job applicants and new hires (one Japanese firm is already working on resume verification via blockchain).
2. Smart contracts, electronically stored and verified.
3. Comprehensive, secure and up-to-date records of employee skills, training and performance – effectively, a ‘skills passport’ that is transferable between jobs, roles and even employers.
4. Enhanced personnel database linked to each individual employee’s digital signature.
5. Greater automation for payroll processes.
6. Management of expense payments and reimbursements – avoiding the need for complicated verification and approvals processes; especially useful for organizations with cross-border workers who are incurring expenses in different currencies.
7. Shareable, secure digital project records and assets with instant updates.

It’s fair to say that the applications tend more towards more administrative HR tasks, potentially making certain checking stages unnecessary. As such, although blockchain promises to be revolutionary, it’s a behind-the-scenes kind of revolution, streamlining and reducing back-office processes that users will largely remain unaware of or, at best, take for granted.

As PWC say in their recent report 'How blockchain technology could impact HR and the world of work':

“The processes most appropriate for transformation through blockchain are likely to be those that are slow, cumbersome, labour-intensive and expensive due to the need for significant data collection and third-party verification.”