HR Digital Transformation-powered by Blockchain
By: Dr.Liew Voon Kiong
Tags: Hr Talent Management, Blockchain For Business, Blockchain, Hr Digital Transformation

Human resource management has undergone tremendous changes in recent years particularly with regards to the digitalization of human resource. The emergence of blockchain technology could further transform the world of HR.

According to Griffiths(cited in Gale, 2018), blockchain has the potential to streamline a lot of inefficient work related to employee data verification. Blockchain can store a candidate education, certifications and work history in a single ledger, therefore it would take just minutes rather than days to verify the data. Besides that, the data cannot be modified or hacked once they are stored in the blockchain, thus guarantee data security and trustworthiness.

In addition, blockchain has a potential impact on HR by allowing personal data to be owned by the individual rather than the organization(Mike, cited in Gale 2018). Consequently, every employee could maintain control over their entire employment data, including educational background, training, and work history. It also means that an individual work identity is more portable, it moves with the individual rather than stuck inside the former organization when an employee changes job.

Besides that, blockchain could disrupt conventional HR processes with respect to financial transactions. Blockchain could streamline payroll function significantly by allowing automated and direct payment based on smart contracts, without the need of a third party such as a bank or other intermediaries.

Recently, PWC (2018)has identified a few areas where we can apply the blockchain technology in HR. The areas include talent sourcing and management, targeting productivity gains, cross-border payment and mobility and Fraud prevention, and cybersecurity and data protection.

Talent sourcing and management

Blockchain could have a major impact on talent sourcing and management. It allows employees to maintain and control access to a comprehensive, trustworthy blockchain-based record of their education, skills, training and workplace performance. By providing potential employers with access to their blockchain-based employment data, companies would be able to match individuals to roles much more accurately and effectively.

Targeting productivity gains

Blockchain has the ability to better match people’s skills and performance to jobs. Finding and recruiting the right talent is always problematic for business organizations, therefore by helping them do this more effectively and efficiently will surely boost their productivity. Besides that, blockchain can help to reduce the burden of data-intensive processes like payroll and VAT, allowing companies to focus more on their core businesses.

Cross-border payments and mobility

Multinational companies could create their own blockchain-based corporate cryptocurrencies that they can use for cross-border payment across their global supply chains, without the need of third-parties for settlement and reconciliation. In the future, central banks may legalize this type of cryptocurrency and support convertibility into fiat currencies. In addition, blockchain could facilitate employees mobility across the border with respect to payroll adjustment, international expenses, and taxes.

Fraud prevention, cybersecurity and data protection

HR department usually needs to handle high-volume financial transactions and sensitive personal data, therefore it is utmost important to prevent frauds as well as to safeguard the data. This is the area where blockchain could be extremely useful. Blockchain’s use of consensus to authenticate data can help to eliminate frauds.

Another issue that blockchain can help to overcome is cyber threats. Many SMEs are ill-prepared for cyber attacks and the results could be detrimental to their businesses. Blockchain could help ensure cybersecurity as the data are immutable and tamper-proof because it uses SHA-256 hashing cryptography.

In short, blockchain can play a pivotal role in the transformation HRM towards a fully digitalized function that improves various aspects of HRM that include talent sourcing, payroll, data protection and more.