As work becomes more flexible, how people want to work has changed. Many don’t want to sit at their traditional 9-to-5 office desk anymore. With such transformations, the HR sector is facing some challenges in terms of providing quality services that would cater to the needs of employees and potential candidates.

So, without a doubt, HR processes are vital in every organization. But to make them more effective, technology, especially blockchain, can be a powerful weapon to take HR management to the next level. 

This article will dive deeper into HR management and explore how blockchain applications can enhance its practices.

The Hype Behind Blockchain Technology

Blockchain technology is a secure digital system that works as a decentralized and unalterable digital ledger for information storage and sharing. It was first closely tied primarily to cryptocurrencies and bitcoin. However, its versatile applications soon become beneficial in financial realms.

Now, in the field of HR, blockchain has three main use cases, which are the ability to optimize processes, introduce automation, and reinforce compliance measures. With its potential to create a tamper-proof record of employee productivity, blockchain has the power to guarantee that employees are always working to their fullest potential.

blockchain technology

Image by rawpixel.com on Freepik

How Does Blockchain Technology Benefit HR Processes?

One of the standout perks of employing blockchain technology in HR is exceptional security. Its decentralized nature ensures that the information stored within this space ensures that all parties involved can’t change or manipulate the data in any way. That’s why blockchain offers comprehensive encryption, safeguarding sensitive data from unauthorized intrusion.

For example, in the food industry, blockchain can enhance security by tracing the origin and journey of each product. For instance, a consumer can scan a QR code on a product to access its blockchain-recorded history, ensuring authenticity and safety by preventing counterfeiting or contamination.

But what about the HR sector? We’ve compiled a short list of use cases explaining how to improve HR management with the help of blockchain.

1. Employee Hiring

When someone applies for a job, they often must provide a cover letter detailing personal information and previous work history. HR specialists then review and verify these details manually. This becomes a time-consuming process due to the need to authenticate the credentials mentioned in the CV.

However, with blockchain technology, the applicant’s entire history can be stored on a shared ledger. This can include education certificates, attended workshops, contact details, recommendations, awards, or even reasons for leaving previous roles. With this process, HR professionals could safely access employee data in the blockchain before conducting interviews, simplifying the hiring process. 

2. Efficient Onboarding

The current process of onboarding new hires can be a bit of a hassle for HR professionals. When an organization employs an individual, they can’t avoid paperwork, encompassing submitting previous records, signing job offers, and agreeing to non-disclosure terms. These requirements and multi-step approvals persist throughout the employee’s entire onboarding process. The same rules also apply for cases like receiving promotions or departing for enhanced career prospects.

So, as soon as a new person joins the organization, they have to repeat the whole process. Thankfully, by combining identity verification software with blockchain technology, the HR new hire onboarding process becomes more efficient. The software instantly confirms the identity and credentials of new hires, while blockchain securely stores and shares this verified information across the organization. This eliminates paperwork, reduces time spent on document authentication, and ensures accurate, tamper-proof records.

3. Reduced Paperwork

To this day, some organizations have employee agreements written on paper. Naturally, the HR department has the responsibility to safely store and check these records. Despite this standard practice, with the digital landscape getting wider and smarter, the HR industry is jumping on the trend train. All agreement terms can be set in a smart contract.

When the terms are met, the smart contract is issued automatically. For example, if an employee earns a promotion or bonus, the smart contract will be updated in the blockchain. The employee will then get the bonus or promotion without needing manual steps. If a company needs to hire a contractor, the work terms and pay can be put in a smart contract rather than a paper document. 

4. Transparent Feedback System

It’s no secret that when someone applies for a job at a new company, they want to understand the company’s work ethics and reputation. In other words, everyone wants to be aware of potential challenges that might come up after they join the company, such as late salary payments or work-life balance issues. That’s why if an employee is unhappy with their company and notices unethical practices, they should be able to provide feedback and voice their concerns anonymously. 

Despite such a practice, anonymous ratings and reviews might not be seen as trustworthy since they can lack credibility. As a solution, blockchain provides a platform for employees, past or present, to rate their organization while keeping their identity hidden. Through blockchain, it’s possible to confirm that the person giving the review is connected to the company without exposing who they are. This kind of platform makes it simpler for potential job applicants to understand their potential workplace better. 

5. Auditing and Record-Keeping

Blockchain applications are the go-to tool for ensuring the organization’s compliance. By using smart contracts and unchangeable records, companies can establish automated systems that guarantee they properly follow laws and regulations. Imagine a scenario where a job candidate presents a resume with several certifications. With blockchain, the issuing institutions could directly record the certification details on the blockchain.

When an employer wants to verify these credentials, they can access the blockchain and instantly confirm the authenticity of the certifications without relying on manual checks or third-party verification services. Additionally, all company records need to be maintained accurately and securely while ensuring compliance with data protection regulations such as GDPR. Blockchain’s immutability ensures that once a record is added to the chain, it cannot be altered without leaving a trace, enhancing data integrity and auditability.

Final Thoughts

What’s best about blockchain is that its decentralized nature minimizes the risk of data breaches. Employee data is not stored in a central repository vulnerable to hacking; instead, it is distributed across the network, making it significantly more challenging for malicious actors to compromise sensitive information.

That said, while blockchain offers promising solutions for better auditing in the HR industry, companies should consider several challenges, such as implementation costs, technical expertise, and integrating blockchain systems with existing HR software. Despite these minor difficulties, with its immutable nature, blockchain technology offers secure, transparent, and efficient solutions to HR professionals.