Blockchain: Making HRM easier for organisations

The recruitment process can now be completed fast and in a more secure manner using blockchain.


A search for ‘blockchain’ on Google will throw up many results, and the majority will be associated with Bitcoin and cryptocurrency. However, the concept is primed to disrupt a lot more than currency. It has the potential to change the way organisations function. In fact, it is a boon for HR and the way it handles business.

The HR fraternity has been on the forefront of embracing technology, and now there is a new technology in town with multiple applications that will make it easier for HR to carry out business functions in a more secure and simple way.

All of us have come across this definition of blockchain. It is a decentralised digital ledger distributed across multiple computers. But what does that actually mean?

To better understand the concept, let us us assume that an apartment complex has hired some security guards who keep track of every person that comes in and goes out, in a diary. In blockchain terms, every entry is a transaction and the diary is the blockchain.

Now let us scale this up. Let us assume there are many such apartments within one society, with multiple security guards. All of them have access to the same diary, which has been shared through a platform, such as let us say, WhatsApp. Now here, WhatsApp is the network, every security guard is a node in the network and each security guard has access to a copy of the diary.

Each guard will need an approval from more than 50 per cent of the total guards who share a copy of the diary, to make a new entry into his copy. The other security guards will, in turn, have to validate that an entry has been made in the common diary. Once an entry has been made, the information will get updated over WhatsApp and onto the shared diary.

Now, if a malicious person wants to make a change in the data, that individual will have to alter a serial number against the entry he wants to modify on all copies of the diary. This will get registered in all the shared copies. Further, he will again have to change the serial number in all individual copies after the new entry has been made. This presents a huge amount of work.

If we scale it further and think on a global scale, we can understand how difficult it can be to modify information without consensus. That is what makes the concept so secure.

This is blockchain in simple terms. But how does it benefit HR? Let us find out.

Cyber security

The human resource function handles a lot of sensitive data pertaining to the organisation, including finances and personal information. Details of pay, insurance records and employee data stand the risk of being exploited by malicious elements within or without.

Blockchain reduces the chances of such data being hacked, and in many cases virtually eliminates it. This is because, the data is decentralised across all stakeholders, and at no one point can any hacker come in and make alterations. Information will have to be changed at all points where that data is stored.

Easy verification

Currently, the hiring and recruitment process in organisations has to be undertaken with a lot of caution because of the potential chances of fraud. Not only may candidates tweak their resumes to land a job, the employee verification process itself can be very cumbersome. While organisations do carry out thorough checks before hiring, the fact of the matter is that, till now, there is no single source of individual data which hiring managers can use to verify information. Moreover, the process may take a lot of time which tests the patience of the recruiters.

Now imagine the same process, but in a blockchain world. With data stored in secured blocks, employees and employers can exchange information on demand, without any fear of false data. Moreover, with less time taken to verify, the whole process will be a piece of cake.

Efficient compensation disbursement

Currently, most organisations are using third-party applications to distribute compensation. Third parties have come in to ensure that payroll is secured and efficient. Blockchain can eliminate the middle man.

For overseas employees, receiving their regular compensation can be a lengthy process as the money wades through multiple banks to reach the individual. With a system, such as blockchain, where the organisation can transfer money to the individual in a more direct manner, the cost and time of doing business is reduced drastically.

Access to employee details/history

Change is happening at a frightening pace. From traditional resumes to video resumes and networking websites, the way employee information is presented and exchanged is undergoing transformation. Adding to the disruption, blockchain has the potential to render these forms obsolete.

Employees will be able to keep a public profile with their information, which they can give employers an access to. Hiring managers can access the digital profiles of the candidates and learn about their individual history, and also go through their letters of recommendation and educational records among other things.

Smart contracts for the gig economy

For gig workers, a major point of concern can be receiving compensation on time, as it undergoes a manual verification process. Blockchain can enable gig workers to get paid faster, through smart contracts. Being essentially self-executing contracts, smart contracts contain details of the agreement between employer and employee written in lines of code. Once the employee completes an assignment, compensation can be instantly doled out by the organisation.

Suchismita Burman, CHRO, ITC Infotech, shares, “I believe blockchain will really impact the HR function, and in particular, the entire life cycle of employee engagement, on-boarding and wellbeing will undergo a change. Having accessible data, which is pre-verified, will reduce a lot of time otherwise spent on operational functions, such as compliance and audit, onboarding, verification and referencing.”

Burman adds that by taking out the operational segment of HR and making it smoother, organisations can focus on the individual and the quality of work that can be delivered. Apart from finding blockchain savvy talent, gathering the right data and structuring it in a way suited to the department’s needs is the biggest challenge. “Organisations will really have to get down to it otherwise it will remain a concept and we shall barely scratch the surface.”

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