In a world of AI, 3D printing and self-driving cars, you’d be forgiven for thinking that blockchain seems a little lacklustre compared to its sci-fi-tech, oh-my-god-we’re-living-in-Bladerunner contemporaries.
In fact, you might not have heard of blockchain at all. (You’ll probably know Bitcoin, the blockchain-based cryptocurrency).
However, while blockchain might not give us hoverboards, robot butlers, or interplanetary holidays, it has the very real potential to change how our jobs, our transactions, and our businesses operate. It could become the system underpinning everything - much as the internet is today.
So what actually is blockchain?
Essentially, blockchain is a giant database of digital records duplicated thousands of times across many computers. Each computer must approve any change or exchange of the records, and all changes are recorded in a permanent, transparent digital ledger that can never be altered or faked.
As a (very) rough analogy, it can be helpful to imagine a large room full of people with perfect memories. Whenever two people want to exchange something – money, for example - each person in the room must watch, verify and record the exchange exactly. Under such circumstances, it’s simple to prove that the transaction happened: everyone in the room has an identical record of the event, exactly as it was.
In terms of money, this means that when exchanging or storing money through blockchain, there’s an infallible record of who owns what and who’s paid whom, openly available to all relevant parties.
However, the applications aren’t limited to finance. Almost anything can be stored and exchanged: records, contracts, digital assets, digital ID. This means that:
- Contracts are impossible to forge or alter
- Counterfeit money is a thing of the past
- Your digital identity can never be stolen or replicated
- Authenticity of products (such as art or designer goods) can be verified
Companies such as Microsoft, IBM, Samsung, Visa and Walmart are already experimenting with the technology to do everything from fix the music industry to solve human trafficking. Take that, hoverboards.
Enough of the hoverboards. How will blockchain affect HR and recruitment?
Three key practical capabilities of blockchain are:
- Cutting out middlemen in financial transactions
- Creating and maintaining verifiable contracts without the need for a third party
- Efficient, transparent and trustworthy verification of data
These could impact people management in a huge variety of ways.
The simplest and most obvious application is for the payment of salaries and signing of employment contracts. Blockchain can make the process more secure, safe and reliable. It can also put an end to the expense and complexity of paying overseas staff by removing the need for intermediary banks.
One Japanese company is creating a blockchain CV database, and universities are exploring blockchain as a degree verification tool. This could allow a person’s entire career and education history to be stored in one block linked to their digital ID.
No longer will companies fall for padded CVs (such as that of the former Yahoo CEO) or need to ring up references to confirm the facts. A person’s resume will be indelible and open - it could conceivably remove the need for background checks entirely.
This will also vastly improve the hiring process for recruiters. The current system of combining endless keyword combinations, firing them into countless job boards, and sifting through keyword-stuffed and often out-of-date CVs is time-consuming and ineffective.
Managerial skills, for example, are listed by people ranging from CEOs to office party planners. Separate-but-similar experience like this could be codified distinctly, making it simple to find and verify people with the right skills for the job.
For highly-skilled jobs, applicants often list competency with 20 or 30 technologies, making it impossible to check them all. A blockchain CV verifies skill without the need for in-interview testing.
Talent and workforce management could also be streamlined with blockchain, replacing or upgrading the current system of performance reviews and training records. A blockchain-enabled system could track courses, qualifications, and experience along with the projects staff are working on in real-time, making it easy to match competencies needed with skills available and spot looming gaps in the skill base.
This could also be reflected in compensation and benefits. Key skills and experience could be linked automatically to pay rises, promotions and bonuses, ensuring that such rewards are distributed fairly, accurately and without bias.
Another company aims to revolutionise the growing gig economy. They’re developing a blockchain-based labour exchange which will allow freelancers to work directly for companies without middlemen such as Upwork taking a cut of the payment in exchange for ensuring fairness.
I don't get it. What's the big deal?
These changes may seem more like improvements than innovation, and it’s true that blockchain’s currently imagined uses in HR are a continuation of the trends towards big data, AI, gig work and automation.
However, the level of trust required for these trends to reach their potential is vast. Automating compensation, letting AI deal with recruitment, or hiring freelancers with no third party verification is risky when information may be incorrect or faked.
That’s where blockchain comes in: as well as providing transparency and efficiency, it facilitates unparalleled trust in information.
The internet hasn’t only built a world of sci-fi tech. It’s also built a world marked by the erosion of trust: anonymous trolling, fake news, catfishing and cyberattacks. The ‘new internet' and its revival of trust could very well change everything, all over again.
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