One of the somewhat newer technology-related topics to surface is blockchain. When it first came out, I must admit that I didn’t see it having much of an HR component. So, I started paying attention…but at a distance. Well, I was wrong.
The Society for Human Resource Management (SHRM) has written a few articles about the topic including “Is HR Ready for Blockchain?” and “Blockchain Could Phase Out Employment Screening”. It really made me take notice and realize that I need to learn more about what blockchain technology can do for HR and business.
To help us demystify blockchain, I spoke with Jessica Griffin, vice president of global product management for Workforce Ready at Kronos Incorporated. Jessica and I had the chance to talk during SHRM’s annual conference in Chicago. I’m grateful that she was willing to share her expertise with us.
Jessica, let’s start with a definition. What’s blockchain?
[Griffin] A blockchain is a distributed public digital ledger used to track records. For anyone learning about blockchain for the first time, there is a lot to unpack in that explanation, but I promise it’s not as confusing as it may seem. For starters, a block is simply another word for record, and a blockchain is simply a chain of records. What makes blockchain unique from other recordkeeping systems is that it is distributed, which is another way of saying the chain of records is stored across a large network of independent computers.
This distributed approach is what sets blockchain apart because it provides a new level of accuracy, security, and privacy. A blockchain contains every version of a record since it was created – which makes tracking changes over time and auditing incredibly simple. To alter one block would require altering all of the blocks to avoid detection. Because the blockchain is spread across a large network as opposed to a single database, this becomes an extremely challenging proposition, especially because every block is encrypted with a unique key that only the owner of that block knows.
From your definition, it sounds like blockchain has been around for a while. I wonder why we’re just hearing about it.
[Griffin] The idea of a blockchain was first theorized in the early 1990s as a manner to ensure document timestamps could not be altered. However, the first blockchain wasn’t put into practice until nearly 15 years later, in 2008, with the launch of the cryptocurrency Bitcoin. This is likely the context in which most people familiar with blockchain have heard about it. While the financial industry was the first to begin exploring blockchain applications, other industries, such as human resources, are not far behind.
Bitcoin, which runs on blockchain technology to securely track all Bitcoin transactions, burst into the public consciousness this year when its value skyrocketed to over $10,000 per coin. Since then, Bitcoin’s value has come back to earth, but the excitement around blockchain as a new technology remains high. While tracking financial transactions is one obvious application for blockchain, there are actually a host of HR applications across the human capital management lifecycle.
Why are businesses so focused on it right now? Is it simply “all about the bitcoins”?
[Griffin] It’s safe to say that blockchain is rapidly racing up the hype-cycle curve and for good reason. Given all the news lately about personal data being misplaced, stolen, or used without permission, businesses are looking for innovative ways to ensure that employee and customer data is kept safe, and that their own intellectual property is being handled securely. They also want a tool which allows employees and customers to take more control over that data.
It’s still early on, but blockchain has the potential to achieve this. Bitcoin runs on a blockchain which is public and spread across many computers, some secure and others likely unsecure. Enterprises are now investigating the benefits of private blockchains. A private blockchain leverages the same distributed architecture to keep track of blocks, but instead of running publicly, it runs privately on a network where all of the computers are known and proven secure.
How does blockchain impact human resources?
[Griffin] There are a number of examples where HR departments can utilize blockchain to improve the efficiency of their activities and processes. Applicant and employee verifications are one area that is seeing the most traction right now. Hiring and onboarding is a vital but tedious portion of the employee lifecycle for both the recruiter and the candidate, but blockchain can significantly streamline it.
At its core, blockchain provides a platform for companies and institutions to work together more efficiently. A lot of organizations have made tremendous strides in getting the paper out and moving to a digital system, but now there is a huge amount of file transfer-based sharing of information.
For instance, imagine streamlining benefits administration and carrier connections. This is one of the most time-consuming and error-prone activities for HR teams. A blockchain approach would dramatically streamline this process and others like it that involve third party partners, especially when you inherently trust the underlying technology will increase each transaction’s security, efficiency, and transparency.
I understand that security is one of the big advantages of blockchain. So, I could see it being adopted for functions like you’ve mentioned – payroll, background checks, and other sensitive areas (like health records).
[Griffin] Imagine a digital token for each candidate or employee. That digital token stores their complete professional data set, including employment information, personal information, financial background – all of the data that today is spread across their resume, reference, and background checks. The applicant or employee could easily use digital keys to release various pieces of the data set in order to complete an application or validate a background check.
At the other end of the human capital management (HCM) lifecycle, payroll and tax can also benefit from blockchain. Payroll, despite all its complexities, is relatively straightforward when your employees live in one area and all have bank accounts with trusted institutions. It gets a lot more challenging when the organization needs to make cross-border payments to a global workforce, or if an hourly worker lives in a rural location that is underserved by banks and credit unions.
In those cases, organizations can securely transmit payroll information through a blockchain network, enabling institutions outside of those you typically interact with to securely access the information and distribute payment to those employees.
Last question, what do you see as Blockchain trends we should start paying attention to now?
[Griffin] For those who are interested in new ways for blockchain to influence HR technology and processes, they should start by keeping an eye on what is happening with blockchain outside of HR.
New technologies, like blockchain, almost always hit existing value chains first. For example, financial records and legal contracts are one area where blockchain’s promise is already being explored with depth. For this reason, I’d suspect employee contracts and records may be the first data to move into the blockchain. It’s arguable that these solutions have the greatest potential for growth as their associated benefits are likely to far outweigh their cost of adoption.
Disruption has been the name of the game in the HR technology landscape recently and that is going to continue. Organizations should exchange in frank discussions with their vendors about how they are using not just blockchain, but all emerging technologies, including artificial intelligence, machine learning, and responsive design, to deliver the more possible efficiency and the best possible employee experience.
A huge thanks to Jessica and our friends at Kronos for sharing their thoughts and expertise. If you want to do as Jessica suggested and stay on top of the latest trends in HCM, be sure to check out the Kronos blogs including The Workforce Institute and What Works blogs.
I’m sure you realize, just like I did after speaking with Jessica, that we’ve only just scratched the surface of blockchain technology and the value it can bring to HR and business. But there’s some very interesting potential for the HR function. I could see blockchain not simply making our work easier and more efficient but keeping employee data more secure. And that’s a business priority.
Image captured by Sharlyn Lauby while exploring after the HR Technology Conference in Las Vegas, NV12