Contact us anytime to know more — Abhishek P., Founder & CFO CISIN
Why Blockchain Matters: Information is the backbone of any business. Getting that information as soon as possible is essential to ensure it is accurate.
Because it allows for immediate, shared, and transparent information storage on an immutable ledger only accessible by authorized network members, Blockchain is ideal for providing that information. Blockchain networks can track orders and payments, as well as production. Because members share one view of the truth, so you can see every detail of each transaction from beginning to end.
This boosts your self-assurance and creates new possibilities for you.
The critical Elements of a Blockchain
Distributed Ledger Technology
All network participants have access to the distributed ledger, which has an immutable record of all transactions.
Due to the shared ledger, transactions no longer need to be recorded more than once, as is the case with conventional corporate networks.
Permanent Records
After a transaction has been recorded to the shared ledger, no participant can alter or tamper. A transaction record that contains an error must be rewritten to correct it.
Both transactions will then be visible.
Smart Contracts
A set of rules, called a Smart Contract, is stored on the Blockchain and executed automatically to speed up transactions.
Smart contracts can be used to define terms and conditions for corporate bond transfers and travel insurance terms.
Blockchain: How it works
Each transaction is recorded as a "block of data"
These transactions are used to show the movement of assets that could be tangible (a product) or intangible(intellectual).
You can record information in the data block: who, what, and when.
Each block is connected with the one before it and the one after it
As an asset moves from one place to another or the ownership changes, these blocks create a data chain. These blocks verify the time and sequence of transactions and link securely together to ensure no block is altered or added between blocks.
Transactions are locked together in an irreversible chain called a blockchain
Each block adds to the verifiability of the block before it and the whole Blockchain. This makes the Blockchain impervious to tampering and gives it the crucial strength of immutability.
This eliminates the possibility that a malicious actor could tamper with the Blockchain and creates a trusted ledger of transactions.
Blockchain has Many Benefits
What should be changed: Many operations waste time on duplicate records and third-party validations.
Cyberattacks and fraud can make record-keeping systems vulnerable. More transparency is needed to ensure data verification. Transaction volumes have increased dramatically since the introduction of IoT.
This slows down business and drains the bottom line. We need a better way. Enter Blockchain.
Greater Trust
Blockchain allows you to rest assured that, as a member, you will receive accurate and timely data. Your confidential blockchain records will only be accessible to network members you have granted access.
Greater Security
All network members must agree on data accuracy. Validated transactions are permanent and immutable. The system administrator can only delete a transaction.
More Efficiencies
Record reconciliations that waste time can be eliminated by using a distributed ledger. It is shared between members of a network.
A smart contract, a set of rules that can be executed automatically on the Blockchain, can be stored on the ledger to speed up transactions.
One business function that is currently taking advantage of blockchain technology is the HR field. Technology developers are already creating solutions being implemented across several industries, and HR departments are seeing the potential benefits this technology can make to their entire hiring cycle.
The potential value of efficiencies in the HR arena with blockchain technologies is yet to be completely understood; however, it could be significant in cost, savings, and streamlined labor-intensive processes.
What the technology offers the HR function is a total change to how it interacts with employees and job seekers, handles data, and communicates between departments and other business functions. In this regard, a progressive web app development company must consider pertinent issues.
Adopting technology that allows data to be securely handled will play a significant role in the future of HR processes.
The ability of multiple stakeholders to work within the secured networks and effectively decentralize systems is only one of Blockchain's many values.
Impact of Blockchain Beyond IT
There is a lot of optimism currently behind the emerging technology of Blockchain. It is not only the IT side of businesses that may see change but the broader functions and HR processes that may be disrupted and a fundamental shift away from the old manual and automated processes.
Companies and HR departments will need to keep up with the pace of change that blockchain technology may bring and ensure they are not left behind and negatively impacted by a lack of readiness.
It is helpful first to understand the various elements of blockchain technology to understand the possible impacts on a business from Blockchain.
Five Essential Characteristics of Blockchain
Before understanding the potential impact of blockchain technologies on the field of HR, it is worth becoming familiar with vital underlying elements of the technology.
The technology design allows communication between unknown users via five core features that permit several different HR transactions or processes to take place without the risk of any data being altered by a user after the initial recording.
Blockchain technology and related systems are still in their infancy, and scalability and performance remain vital issues to be addressed.
The initial technological blockchain solutions still need to involve all of the following characteristics in an integrated way.
Still, they are all required to realize a complete blockchain solution:
Distribution: Participants in Blockchain are connected on a distributed network and operate "nodes" or computers that run programs to impose the rules set by the business of the Blockchain.
These nodes keep a copy of the ledger, independently updating data when a new transaction occurs.
Decentralization: It is a key selling point of blockchain solutions. This characteristic centers around the principle that no one entity will dictate rules or control most nodes.
The need for a central authority to oversee the network is removed using a "consensus mechanism," which effectively approves and checks the transactions.
Encryption is another essential element that ensures a robust HR system by recording the participant's details using pseudonyms and securely recording all data records.
The participant controls personal identity and other information, meaning only required or relevant details for a particular step of the HR process are accessible.
Tokenization: Effectively converts items of value (or physical or non-physical elements) into "tokens," which Blockchain recognizes as "currency" in the system and can be traded.
In this example, data or the identity of a participant could represent the value to be turned into tokens and changed.
Immutability: Data is another feature of blockchain technology that receives attention. Ensuring records can only be altered if all participants agree is a vital technology characteristic.
Once transactions are completed, they are time-stamped, added to the ledger sequentially, and cryptographically signed.
Read More: What is the Future of Blockchain Technology?
Existing Technologies Enabling Blockchain
Several existing technologies, such as encryption, underpin the above characteristics; however, more is needed to support the future blockchain environment, where scalability and reliability are potential issues.
Smart contracts, intellectual assets, and Decentralized apps are a few technologies currently being worked upon by mobile application development services.
The full potential for blockchain technology to significantly disrupt business processes and potentially a host of other areas of everyday life remains to be seen.
Increased understanding of the technology is required, along with integration with existing solutions, to realize the full potential of this novel technological advancement.
Problems Affecting the Current Recruitment Process
The HR process places high cost and time burdens on companies. From start to finish, the entire hiring process can take time and involve many players.
The process can be a barrier to a company making a hiring decision or an employee applying for a position.
Employers often have to employ other consultants to do due diligence, which is usually a lengthy process that costs both money and time.
One area where there are often lengthy delays in the recruitment process is the verification of the applicant's academic qualifications.
For example, some methods require job applicants to submit their credentials through their college. This process can incur charges and take weeks; however, this is where blockchain technology can provide a solution.
A shared ledger between colleges and recruiters where the details have been authenticated could result in high cost and time savings.
Implications of Blockchain on HR
The potential for far-reaching changes and improvements in HR is exciting when thinking of possible blockchain technologies, especially for any blockchain app development company.
What else could an organization do with savings from improved recruiting processes, less spending in the HR department, and seamless communication within and with other stakeholders? Blockchain technology offers solutions to improve processes along the recruitment cycle, so it is a good fit for technology and this arena.
Simple changes could be impactful, such as reducing the burden on recruitment staff and HR departments regarding paperwork and communicating with candidates and third parties.
Focus can turn to find suitable applicants for the position rather than the time spent sifting through details and sharing back and forth. Blockchain technology allows only the information required for a particular step to be accessed and available. The cycle then automatically moves along without unnecessary processes and interventions.
Processes such as efficiently communicating with all in-house stakeholders and third parties in the recruitment process, authorizations, reviews, approvals, etc., can all be impacted by blockchain-based solutions.
The initial forays into the HR function and blockchain solutions are providing insights into the future of this crucial area of business leaders.
As explained earlier, the current blockchain case studies only include some of the necessary principles of a complete blockchain solution; therefore, conclusions about the success still need to be completed.
Below are situations providing insight into what lies ahead in the HR space:
Smart contracts are being utilized for contract staff. For example, once milestones or conditions of a contract have been met, an employer can release the payment as per the contractual obligations without unnecessary human intervention and authorizations, as the technology ensures compliance.
There is no fear of data being altered once entered. Security and access to employee data are high on the priority list for all employers and employees.
Employees can feel safe that the encryption and immutability of the blockchain technology ensures only relevant information about them is released to the appropriate people at a suitable time.
The data cannot be accessed or altered otherwise. Employers can ensure they comply with best practices and privacy and discrimination laws. Using the "tokenization" ability, records can, on occasion, be shared with the candidate's permission, allowing the appropriate authorization to occur.
A time-consuming process that can detract from finding the right talent is verifying employment history and background details.
The distributed blockchain technology in this function of HR allows immutable employee records of a candidate's work history to be generated by verifying their credentials and thereby creating a "token" comprising their identity. The data that has been recorded can now be accessed for future uses with the knowledge advisors that it cannot be altered and thus providing surety about the applicant's details.
One area where employees will feel empowered is with technological options relating to compliance and regulations.
As stipulated by GDPR in Europe, the right to remove their record is one example. The employee can render their identifiable details unrecoverable by deleting the encryption key. This technology could be adapted to other legislated requirements or in-house company procedures as the need arises.
Efficiencies across the critical HR functions of payments and audit reporting are also being seen with blockchain solutions.
Encrypted and immutable data enables more streamlined transactions and assists the generation of quality compliance and audit reporting. Companies won't require banks or the involvement of other third parties to process wages or additional payments.
Not necessarily appreciated by employees, blockchain technology can improve attendance data accuracy. The same benefits stated above about the integrity of the data stored means alterations cannot occur without authorization.
In conjunction with biometric blockchain solutions, tracking relevant data for attendance and payroll purposes is further streamlined for the company.
Payroll Management - A Disruptive Change Based on Blockchain
In its initial purpose, Blockchain technology was created as an alternative currency' via the development of 'cryptocurrencies' such as the well-known version of Bitcoin.
It seems logical then to extend this idea to the potential payment of wages. For businesses that operate domestically, this may not be a solution that currently fits the local infrastructure, economy, or requirements of employees.
Hence, a mobile app development company should emphasize the above aspect.
One of the most robust cases for using Blockchain in HR is payroll management. The transactions are stored as immutable data and encrypted on the Blockchain.
This possible new solution to paying employee wages lends itself to new possibilities, particularly to access staff overseas or in remote locations.
The potential of blockchain solutions for employees or contract staff has already been realized, as seen with the 'gig economy workers, where payments are made to freelancers etc., with no banking intermediaries, other third parties, or local currency involved.
Therefore, if a business operates globally, offering cryptocurrency payroll services may provide future advantages.
Where the economic system allows, offering this type of payment to prospective employees may attract workers to a company, for instance, who are worried about currency fluctuations during lengthy payment processes. Depending on the local situation and laws of the employees' home country, a flexible and secure payment method may one day be beneficial if receiving overseas payments and cutting employers' fees.
Direct Access to External Talent
Innovations in payroll for employee or contractor payments using Blockchain could potentially increase talent acquisition.
Prices on a blockchain-based system could offer many attractions to the future workforce and companies who can now access talent previously not considered due to difficulties in confirming details such as personal information and employment history. So the massive increase in the talent pool via access to some of the hundreds of millions of workers who operate outside the traditional banking system.
How to Incorporate Blockchain in HR Processes?
HR departments can take various steps to ensure they are in a position to capitalize on blockchain developments in the future.
Blockchain development services need to pursue avenues that best suit the requirements of the HR departments.
Keeping up to date on technological developments is crucial for the company and the HR department. It is essential to meet with all relevant interested parties, not just the IT department, to develop a holistic strategy and comprehensive understanding of Blockchain's technology, advances, and benefits.
The company may need to gear up or adapt processes for future innovation. The specific needs of the HR requirements need to be considered in a strategic way to ensure the cost of the adoption of new technology is justified.
HR staff and, indeed, more comprehensive company managerial staff may require upskilling to prepare for the fast technological changes.
This may necessitate external talent experts in Blockchain, currently in high demand as businesses explore Blockchain for their business applications. The full benefit of the technology may only be realized if decision-makers and departmental staff are across the technical side during the strategy phases.
One final step would be to learn lessons from the current early adopters and pilot blockchain programs in your field.
Alternatively, look at some of the early projects from the banking and finance sectors or supply chain, as these are the industries with the most experience with this new technology.
Conclusion
The far-reaching possibilities for innovation in HR are seeing the focus of blockchain solution providers slowly turn toward this sector.
The potential for disruption to the current HR process is excellent, with efficiencies possible in almost every step of the recruitment cycle. The security of data, efficiencies in payments, decentralized records, and automated verifications all lend themselves to this essential function in most businesses.
Blockchain-based solutions, even if it's iPhone application development, are ready to change the HR landscape and may eventually be incorporated as best practices across the board.
