How Blockchain Can Be Significantly Beneficial for HR Managers is in the Area of Recruitment?

How Blockchain Can Be Significantly Beneficial for HR Managers is in the Area of Recruitment?

One business function that appears to be taking advantage of blockchain technology currently is the field of HR. Already technology developers are creating solutions that are being implemented across a number of 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 the utilization of blockchain technologies is yet to be completely understood; however it could be significant in terms of cost, not only savings but also labour-intensive processes streamlined. What the technology is offering the HR function is a total change to the way it interacts with employees, job seekers, how it handles data and how it communicates between departments and other business functions. In this regard, a progressive web app development company needs to consider the pertinent issues.

The adoption of technology that allows data to be securely handled will play a big 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 the many values that blockchain offers.

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 wider functions and HR processes that may be disrupted and see 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 lack of readiness.

To understand the possible impacts on a business from blockchain, it is helpful to first understand the various elements of blockchain technology.

Five Essential Characteristics of Blockchain

Before understanding the potential impact of blockchain technologies on the field of HR, it is worth becoming familiar with key underlying elements of the technology.

Essentially the design of the technology allows communication between unknown users via five core features that permit a number of 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, however, in their infancy and scalability and performance remain key issues to be addressed.

The initial technological blockchain solutions do not yet involve all of the following characteristics in an integrated way but 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 is a key selling point of blockchain solutions. This characteristic centres around the principle that no one entity will dictate rules or control a majority of the nodes. The actual 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 important element that ensures a robust HR system by recording the participant’s details using pseudonyms and securely recording all data records. Personal identity and other details are controlled by the participant, which means that only details that are required or relevant 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 traded.

Immutability of datais another feature of the blockchain technology that receives attention. Ensuring records cannot be altered unless all participants agree is a key characteristic of the technology.Once transactions are completed, they are time-stamped, added to the ledger sequentially and cryptographically signed.

Existing Technologies Enabling Blockchain

There are a number of existing technologies, such as encryption, that underpin the above characteristics; however, they are not currently sufficient alone to support the future blockchain environment, where scalability and reliability are potential issues. Smart contracts, smart assets as well as Decentralized apps are few of these technologies that are currently 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 itself 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, and this is usually a lengthy process that costs both money and time. 

One area where there are often lengthy delays in the recruitment process is that of the verification of academic qualifications of the applicant. For example, some processes require job applicants to submit their credentials for a job through their college. This process can incur charges and take weeks; however, this 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.

Want to Hire Dedicated Developer? Get a Free Estimation or Talk to Our Business Manager

Implications of Blockchain on HR

The potential for far-reaching changes and improvements in HR is exciting when thinking of the possible blockchain technologies, especially for any blockchain app development company.

What else could an organization do with savings from improved recruiting processes, less spend in the HR department, and seamless communication within the organization and with other stakeholders? With blockchain technology offering solutions to improve processes all the way along the recruitment cycle, it appears to be a good fit for technology and this arena. 

Simple changes could be impactful such as reduced burden on recruitment staff and HR departments in regards to paperwork and communicating with candidates and third parties. Focus can turn to finding the right applicants for the position, rather than the time taken sifting through details and communicating back and forward. The blockchain technology allows only the information that is required for a particular step to be accessed and available. The cycle then automatically moves along without unnecessary processes and intervention.

Processes such as efficiently communicating with all in-house stakeholders and third parties in the recruitment process, authorizations, reviews, approvals etc., all can be impacted by blockchain-based solutions. 

The initial forays into the HR function and blockchain solutions are providing insights into the future of this key area of business.

As explained earlier, the current blockchain case studies do not include all of the necessary principles of a complete blockchain solution; therefore, conclusions about the success are incomplete.

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 the need for unnecessary human intervention and authorizationsas the technology ensures compliance and there is no fear of data being altered once entered.Up high on the priority list for all employers and employeesisthe security and access to employee data. Employees can feel safe that the encryption and immutability of the blockchain technology ensure only relevant information about them is released to the relevant people at the relevant time. The data cannot be accessed or altered otherwise. Employers can ensure they are complying with best practice and privacy and discrimination laws. Using the “tokenization” ability, records can, on occasion we shared with the candidate’s permission, allowing the appropriate authorization to occur.
  • A time-consuming process which can detract from finding the right talent is the verification of employment history and background details. The distributed blockchain technology in this function of HR allows immutable employee records of a candidates work history to be generated by verifying their credentials and thereby creating a “token” comprising their personal identity. The data that has been recorded can now be accessed for future uses with the knowledge that is cannot be altered and thus providing surety about the applicant’s details.
  • One area where employees will feel empowered is with technological options relatingto compliance and regulations. The right to remove their personal record, as stipulated by GDPR in Europe, is one such example. The employee can render their identifiable details unrecoverable by the deletion of the encryption key. This technology could be adapted to other legislated requirements or, indeed, in-house company procedures as the need arises.
  • Efficiencies across the important 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 other payments. 
  • Perhaps not necessarily appreciated by employees, blockchain technology can improve attendance data accuracy. The same benefits stated above in relation to the integrity of the data stored means alterations cannot occur without authorization. In conjunction with biometric blockchain solutions, the tracking of relevant data for attendance and payroll purposes is further streamlined for the company.

Payroll Management - A Disruptive Change Based on Blockchain

Blockchain technology, in its initial purpose, was created as an alternative ‘currency’ via the development of ‘cryptocurrencies’ such as the well-known version Bitcoin. It seems logical then to extend this idea to the potential payment of wages. For businesses that operate domestically, only this may not be a solution that currently fits the local infrastructure, economy or requirements of employees. Hence, a mobile app development company should put special emphasis on the above aspect.

So it appears that one of the strongest cases for the use of blockchain in HR may be in 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, in particular, 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 indeed local currency involved.

Therefore if a business operates globally, offering payroll services in cryptocurrency may provide advantages in the future. 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 method of payment may one day be beneficial if receiving overseas payments, as well as cutting fees for employers.

Read the blog- Use Cases for Smart Contracts in Decentralized Finance.

Direct Access to External Talent

Innovations in payroll for employee or contractor payments using blockchain could potentially see the increased acquisition of talent. Payments on a blockchain-based system could offer many attractions to the future workforce as well as for companies who can now access talent that were previously not in consideration due to difficulties in confirming details such as personal information and employment history. So the huge 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?

There are a variety of steps that HR departments can take to ensure they are in a position to capitalize on blockchain developments in the future. Blockchain development services need to pursue avenues which best suit the requirements of the HR departments.

Keeping up to date on developments in technology 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 the technology, advances and benefits of blockchain. The company may need to gear up or adapt processes now to be ready 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, wider company managerial staff may require upskilling in order to be ready for the fast changes occurring in technology. This may necessitate the use of external talent experts in blockchain, who are currently in high demand, as businesses explore blockchain for their business applications. The full benefit of the technology may not be realized if decision-makers and departmental staff are not across the technological 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 of this new technology.

Want More Information About Our Services? Talk to Our Consultants


The far-reaching possibilities for innovation in HR are seeing the focus of blockchain solution providers slowly turn towards this sector. The potential for disruption to the current HR process is great, with efficiencies possible in almost every step of the recruitment cycle. The security of data, efficiencies in payments, decentralized records, automated verifications all lend themselves to this highly important function in most businesses. Blockchain-based solutions, even if its iPhone application development, appear to be ready to change the HR landscape and may eventually be incorporated as best practice across the board.