Blockchain developed as the technology underlying digital currencies, is a decentralised, distributed ledger that ensures data transfer and immutability. Blockchain has an impact on HR in the area of employee engagement.
Challenges Employees Face with Traditional HR Processes
Employees experience slow and clunky systems, worries about data safety, difficulties in verifying their own qualifications, and a lack of transparency.
Data Security and Privacy Concerns
Data breaches and cyberattacks are a constant risk. IBM reported the average cost of a ransomware attack in the UK hit £3.4 million in 2023. 1 in 10 employees falls victim to data breaches caused by their employer.
Frustration with Inefficient HR Processes
These outdated systems are slow, often have mistakes, and waste time and effort, affecting employees directly. Take hiring, for instance. In 52% of companies, getting new hires up to speed takes up to a month, according to Talmundo.
Difficulty in Verifying Credentials
Employees often experience long waiting times while HR departments verify their qualifications, work experience, and certifications. This process to make sure everything is true takes many weeks, which slows down onboarding and makes the whole recruitment process take longer.
Lack of Transparency in HR Processes
The traditional HR processes often suffer from a concerning lack of transparency. Employees frequently find themselves in the dark about crucial aspects of their compensation and benefits. They may have little visibility into how performance bonuses are calculated and distributed, how salary increases are determined, or how their benefits packages are structured.
When things aren’t clear, workers start to worry if they’re being treated and paid right. Also, HR teams find it hard to keep up with and follow all the complex workplace rules and laws that keep changing.
How Blockchain Benefits Employees
Payroll Management
Blockchain has an impact on cross-border payments by cutting out traditional financial middlemen. Employees benefit from quicker and cheaper international payroll processing. Automating payroll tasks helps cut down on human mistakes and boost productivity.
The security and transparency of blockchain make sure salary payments happen in real time lowering the chance of fraud and helping employees get paid the right amount.
Improved Hiring and Career Advancement
Employees experience faster and more reliable hiring processes with blockchain. It securely verifies work history, education, and professional certifications, making background checks more efficient. This speeds up hiring and reduces recruitment delays.
Tokenising career credentials enables individuals to present verifiable digital representations of their educational and professional accomplishments and experiences. Because blockchain keeps data accurate and current, it also helps to match candidates to jobs more making sure people fit their roles better.
Easier Access to Employee Benefits
Blockchain influences real-time access to employee benefits info. It helps workers know what they’re entitled to. It also lets HR teams trigger benefits when workers hit certain milestones.
Greater Security and Clarity in Employment Contracts
Smart contracts, which are self-running contracts stored on the blockchain, are a strong tool to make sure employment deals are followed. Smart contracts for compliance enforce rules, terms, and penalties without needing middlemen.
Also, digital contracts stored on the blockchain can’t be changed and can be checked by everyone involved, which makes employee agreements more transparent.
Control Over Professional Identity and Career Records
Employees can use personal blockchains to store their education, skills, job history, and work records. They control who can see or update their profiles through permissions. They can take their verified work achievements with them to new employers.
Better Protection of Employee Data
A recent report found nearly 70% of data breaches involve a human element. Blockchain keeps sensitive worker information safe and stops people who shouldn’t see it from getting access. Its unchangeable records and ways to prevent fraud. Also, blockchain helps companies around the world follow data protection rules. It does this by storing data clearly and securely.
“The global blockchain technology market is projected to grow at a CAGR of 52.8% and reach around £654 billion (~ $825.93 billion) by 2032, which means blockchain development gains even more momentum. According to Casper Labs, 87% of global business decision-makers are likely to invest in blockchain in the next 12 months. Partnering with a professional blockchain consultancy can help companies sidestep costly pitfalls in blockchain solution design and project planning, setting a firm foundation for the long-term success of the blockchain initiative.”
Vital Soupel – DeFi & Blockchain Consultant at ScienceSoft (Source)
Advantages of Using Blockchain in HR
Enhanced Talent Sourcing and Management
Blockchain influences verifying and evaluating applicants’ education, skills, and achievements through unchangeable records. By offering a clear and quick hiring process, blockchain draws in skilled professionals and creates trust with applicants. It also lets people keep and manage access to their confirmed qualifications.
Cross-Border Payments and Employee Mobility
Blockchain simplifies international payroll processing and expense management by eliminating intermediaries and reducing transaction costs. Blockchain’s transparent tracking system also helps address tax liabilities and ensure compliance across different jurisdictions.
Also, blockchain provides a unified system for global financial operations, making it easier for employees to work and receive compensation across borders.
Fraud Prevention, Cybersecurity, and Data Protection
Blockchain’s decentralised structure improves the security of HR data. Blockchain also provides built-in fraud prevention, which helps protect against fraudulent financial transactions.
Transparency and Trust in Employee Engagement
Blockchain helps employees feel more confident in their workplace interactions. This trust-building technology also supports fair and verifiable employee recognition programmes, ensuring achievements are acknowledged accurately and fairly.
Conclusion
Blockchain technology is changing how staff deal with HR processes, fixing problems and boosting data safety. Because it’s spread out and can’t be changed, it brings more transparency, smoother work, and more trust between employees and employers.
Author: Stacy Dubovik – Financial Technology & Blockchain Researcher, ScienceSoft
Photo credit: StockCake
