Blockchain in HR: Challenges, Applications and the Future of Work

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Last week, I had the pleasure of attending what was probably the first ‘Blockchain and the Distributed Workforce’ event. The evening was organized by Andy Spence at the RocketSpace offices in London and the idea behind this meetup was to bring together a diversified crowd of HR, recruitment, and blockchain technologists. This article is a round-up of what blockchain is, how it applies to HR, and how it is used by companies today.

First things first: What is blockchain?

The below video from the Institute for the Future explains blockchain technology in two minutes.

When you mention blockchain, many people think it’s about bitcoin.

But besides being the underlying technology for the world’s most famous cryptocurrency, blockchain technology can be useful for all sorts of use cases.

Including HR.

As with every (new) technology though, we have to look at what actual problems we can solve with it. In HR, for example, there are lots of problems we have around verification of identity and qualifications that could benefit from blockchain technology.

Another example is the increased scrutiny on how our personal data is used – and monetized. This has made people much more wary about using central networks to show their personal data, including career histories.

What challenges do we have in the workplace that need to be solved?

In the workplace, more specifically in the labor market, we’ve got particular problems.

Talent supply problems
If you look at recruitment and hiring, there is a poor visibility of information about available workers and inefficient matching.

Cost of labor
In inefficient talent markets, employers are paying 15-30% of contract cost to intermediaries. Needless to say, this is costing organizations a lot of money.

On the receiving end, contractors, vendors, consultants or freelancers sometimes have to wait many months before getting paid.

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Not only is this frustrating for the parties involved, it also impacts the viability of businesses. In the UK alone, almost 20% of SMEs face being pushed towards bankruptcy as a result of late payments.

Candidate fraud
There is low confidence in identity and candidate qualifications and more than half of the candidates tell lies in their CVs – a number that changes depending on the industry and sector. Where “Studied at Harvard”, could mean “studied Harvard Business Review.” Yes, that sounds a bit cheeky, but there is an awful lot of fraud out there.

Other labor market specific issues involve selection bias and rapidly shifting talent pools.

Some of the challenges today’s labor market is faced with. 

Data
We’ve also got a challenge around centralized data and social media.

The internet has brought really positive developments in hiring and work, think of the job boards that make a search more efficient, the opportunity to poach from our competitors via LinkedIn, etc. But digitalization still has a lot further to go in this market in terms of the visibility of work. Maybe the biggest fix here is around centralized data and moving towards a more decentralized model.

Facebook – and the backlash from that – have made people think about their personal data a bit more and this may help to make the case for decentralized models in the workplace.

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The gig economy
We’ve got – a lot of – people moving to the gig economy. When we say the gig economy to some people, their first reaction is that it’s exploitative, there is no sick pay, etc. 

But regardless of how we define this, it’s a growing trend with more people choosing to work away from the permanent job and work contract.

How blockchain technology can help HR

The good news is, we have it in our hands to design the next generation of digital workers and there are some blockchain features we can incorporate into our digital work platforms that can improve the situation.

For instance:

  • The ability to exchange digital assets without the need of a 3rd party
  • The ability to execute smart contracts in the employment space
  • A distributed ledger to store digital records
  • An indelible record of all previous transactions 

Blockchain at work
Let’s look at some examples of blockchain at work.

Only a year ago, there were about 10, maybe 15 startups in this space. Now, there are over 52 startups building blockchain-driven solutions to many different workforce problems.

There are different segments, but let me take you through four of them that are quite interesting:

  1. Qualification and verification.
  2. Paying employees.
  3. Work matching platforms.
  4. Connect your information across the web.

Blockchain-at-work startups

A sampling of startups active in the blockchain-at-work space. 

The future of work

So, where will all this lead us to?

As with many things, technological developments – and their adoption – take time. The implementation of blockchain-based solutions to address some of the above-mentioned HR challenges won’t happen overnight, it’s likely going to be a gradual process.  

The first wave will perhaps be around blockchain-based candidate verification, a straightforward use case. Real-time worker payments could be another one and less spam as we manage our own career profile.

The second wave of blockchain-at-work technology could be about better talent markets, more visibility of work, workers and matches. It could also entail more trust in the marketplace.

The third wave could involve thinking about the nature of the organization itself. If we got a larger liquid workforce that could be called upon for projects that would mean less permanent people and long-term job contracts. So maybe we’ll have more autonomous organizations and focus on networks of teams as well.

Three waves of blockchain solutions

How blockchain-based solutions could be used for the future of work. 

Now, of course, there are challenges.

Techies will talk to you about current blockchain related challenges like transaction cost and transaction speed for instance. So we’ll have to get the process right and that’s not going to be an easy task. 

What can we do right now?

Try out new technology!

This is something we can start with straight away. Look at the blockchain projects that are going on and where they can address some of the workforce challenges. And work with startups. Experiment and see if their solution works. Which leads us to six startups working on a variety of different problems. 

Here’s a short overview of what they’re up to and how they’re using blockchain technology.

Etch.

In a nutshell, Etch reduces the time taken between working and getting paid to zero.

To do so, they turn the logic of a worker’s employment contract into a smart contract which means that as they spend time working, their wages flow automatically into their Etch wallet. Blockchain enables this to happen 100% transparently and instantly. No more waiting on salaries for contractors.

The Etch. logo


R_Block

R_Block is a decentralized, identity-proof hiring network. Users of the platform own their skills and experience data and they decide who they want to share this data with and when. Workers can earn CVTokens for sharing their R_Block profile and interacting with recruiters and they can turn their proven skills & work history into a shareable CV.

This technology enables companies to always have an updated CV that they can access anytime (something they don’t do with traditional paper CVs given the introduction of the General Data Protection Regulation).

R_Block

TiiQu

TiiQu is a blockchain-based platform that uses the immutability and verifiable source of data qualities to create a digital passport. This digital passport can be relied upon as proof of – among other things – an individual’s professional trustworthiness, identity, and qualifications.

In short: at TiiQu, they’re on a mission to remove the guesswork and assumption from an individual’s claims about themselves. Blockchain technology is used for its transparency and the ease of verification by other parties the technology offers.

TiiQu


Vault

Vault is the world’s first blockchain powered counter-harassment platform. It allows users to record harassment experiences, store evidence, and personal memos.

Users are in full control over the information stored in their Vault which no other party can access without explicit consent. Once the case is recorded, the user gets a notification about whether or not the perpetrator’s name was recorded in Vault by other users.

Vault


Gigachain

Gigachain is a blockchain based tech platform that aims to protect workers worldwide from exploitation and labor abuse.

The technology records evidence of work done (usually hours worked plus the location) in a tamper-proof record which is available to the worker, the business and potentially interested third-parties for example for audit and oversight purposes.

Gigachain

Path

Path builds tailor-made, blockchain-driven solutions for various organizations from universities to corporates. This can entail the issuance of digital certificates to students and employees to help them build a professional Path for instance. Or the reviewing of potential employees with their own online certificates before hiring them to make sure an organization gets the best talent.

To name just a few of the many possible applications.

Path

In summary

Developments in blockchain technology can be of great use to HR in helping to get their organization ready for a changing workforce. As with any new technology, however, the starting point should always be: what problem are we trying to solve here? In order to get this right, all of the partiers involved – from HR and recruitment professionals to startups and blockchain technologists – should constantly keep talking to each other. Perhaps at the next ‘Blockchain and the Distributed Workforce’ event, Andy?

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