Why Blockchain is the next potential disruptor of HR function

   2018-11-11 21:11

blockchain, hr functionDespite all the automation that has been implemented for payroll processing, at the time of payment several checks are made before the appropriate payments are made.

By Uma Ganesh

In the wake of digital transformation, HR function has adopted several new technologies—cloud, virtual reality, mobile applications and AI led tools to attract and retain quality talent, foster a learning environment, embed advanced analytics and derive benefits from social media.Blockchain technology is also being explored for suitable applications in the HR domain.



Blockchain technology is built around blocks of records containing an encrypted record of the most recent network-validated operations, as well as of all the operations contained in all previous blocks. This eliminates the need for creating multiple individual ledgers and having a central authority for approval as the participants in the network would have identical copies of the records that are encrypted.

Recruitment process is a time-consuming activity when it comes to verifying the credentials and carrying out background checks. Often, resumes may present false or inaccurate status and may not contain the uptodate status on vital details. The challenge is even more for cross-border checks. Blockchain works on the principle of records being created by the source and stored in a ‘block’ that could be linked to the HR system and digitally accept its authenticity. It would save time and money by not having to validate documents. The need to work with recruitment firms could be reduced as peer to peer connectivity of blockchain presents the possibility of recruitment managers directly accessing verified data of a pool of candidates matching their requirements.

Despite all the automation that has been implemented for payroll processing, at the time of payment several checks are made before the appropriate payments are made. Processing of payroll involving employees in overseas locations is even more cumbersome as it involves intermediary banks, fluctuations in exchange rates and the long lead times required to confirm payments. Blockchain application could make payroll processing more efficient by establishing the chain of actions and approvals required and enabling the final trigger for payment release thus reducing the time and effort involved in payroll processing. The frequent questions that employees have on HR policies, payroll, leave entitlements, etc., are currently being addressed by special desks within HR department or at times through outsourced or shared services which may not justify the costs being incurred.

Some companies have started experimenting with AI bots to handle routine employee questions. Convergence of blockchain and AI chatbots could make the solution even more efficient as the AI bots would be able to access reliable and secure blocks of information to get trained and for answering the queries. Similarly, in the context of legal or safety related compliance, virtual reality applications are gaining momentum. When combined with blockchain, the record of training would be secure and protected and thus organisations can demonstrate compliance.

Blockchain technology implementation is still at a nascent stage and it has to overcome some roadblocks with respect to complexities with software design. The cost involved in setting up the blockchain solution is significant. Until the technological design issues are sorted, it would be good to experiment with pilots and check the efficacy of the system. Given the heightened concerns for security and privacy, blockchain technology would become mainstream soon and HR domain would benefit tremendously by creating awareness amongst the key stakeholders and keeping a close watch on the new entrepreneurial applications emerging in this arena.

The writer is chairperson, Global Talent Track, a corporate training solutions company.

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