Block-chain in hiring: possible applications

Underpinning transparency and verification: block-chain potential applications in HR

The technology of “data blocks” may impact recruiters’ lives already in the near future

Block-chain has been a buzzword for the last couple of years. Seemingly not easy to comprehend – for those not deeply informed it is intricate to make sense of it on a practical level – block-chain was praised as the technology to potentially reinvigorate different industries. But what does it actually mean?

A block-chain is “a continuously growing list of digital records in packages (called “blocks”) which are linked and secured using cryptography. These digitally recorded “blocks” of data are stored in a linear chain and contain data, are cryptographically hashed, and time stamped.” The data inside the blocks may contain different information – from transactions archive to an individual’s education and work history. What really makes block-chain stand out is its fundamental principle of inalterability: no one can modify the chain without all other community members knowing about the change and approving it. This factor makes block-chain what it is praised for: a technology that is decentralized, incorruptible, and transparent.

No wonder, block-chain got the interest of companies across the business horizon – and for a reason: according to a recent Deloitte report, “the block-chain is not just about cryptocurrencies and faster peer-to-peer payments. It is also part of an ecosystem of advanced but fledgling technologies, including artificial intelligence, robotics and crowdsourcing, that look set to play a fundamental role in the future of commerce and society. Block-chain will affect the way that individuals and organisations interact, the way that businesses collaborate with one another, the transparency of processes and data, and, ultimately, the productivity and sustainability of our economy.

These applications are not the future but the reality: in PwC’s 2018 survey of 600 executives from 15 territories, 84% say their organisations have at least some involvement with block-chain technology. PwC states that “using block-chain in concert with enterprise resource planning platforms will enable companies to streamline processes, facilitate data sharing and improve data integrity.”

Slowly but surely, block-chain will eventually spread beyond the financial services (main beneficiaries of the technology to date) and enter the wider business world, including Human Resources.

Block-chain in hiring: possible applications

  • Efficient data verification and background checking

An important yet time-consuming part of the hiring process is the accurate verification of the information provided by the applicants. This comprises checking references, previous professional experience and, sometimes, educational credentials. In fact, this phase is of extreme importance, as blocking fraud has become one of the essential recruiting activities. Smallbusiness.co.uk cites a research that reveals astonishing data: “more than half (55%) of UK employees admitted to lying or withholding important information when filling out a job application or CV”.

By introducing block-chain technology, it becomes possible to securely archive a verifiable chain of data: as Forbes authors point out, “the block-chain could store a range of personal and professional credentials, from driver’s licenses and bank information to educational credentials. When a record is on the block-chain, a verification process that previously may have involved days of phone calls, faxes, emails and records searches will become instantaneous”. As a person’s record, once verified, cannot be altered, the system prevents candidates from manipulating their background information. The HR managers, as a result, get an instant access to candidates’ full transparent work and educational histories, all placed in a 100% protected digital ledger.

In addition to that, educational bodies and universities may start issuing encrypted academic credentials on a block-chain – the verified certificates that can be easily consulted by potential employers. As a matter of fact, MIT has already designed a digital diploma pilot program, delivering encrypted certificates upon the completion of the course. That said, block-chain has a huge potential for application in the gig economy and in high volume recruiting, where verifying the skills and past experience of contingent workers is challenging due to large numbers of candidates and imposed time restrictions

  • Accelerating contracting paperwork

Block-chain can contain data needed for employment contracting – new worker’s electronic signature, payroll details, fiscal numbers, and other information requested for the paperwork. Thus, for recruiters this could spell trouble and save tons of time: in future, a candidate might get employed almost immediately if the entire data package can be transferred in a second. Block-chain also opens the doors towards smart contracts: it may become possible to pay the employees automatically thanks to a code that will transfer the money once certain conditions are created, without any risk of delays or fraud.

  • Automating and mitigating taxation process

According to the editorial of Voice on Growth, “for HR professionals, constantly evolving tax laws and regulations across jurisdictions ensure they often have their hands full properly issuing taxes. Payroll taxes are then only further complicated by other factors like bonuses, commissions, overtime pay, back pay, accumulated sick time pay, human resources expenses, and beyond. Block-chain’s keen ability to record and update employee tax considerations and provisions automatically is catching the attention of the HR industry”. By lining up the taxation process, the block-chain-powered platforms will be likely favored by many HR departments around the world.

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