Blockchain in HR: 8 Ways Blockchain will Impact the HR Function

Written by Norberts Erts

The demand for blockchain in HR is growing and we are here to tell you why.  Check out the following 8 ways blockchain will impact the Human Resources function.

While blockchain is widely associated with Bitcoin and other cryptocurrencies, blockchain technology is set to revolutionize how the HR and recruitment functions operate within business.

Blockchain, the decentralized distributed database, is being trialled and implemented by numerous companies across multiple industries on a global scale.  No longer confined to cryptocurrency, blockchain’s capabilities can be extended to sectors such as logistics, fashion, healthcare and even humanitarian causes like we can see with the ID2020 digital identity initiative which aims to provide a global identity solution for refugees.

At present, we see companies such as Hays and NRG are in the initial stages of jumping on the blockchain bandwagon and it won’t be long until the HR and recruitment processes are likely to become more streamlined with this tech.

“Blockchain’s implications for the finance industry are well-known, but the potential to use the technology in the world of work is huge and it will soon transform HR and recruitment,” says Grant Torrens, Business Director of Hays in Singapore

So how will blockchain impact the HR function?

1.    Recruitment

Recruitment takes up a lot of time and resources within the HR department, so much so that organizations turn to third party agencies or recruiters to claim back the time.  But as those methods usually come with a hefty fee, it can be quite counterproductive.

As most of the candidate information usually sourced during the recruitment phase can already be viewed on the blockchain, there’s a huge amount of the process already streamlined.  Resumes will be a thing of the past and looking at grades, certificates, work history and experience will be easily verified and visible to people with direct involvement.

“There are problems with our recruitment of different types of workers. These include prejudice and bias, lack of visibility of available workers, low levels of trust in centralised social networks, spam and high fees to intermediaries. We now have the opportunity to build the next generation work platforms enabled by technology such as artificial intelligence, mobile and blockchain, the underlying technology behind Bitcoin.” Andrew Spence, HR Transformation Director at Glass Bead Consulting

With blockchain creating the option to eliminate many of the third party and back office elements of recruitment, blockchain could potentially be responsible for recruiters becoming redundant.

2.    Verification

CompTIA uncovered that 51 per cent of early adopters of blockchain currently use it to verify digital identities and this is because the data stored comes from trusted sources such as authorized institutes.

Being able to verify individuals’ identities, background and work experience alongside real time information relating to pay and claims will undoubtedly free up some much needed time to allow HR to focus on the more strategic goals of the business.

3.    Referencing

The process of employee referencing has changed a lot over the years and it looks likely to change again soon.  As HR will have access to a candidate’s employment record that is accurate and reportedly impossible to falsify, the referencing process will become more transparent and address fraudulent credentials, increasing the chances of you hiring talent better suited to the business.

“Once someone has done a degree, they will just put their certificate in blockchain and it never needs to be verified again,”

• Jacky Carter, Group Digital Engagement Director at

4.    Smart Contracts

It’s reported that 45 per cent of early adopters of blockchain are already implementing smart contracts within their organizations.

Smart contracts between an employer and its workforce will make it possible for workers to be paid automatically thanks to a code which will determine what happens to the money once it comes in and certain conditions are created.  The distribution of wages can happen instantly with no risk of delays or fraud.

Smart contracts also support the rise of the ‘gig economy’ as gig workers would benefit from such a system of contracts and payments being made if they are part of the supply chain of an organization.

Not having to upload workers onto the payroll system, being able to outline the terms upfront and having the ability to switch on and off a contract will be quite appealing for employers and their HR teams that are used to adhering to normal procedures.

5.    Employee Life-Cycle

The whole employee life-cycle would be disrupted by the implementation of blockchain technology as the current procedure to hire and on-board a new recruit can be lengthy.  From conducting the interviews, checking qualifications, validating work background and gathering references or applying for the necessary security checks – it all takes time.

This process continues throughout employment (for example, if the role changes, further qualifications are obtained or different management is assigned during a handover) until eventually the employee exits the company.

And it still doesn’t end there!

Then you may be requested to forward some of this data to potential new employers for their checks on that individual and alongside this the whole process renews again.

As blockchain would already hold all of this validated information, it would significantly reduce the time and energy spent on this process, simplifying the whole HR experience.

6.    Secure ‘Transactions’

‘Transactions’ in a blockchain setting can be anything from an exchange of personal information, work history, records to financial details and cryptocurrencies.

The capabilities of cybersecurity are changing the future of these transactions as the information stored on blockchain are secured through cryptography which makes it extremely difficult to tamper with.

Knowing that blockchain is an enabler of secure transactions should put employer and employee minds at ease.  Less risk means less claims of security or data breaches being made for HR to tackle.

7.    Attendance

For ID2020, the blockchain technology is used to store biometric data, such as a fingerprint or iris scan, for legal ID and record-keeping.  Organizations could use this technique of storing unique employee data to track attendance and expenses for wages and claim purposes.

Human resources would have visibility to the real-time data and there would be no dispute that the records are accurate, strengthening the trust element in payment authorization and looking into claims made.  This would decrease errors and frustration caused between the HR and Payroll departments.

8.    Compliance & Auditing

49 per cent of companies already implementing blockchain, use the technology for compliance and auditing purposes and it’s easy to see why.

With the data stored within the blockchain already accurate and validated, audit checks for compliance would be easy to conduct and readily visible to those authorized.

It looks like blockchain technology would be a welcome addition to HR that is likely to free up time and resources needed to focus on core business goals and objectives whilst strengthening the role of HR as a strategic partner.

We are still closely watching how blockchain in HR will evolve and how it will potentially improve the way business operates – don’t worry, we will be sure to keep you updated!

So are you working within an organization that has implemented blockchain technology?  We would love to hear about your experience!

Just to recap, here are 8 ways blockchain will impact HR:

1. Recruitment
2. Verification
3. Referencing
4. Smart Contracts
5. Employee Life Cycle
6. Secure Transactions
7. Attendance
8. Compliance and Auditing

Guest Post from Norberts Erts, Co-founder of HR software company CakeHR that streamlines attendance and performance management for customers worldwide.