When Blockchain technology is mentioned, the first thing that comes to mind is cryptocurrency—Bitcoin. Lately a lot of excitement has been around Tesla buying bitcoins worth $1.5 billion and offering to accept payments through bitcoins for its products leading to prices of cryptocurrencies soaring as well as speculations on what next. Cryptocurrency has been viewed as a distant possibility for corporates to adopt on a large scale until now. However, following the example of Elon Musk, in the medium term, perhaps HR managers may want to explore the possibility of using cryptocurrency as the mode of payment for its payroll.
While currencies are relatively stable in developed countries, in countries where the currency is devalued or the banking systems are not reliable, companies that operate globally and hire workers from such countries could use cryptocurrency that is centred around blockchain technology and thus attract more talent to meet the business requirements. Processing of payroll involving employees in overseas locations is 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.
Blockchain could overcome the challenges in verification of the work done by contract and gig workers and expedite their payments using smart contracts on the basis of established criteria for payments to be made. This would also help in the avoidance of frauds and fake invoicing.
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.
Cybercrime has been one of the main concerns of all companies. With the adoption of blockchain technology, criminals would find it difficult to hack the system as the records are decentralised. Therefore with the data no longer being stored in a single place and all changes needing verification and authorisation, it is now possible to almost eliminate data attacks.
Another area where blockchain can be significantly beneficial for HR managers is in the area of recruitment. If employee records were stored on the blockchain and the permissions to access their records such as academic qualifications, employment history, references, etc., is provided to the potential employers, both employers and the candidate will be on the same page and it would be possible to ensure authentication and expedite the hiring process.
Just as AI and advanced analytics —once seen as an unlikely tool for HR but now an essential backbone for every function; blockchain is also likely to soon become part of the core architecture of businesses. Hence it would be of advantage for HR managers to be aware of technology and its the potential use cases including the emerging applications being developed by the startups.
Originally appeared in Financial Express