Human resources are indispensable to any company. And HR departments are intricately involved in almost every step of an employee’s work cycle—from recruitment to hiring, onboarding, climbing up the corporate ladder, and even when he/she leaves the organization.

Recruitment and hiring perhaps take up the most significant chunk of an HR team’s day-to-day operations and budget. A report stated that it takes an average of 42 days for HR personnel to fill in a position. Do remember, though, that hiring employees is not the only task HR teams do. They are also involved in payroll processing, timekeeping, and retirement processing, to name a few.

With this in mind, companies are looking to streamline their HR processes as much as possible. And they are exploring blockchain technology, which has already started to transform various industries such as healthcare, marketing or agriculture.

What Is a Blockchain?
Blockchain is a widely used technology in the field of cryptocurrency. And so most people could still be at a loss as to how it can help in other areas, including HR. But that doesn’t eliminate the technology’s capability to simplify some HR functions. The key to understanding it lies in knowing its essential characteristics, including:

It is a distributed ledger: A blockchain is a distributed ledger that contains every information about a transaction and the people involved with it. That means that all of its users have access to the data it stores.

It is a decentralized technology: Decentralization is its primary feature. No single person or entity governs a blockchain. Every user can, therefore, access and store important contracts, documents, and other digital assets in it without having to go through any other user.

It uses cryptography: A blockchain is secured by cryptography. Every piece of data on it is encrypted, and so users need to have a private key to access information and a public key to conduct transactions.

It is immutable: A blockchain cannot be changed at all. Data and transaction corruption is, therefore, impossible. Every transaction made on it is transparent, deterring unauthorized users from altering data stored in it.

How Can a Blockchain Be Used in the Field of HR?
Like any other new technologies, blockchain can augment HR sourcing and boost teams’ recruitment productivity. It can streamline processes, leaving more time for HR personnel to focus on their primary task—taking care of their organizations’ human capital.

Recruitment
A blockchain can store job candidates’ personal details, including their work experiences, grades, and other credentials, eliminating the need for resumes. Each applicant can have a virtual record on a blockchain network that serves as an immutable record of his/her work history, certificates, and other work-related details.

Around 75% of HR managers have detected lies on applicants’ resumes. And 40% of HR managers spend less than a minute checking resumes, which heightens the chance that lies may go unnoticed. But because of a blockchain’s characteristics, its use in the recruitment process lessens, if not eliminates, fraudulent applications.

Performing Background Checks
Using a blockchain to store applicant credentials would also help HR teams save time in doing background checks. First, with blockchain, they don’t have to jump from one data source to another. Secondly, specialists are assured of record accuracy since users cannot alter their employment data once entered into the blockchain. An HR manager can, therefore, verify if applicants’ claims are real without having to rely on word of mouth or a document that can be falsified.

Timekeeping
A blockchain can also be used for recordkeeping, specifically to store fingerprints and other biometric data. Since all information related to employee attendance is secure and immutable, companies can rely on its accuracy. That reduces time log and payroll disputes between HR and employees.

Payroll Management
Managing payrolls is another blockchain application. That is quite obvious as the technology serves the same purpose in cryptocurrency exchanges. Some organizations, such as Bitwage and Chronobank, have already adopted blockchain for their payroll management needs. It simplifies making international payments to remote and gig economy workers as well as contractors, for one, since the process doesn’t need to involve banks or other intermediary entities.

Aside from the speed at which financial transactions can be completed, another benefit of using blockchain in payroll management is cost reduction. Transaction fees imposed by traditional financial service providers would no longer apply.

Smart Contract Management
Some companies need to resort to hiring contractors for short-term jobs. But, doing so can pose challenges to HR departments in terms of payment and taxation because freelancers can reside anywhere in the world and so may abide by varying laws and regulations. Smart contracts designed for blockchain can help them automate payment processing every time a freelancer hits a pre-established milestone.

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HR processes can become more streamlined and less costly when blockchain technology is used. Payroll management, recruitment, performing background investigations, smart contract management, and timekeeping are just some of its significant use cases. In the coming years, blockchain will continue to make substantial differences in HR as well as in other aspects of the corporate world.