How Blockchain Technology Is Upending the HR Department

With freelancing on the rise, various industries are being disrupted on different scales. Freelancing affords employees and employers alike the opportunity to be specific in the work they do or need done.

As a result, many companies (especially small- to medium-sized businesses) are seeing the benefits of temporarily hiring freelancers with specific skills instead of more permanently adding someone to their staff.

The effects of freelancing will therefore soon reach HR departments everywhere. And because more and more projects are completed online, with clients and freelancers having little to no face-to-face interactions, this could change the way HR departments function.

In addition, technology such as blockchain is further disrupting workforce norms. If freelancers utilize blockchain-based platforms, HR departments could see even more drastic changes to how they are run.

Why Is Freelancing So Popular?

Freelancing has boomed in recent years. For employees, it offers the freedom to work whenever and wherever they want, and on their own terms. Many who feel stifled by the traditional 9–5 office hours and environment welcome the prospect of being their own boss.

For employers, especially those running small- to medium-sized businesses, freelancing is a cost-effective alternative to hiring someone full-time. Smaller businesses do not have the same financial freedom as their well-established counterparts. Therefore, hiring someone to be a permanent staff member, when the skills needed are actually temporary and specific, is not a financially wise decision.

This is where freelancers come in. Freelancers usually have very specific skills (e.g. web design, writing, editing, social media management, and online marketing). If a company needs a short-term project completed, a freelancer with the specific expertise to complete the project is a great option. The two parties work together for the allotted time and part ways once all the terms of their agreement have been met. This means that a company is not paying someone full-time for general skills that only sort of fit with a task. Additionally, freelancers do not receive benefits, so smaller companies save money there, too.

How Does Blockchain Fit Into All This?

Blockchain has ledgers that contain all the transactions among those in a network. It is a secure, reliable, private way to store data. It also has no centralized authority, making the chances of bias and corruption very slim. In a network, changes cannot be made to data in the system unless the majority of users approve. This adds yet another level of trust and transparency amongst those involved in the network, because data cannot be tampered with by an individual without the knowledge and approval of others.

So, how much does all this affect HR? Well, according to PWC, quite a bit! Blockchain has the potential to completely disrupt the way HR departments are currently functioning. It would hasten the process of skill, education, and performance verification; it would be a cheaper, more convenient method of managing cross-border payments for international employees; it could reduce data-heavy processes (such as dealing with VAT and payroll); and it also increases cybersecurity and protection against fraud.  

Verifying Education and Work History

A staggering 75% of human resources managers say that they have found a lie on a resume. Clearly, resumes aren’t always reliable. But blockchain is. For instance, with blockchain, students are able to own a verified digital file of their diploma, which they can literally carry around with them on their phones.

This makes verifying education so much simpler, because HR personnel merely need to check a potential employee’s digital credentials. Instead of this process taking weeks, blockchain makes it smoother and more streamlined. Blockchain is also useful against the current onslaught of fake degrees being bought and sold.

By having education and work history on a secure platform like a blockchain-based system, those in HR can rest assured that the person they interview is exactly who they say they are on paper. The costs associated with verification and background checks could be greatly reduced. This could eliminate a lot of the stress and mistrust that comes with working in HR.

Managing Employee Mobility

One perk of freelancing for freelancers is the ability to work anywhere. For employers, however, hiring people internationally can present quite a headache. Different tax laws and transfer costs are just a few of the things those in HR have to deal with when paying an international employee.

Luckily, blockchain is able to manage international money transfers and tax issues. The conversion of Bitcoin to the employee’s local currency happens seamlessly within blockchain, reducing hassle all around. Costs are reduced on both sides, too, because third-party entities (such as banks) are not involved in the transfers (so neither are their often hefty fees).

HR and Blockchain: A Fruitful Partnership

HR departments would do well to start taking advantage of blockchain solutions, as its popularity shows no sign of diminishing. By utilizing blockchain technology, HR departments could do their jobs more efficiently by screening and vetting employees faster than before. They would also be able to easily manage international employees by using blockchain and Bitcoin to make payments, knowing that the system would take tax laws into account. All this would be done on a decentralized, secure platform, eliminating opportunities for fraud and mistrust.