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Blockchain In Human Resources: 8 Possible Use Cases

  • 24 October 2018
  • Sam Mire

So many people form their ideas about human resources from The Office. Don’t let Toby Flenderson’s bumbling act fool you — HR is an indispensable sector of the corporate world.

HR departments are mostly known for hiring, but they oversee an array of tasks. It takes an average of 42 days and $4,129 to hire an employee. Executives cost nearly $15,000 per hire. A scrappy HR team is motivated to streamline these processes to save time and money. That’s why they’d do well to investigate blockchain-driven applications useful in human resources.

Given enough time, blockchain will leave its fingerprints all over HR departments, from automating payroll to assisting in employee vetting.

Blockchain in human resources - Possible use cases


Transparent Work and Education Histories

Blockchain use cases in human resources -Transparent Work and Education Histories

A reported 75 percent of HR managers have caught a lie on an applicant’s resume. And nearly one in five hiring managers said that they spend less than 30 seconds examining a resume. Imagine how many lies go unspotted.

They need help!

Applicants most commonly embellish their skill set , their work responsibilities , their dates of employment , their job title, and their academic degrees.

It’s not as if companies sweep these lies under the rug. More than half of employers say they would disqualify a candidate for lying on a resume. It’s just that HR departments need better tools to catch the resume-fudgers.

A blockchain-powered database that contained a job candidate’s verified metadata would be quite the solution. Think of a platform like Indeed.com, except it stored user degrees, certifications, and work history on a blockchain. All data uploaded to the platform would be verified before it could be posted to an applicant’s profile. Applicants have an option of what they want to, but they can no longer fabricate or embellish their work history.

Companies Trying to Solve This Problem 

  • Recruit Tech Vietnam based project building recruitment solutions on the blockchain.

Securing HR Data

Blockchain use cases in human resources - Securing HR Data

When a Boeing HR employee sent a work-related spreadsheet to his spouse in November 2016, he just wanted formatting advice. Harmless enough.

Buthe had also endangered the identities of nearly 36,000 Boeing employees in four states — 8,000 had their data stolen.

Boeing is one of the largest companies in the world. If it can fall victim to this, who’s immune?

Not only must they defend from external security threats, but HR departments have to worry about inside jobs. IBM found that employees are responsible for 44.5 percent of malicious company data breaches. An additional 15.5 percent of those are due to inadvertent employee mistakes,

Blockchain’s security strengths can ease an unsolved problem. HR departments may possess sensitive, potentially career-ruining information, so they’d do well to investigate blockchain-level security measures. Here are the companies that can help.

Companies Trying to Solve This Problem 

  • Chronobank – Speeding up HR processes while reducing risk by leveraging blockchain.
  • Fourdx – Blockchain secured eDelivery and document exchange.

International Payroll

Blockchain use cases in human resources - Payroll

66 percent of Americans say they would face financial hardship if their paychecks were delayed by just one week — payroll is important!

54 percent of employers said their current payroll processes have room for improvement. A reported one-third of small business owners pay at least $500 per month in payroll service fees. That seems a bit high for such a routine process

Payroll services could see a new layer of automation and convenience by implementing cryptocurrency technology. It’d be particularly helpful for paying international employees convertible digital assets with far fewer fees. These systems are reasonably fast and reduce the impact of fluctuating exchange rates, which can artificially depress or inflate employee wages.

Companies Trying to Solve This Problem 

  • Peacounts  Full-service payroll on the blockchain.
  • Bitwage – Blockchain solutions for outsourcing.
  • 4th Pillar – Full-service HR solutions on the blockchain.

Enforcing Compliance via Smart Contracts

Blockchain use cases in human resources - Enforcing compliance via smart contracts

If you’re looking for an easy paycheck, HR isn’t for you.

HR departments in charge of compliance can expect their workload to continue growing. One report suggests that firms spend approximately four percent of their revenues on compliance, and that number could reach ten percent by 2022. 89 percent of compliance executives at banks, capital market firms, and insurance agencies expect the cost of compliance to rise over the next year and change. Nearly half of those executives expect a 10-20% increase in costs, while nearly one-fifth expect an increase of more than 20 percent.

One way to mitigate these costs is by using smart contract technology on the blockchain. These contracts could transmit information and documents to regulatory bodies based on predetermined criteria. This system would significantly decrease — if not eliminate — costly reporting delays, document manipulation, and human foot-dragging.


Transparent Audits

Blockchain use cases in human resources - Transparent Audits

An audit is the financial equivalent of a blindside hit in football. Audits are so scary that they’ve caused countless businesses to cling to physical records systems for decades. But this is just hoarding.

Accountants and bookkeeping agents recommend that businesses retain records for seven years. The average in-house bookkeeper costs businesses $41,692 per year. An audit will cost more than $10,000 on top of those recordkeeping costs. Is it any wonder why business owners loathe the state of compliance?

The blockchain could make it easier for business to go through an audi by sharing their records with regulators and auditors securely and in near real time. This would cut the time and cost necessary for document collection to comply with auditors. The blockchain’s cryptographic hashes and source verification present a strong barrier to document manipulation and fraud, making regulators’ jobs a bit easier.


Better Vendor Tracking on Ledgers

Blockchain use cases in human resources - Better vendor tracking on ledgers

Ford, GM, FCA US, and Nissan lost an estimated $2 billion in operating profit due to stagnation in vendor-supplier operations. Being on good terms with vendors has let Proctor and Gamble structure payments in a way that frees up roughly $1 billion in cash flow at any time. Transparent, real-time blockchain ledgers could help track invoices and facilitate distribution, billing, and overall reporting.


Automating Taxation Processes

Blockchain use cases in human resources - Automating Taxation Processes

Every business and individual pays taxes. Taxation can determine whether a restaurant stays open, a family keeps its homes, and economies boom or bust.

63 percent of small businesses reported spending more than $1,000 each year to issue federal tax returns. That cost increases with the size of the company, and taxes are only going to get more complicated. Payroll taxes are another beast all their own, involving bonuses, commissions, overtime pay, back pay, accumulated sick pay, human capital expenses, and beyond.

With approximately $1 trillion in payroll taxes collected in 2016, HR departments can go crazy getting their ducks in order. The ability for the blockchain to record and update employee tax considerations automatically is invaluable. It’s why blockchain-powered platforms could ultimately be the new record of choice for the world’s HR departments.

Companies Trying to Solve This Problem 

  • Peacounts – Using blockchain payroll systems to automate payroll tax.

Paying Independent Contractors

Blockchain use cases in human resources - Paying Independent Contractors

15.5 million American workers in the were self-employed as of May 2015. As many as 40 percent of them in the US could be freelancers by 2020. These freelancers often identify as independent contractors for taxation and liability purposes.

Such alternative work arrangements present unique challenges to HR departments that handle taxation. Blockchain-powered smart contracts could automate payments. These automated contracts are uniquely suited to paying contractors according to predetermined milestones.

It’s simple: hit the milestone, release payment into digital wallet.

Companies Trying to Solve This Problem 

About Sam Mire

Sam is a Market Research Analyst at Disruptor Daily. He's a trained journalist with experience in the field of disruptive technology. He’s versed in the impact that blockchain technology is having on industries of today, from healthcare to cannabis. He’s written extensively on the individuals and companies shaping the future of tech, working directly with many of them to advance their vision. Sam is known for writing work that brings value to industry professionals and the generally curious – as well as an occasional smile to the face.

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