Transaction technology is evolving, and the newest player on the market is blockchain. But it's more than bitcoin — here's how HR can cash in.
Blockchain. You've heard the term — likely associated with bitcoin — but what exactly is it? Why is it considered so secure? And, most importantly, what can it do for HR?
Let's start with the basics: Blockchain is a secure, incorruptible transaction technology that can be programmed to record not just financial data, but virtually everything of value. Every transaction associated with blockchain creates a "block" — a record of that transaction — which is added to the existing chain of blocks, creating a blockchain. Security features are further improved with blockchain because all transactions are part of a shared ledger.
For example, if you send one bitcoin to someone else, everyone using the blockchain can see that transaction. The ledger is constantly updated with new transactions as they happen, making it nearly impossible for anyone to alter this public record without getting caught. This makes blockchain an ideal method for securely conducting any type of transaction, from sending cryptocurrency to exchanging confidential records or verifying personal information.
As a secure transaction technology, there's huge value potential here across the enterprise — especially for HR.
The key principles of information security can be efficiently applied to blockchain transactions and implemented as follows:
Principle of Confidentiality
Blockchain addresses data confidentiality and access controls by out-of-box full block data encryption and access control capabilities. Encryption of block data ensures data will not be accessible or disclosed to unauthorized parties.
Principle of Integrity
Blockchain technology enables users to trust that the transactions stored on the ledger are tamper proof. The combination of sequential hashing and cryptography along with its decentralized structure make it very challenging for any party to tamper with the content of the ledger. This provides additional assurance about the integrity and truthfulness of blockchain data and associated transactions.
Principle of Accountability and Traceability
Every transaction associated with blockchain added to a public or private blockchain is digitally signed and timestamped, which means that these transactions can be traced back and creates an authentic audit trail, which is the main objective of the accountability and traceability principle of security. This feature relates to an important information security property: Non-repudiation.
Blockchain and Privacy Laws
Blockchain also fits side-by-side with data privacy principles and laws. Generally speaking, information security and privacy principles go hand-in-hand when it comes to ensuring data is secure, not getting tampered with and creating an audit trail for tracking data flow — especially for privacy related requests like "right to be forgotten" that come with emerging privacy laws. While maintaining the integrity of transactions the ability to erase and track the transactions is enabled and assists with privacy controls.
According to ZDNet, blockchain naturally lends itself to security applications — not as a threat detection and remediation solution, but instead as a way to ensure complete network transparency. The distributed nature of ledger records means no centralized database exists to falsify or delete records. The double-approved, always-available nature of transactions empowers security professionals to determine exactly what happened, how it happened and who was responsible for initiating specific behaviors.
For human resource teams handling huge volumes of secure employee personal data, training records and performance reviews, the use of blockchain makes it possible to ensure transparency in access and modification along with auditable security in data handling. This both improves employee confidence in HR methodology and reduces the chance of "accidental" data leaks. In addition, HR teams get access to a wealth of "clean data" they can use to report on the employee population, productivity and workplace culture, increasing the value of statistics and analysis.
The New HR
Security is just the beginning for HR and blockchain. Why? Because organizations are spending time and money to properly evaluate potential hires. From standard background checks to drug tests and employment verification services, the need to confirm employee claims and skills is a major cost-sink for HR teams and can impact recruiting timelines.
A recent Deloitte report notes that 58 percent of employers have discovered outright lies on employee resumes, while 86 percent of employees have misrepresented facts or experience. The result? HR needs a better way to vet new employees and ensure they're getting the skills and expertise they need.
Blockchain offers the potential for employees to request education, training and certification records verified by the issuing institution and then pass these records on to prospective employers — who can easily access complete chain-of-ownership to ensure records match resume claims. For HR this is critical — consider the risks if an employee is hired who claims to have specific job safety training or credentials but isn't telling the truth. Both worker safety and organizational reputation could be at risk.
According to Bitcoin Magazine, meanwhile, some organizations are linking payroll with blockchain transactions. For example, GMO Interent Group in Japan now offers employees the ability to receive some of their salary in bitcoin rather than yen. As more companies adopt blockchain for payroll, employees may eventually prefer to deposit some or all of their paychecks into a digital wallet, allowing them to convert their earnings into the fiat or cryptocurrency of their choice.
Beyond actual bitcoin payments, the use of blockchain helps secure payroll transactions since both parties must agree to the transfer. In addition, issues with missed payments or disputed amounts can easily be resolved using the shared blockchain ledger.
Transaction Technology Trends
So what's next for blockchain? Forbes suggests a short-term slowdown in the market as regulators take a firm stance on bitcoin-based initial coin offerings (ICOs). In addition, businesses should expect a consolidation of platforms and services as the cryptocurrency market gains ground, in turn leading to calls for better oversight and standardization. Much like cloud computing, this push for standardization should drive growth of niche services, including HR-native offerings for payroll, records management and certification tracking.
Blockchain is big business and expanding at an exponential rate. This transaction technology will offer real benefits for early-adopter HR teams who begin to apply blockchain within their transaction processes. Providers of HR technology and services still have a huge runway for growth while the overall market agrees to platform standardizations in which transactions will communicate around the globe. But now is the time to seize your opportunity to familiarize yourself and get on board with one of the biggest leaps in technology since the launch of the internet.
SIGN UP FOR THE SPARK NEWSLETTER