How can Blockchain Improve your Hiring Processes?

This, the third in a series of blogs I am writing looks at the role of Blockchain, otherwise known as Distributed Ledger Technology (DLT), can play in recruitment to benefit both employers and candidates.

In the first blog, I introduced the basics of Distributed Ledger Technology (DLT), widely known as blockchain, and the positive effects it is set to have in the payroll domain.

The second blog focused on blockchain’s potential to safeguard personal data (PII), and how information can be exchanged securely and untampered between employer and employee.

Today’s blog discusses blockchain applications for recruitment and the final chapter in this series will look at ‘what’s next’ for your HR and payroll teams in relation to blockchain.

Blockchain enhanced recruitment

When a company raises a vacancy it means they need a person to perform a job. Sometimes they’re looking to hire a permanent, salaried employee and at other times they need someone to perform a specific task against a set payment, also called a “gig”.

The recruitment of short-term employees does not mean hiring short cuts. Irrespective of job function, it is advantageous for everyone if the right candidate is identified quickly and easily so steps can be taken to onboard a qualified person and move them into the role.

In real life, the recruitment process is seldom short and simple. Even if you hire a “gig-worker” there are the same process and legal obligations to fulfill as with a permenant starter – sourcing, vetting, selecting and onboarding regardless are time- and labor-intensive tasks.

Never assume anything

Many people have a profile on LinkedIn that holds career data, and typically, it is the one place where information is updated frequently as people move from role to role.

The assumption is that with LinkedIn being a public forum the information is honest and true. This is not always the case.

We’ve all read stories where it turned out the student had not actually completed the study course; and the creative use of titles and even, doctors and others who have not held any of the roles they claim to have done!

When presenting themselves on a job site, candidates can paint a very shiny picture Add to this the positive references that makes you believe that no one has ever done a bad job and it becomes clear one of the reasons why candidate screening exists!

Candidate screening – time consuming, but vital

Before any agreement is entered with a prospective employee, as employer it is essential that you verify that the candidate is who they say they are and holds the qualifications and certifications they have listed on their resume.

Vetting candidates is one of the most time-consuming tasks in recruiting – and it can be difficult to verify information. If you need to go back more than 15 years the chances are that there are no digital records available to easily check qualifications and examination boards and schools could long ago have closed.

What if there was a faster way to verify candidates?

Remember, DLT provides the means to store information and keep a record of this in a ledger. Once this information has been verified, the ‘transaction completes’, a block is added to the chain and that chain can’t be altered unless all nodes on the network synchronize and verify simultaneously, therefore, making this record virtually impossible to tamper with.

From an HR perspective, DLT can be used not only for identity (refer back to the second blog for more on this), but also for career information like qualifications, work history and reference validation.

Early adopters of blockchain

Educational institutions are already starting to issue degrees and certifications on blockchain. This makes it easy for an employer to quicky and easily verify the validity of qualifications. Moving forward, even if the school or university ceases to exist, or a subsequent employer goes bankrupt and employment records are no longer available, this detail will remain available and secure on the blockchain.

Introducing the “CV wallet” to the gig economy

Instead of mailing a resume to a potential employer, a worker will be able to use their “CV wallet” to provide them with easy access to verified qualifications, job performance and proof of work records.

For employers, if verification can be completed faster and at a lower cost, it becomes increasingly viable to add workers to the workforce on a non-permanent base. The lengthy reference check is removed if the worker can provide verified career information on DLT with the assurance that the information is accurate and secure.

Smart contracts and payments

Blockchain introduces other advantages to the recruitment process, including contract management and performance-related pay. Contractual agreements can become ‘smart contracts’ where the details are stored on a blockchain and future payments held in escrow until the work is completed.

A smart contract stipulates the expectations for the job and when these are met, the money is released. This provide the assurance to the employee that they will be paid correctly  and to the employer that the work will be completed well. This opens up trust. To the contrary, if the contract is not fulfilled, or the diploma not submitted, the transaction simply doesn’t take place.

A smart contract can also govern other agreements between employers and employees, e.g. when an employee finishes their education with a diploma, their salary increase is applied in the next salary run.

Three key uses for blockchain in workforce management

Michael Rogers, Chief People Officer at NGA Human Resources, sees three key advantages of blockchain to optimize workforce processes:

  1. Fast hiring using centralized verification

Blockchain will allow employers to quickly establish an employee’s identity and eligibility for work, removing the time and cost of third parties to verify documents.

If the employee already holds specific certifications, they can be quickly verified. If a diploma or ID has been tampered with, the distributed ledger will clearly show that the data is not in sync and establish proof of falsification.

As a result, the onboarding process will become more digital and less document centric – instead of submitting copies, the employer will be able to check the future employee’s ledger to validate eligibility for work.

  1. Digital work trail

There are occasions when an employee takes time off in between jobs and wishes not to disclose this. Often these gaps are masked by lengthening service at a previous employer rather than being open about it. When work records are stored using DLT, this option is removed and replace with a secure and verified trail of the employee’s career, including positions held and length of continuous employment.

A career gap is not necessarily bad, but not disclosing it is and will often be discovered, opening an awkward situation. A digital work trail provides assurance to future employers of the length and type of employment of the candidate.

  1. Work flexibility

While employers will continue to employ a permanent workforce for the foreseeable future, there are often occasions when they need to augment staff during certain periods or to staff special projects. We are also seeing a growing trend for more flexible work styles.

Smart contracts will be idea for short-term contracts and gig worker, allowing for more flexibility in the workforce and, as mentioned above, paying for results. This works well for employers and employees because it removes the rigidity of when and where people need to work, provided they deliver the agreed results.

Establishing two-way trust

Technologies that are based on distributed ledgers establish trust. Trust that the employee is who they claim to be and have the qualifications they claim to have.

Trust works both ways: it also assures the employee that the contract is valid and that they will get paid correctly and timely for a job well done.

Blockchain, securing the future of work

There are and will be many benefits of blockchain applications in talent acquisition and hiring processes. I’m looking forward to discussing What’s Next in the final instalment of this series.

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