How can the financial services industry use blockchain to eradicate pain points in its HR ecosystem?

Now that we have a better understanding of what blockchain is and can do, let’s have a look at where it fits into the evolution of HR and talent technology. 

The road so far … 

In a mere five years, we’ve seen tremendous change in human capital management (HCM) technology.  

  • In 2015organizations like Oracle, Workday and SAP redefined the user experience of HCM technology with their cloud-based HCM solutionswhile expanding integration into areas such as performance, learning, analytics, etc. 
  • In 2018, we saw the emergence of cloud HR 2.0. With Microsoft Azure, Amazon Web Services and Google Cloud Platform leading the way, best-of-breed solutions emerged across the talent lifecycle owing to the portability of data through APIs and cloud platforms. 
  • In 2020, we predict that relationship databases will link employees and contractors across multiple entities, tracking performance, knowledge and social capital. 
  • By 2021, the era of blockchain will have fully emerged, enabling decentralized authentication of payroll, employment contracts, work orders and qualificationschanging the very nucleus of HR service delivery. 

What are the pain points plaguing HR today?

In the new world of work, HR organizations are searching for top talent from all over the world, which adds a layer of complexity when it comes to accessing and validating information about these individuals. 

Most companies, governments and other service providers continue to store and secure necessary information in silos and antiquated systems. This impedes the free flow of data between organizations and creates the following pain points: 

  • HR has to interact with and depend on numerous parties to validate candidate information. 
  • Candidate information is often inaccurate, incomplete, or unfindable depending on the provider. 
  • Interview processes can be overly extensive, deterring candidates from applying for employment. 

Today, inefficiencies in HR systems mean: 

  • The recruiting process can take weeks while HR contacts many people outside the organization to verify candidates’ information. 
  • Before new hires can start working, they must go through painful, time-consuming processes to get access to the organization’s system and to create and store credentials. 
  • It’s a challenge to manage information from thousands of certification agencies to keep track of the upskilling and certification of employees. 

How blockchain can solve today’s HR issues

Blockchain applications can take fragmented, centralized data storage frameworks and create networks built on transparency and the shared responsibility of storing and validating data across all parties. This means that: 

  • HR can access all needed information, provided by all involved parties and stored in just one place. 
  • HR has one single source of truth stored on the network and validated by all involved parties. 
  • Candidates can securely provide required employment information, shortening the recruitment process. 

The figures below further illustrate how a potential blockchain-based ecosystem could eradicate most of the pain points plaguing HR and talent today. 

To summarize: 

The current traditional ledger structure between organizations is slow, cumbersome and errorprone. Existing infrastructure is manually intensive and dated. Any exchange of data requires that all participants that have data stores first agree and reconcile. This of course drives significant effort and inefficiency. 

A distributed blockchain ledger allows for decentralized, replicated, shared and cryptographically secured operations which are validated by mass collaboration and applicable to many transactions. All market participants work from the same data set, resulting in a significant improvement in efficiency. 

Enhancing human expertise

What are the implications of blockchain for talent management? Accenture research predicts an estimated cost saving of $113 billion from blockchain integration in HR in the US, while Gartner forecasts that investments in blockchain will reach $3.1 trillion by 2030. What’s more, not only will blockchain drive efficiencies across HR, it will also help create and enhance the human+ workforce.  

What is a human+ workforce? The Accenture Technology Vision for Insurance 2019 revealed that in the new world of work, each individual worker is empowered by their unique set of skills and knowledge—plus a new, constantly growing set of capabilities made possible through increasingly intelligent technology.  

In my upcoming posts, I’ll show how blockchain can add value to HR and enhance the capabilities of employees. Can you imagine a blockchain-based future yet? 

Contact me here or on Twitter @knott_nic or connect on LinkedIn with my colleagues Colin Strasburg and Oliver Grindrod to chat about blockchain, to find out more about digital HR in financial services or to join us at the Change Directors Forum and People Innovation Forum in London.

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