Blockchain’s HR Potential

Could blockchain, the technology behind the cryptocurrency Bitcoin, revolutionize the field of recruiting?
By: | May 16, 2018 • 4 min read
Using blockchain-based recruitment and other blockchain-based solutions and HR

Since its founding in 1868, the Massachusetts Institute of Technology has issued paper certificates to the graduates of its highly regarded programs. Beginning last year, however, MIT graduates were given the option of receiving their diplomas in a digital, tamper-proof form via an app that’s based on blockchain technology.

The intent is to give students quick access to a secure version of their diploma that they can easily share with other schools, family members and employers, according to MIT.

Blockchain is the technology that enables the cryptocurrency Bitcoin. It is, essentially, a secure database called a “distributed ledger” in which each transaction (or “block”) is replicated across thousands of computers. No single block can be altered unless all the computers (or “nodes”) are in agreement, thus creating a highly secure and (theoretically) tamper-proof medium. This security is vital for Bitcoin and other blockchain-based cryptocurrencies, and its proponents say it potentially gives blockchain a great deal of utility for the HR space as well.

“Blockchain is a great opportunity for HR professionals,” says Monique Black, head of talent and HR services at investment firm Maco.la, describing blockchain as “a tamper-proof system of record.” “Blockchain can be instrumental in making HR processes more effective, whether it’s identifying job candidates or validating credentials.”

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Nevertheless, the technology has not been widely adopted in the mainstream yet, although a growing number of companies and investors are actively pursuing blockchain-based solutions.

Blockchain-based Solutions and HR

Startup companies such as Vertalo, Job.com, Jobeum and Caerus Connections are either building or have introduced new blockchain-based HR products and services. ChronoBank, for example, an Australia-based cryptocurrency firm, uses blockchain technology to help clients find freelance workers and pay them in Bitcoin-based “Labor Hour” tokens.

Other, more-established vendors in the HR space, including background-screening firm InfoMart, are also investing in blockchain. InfoMart is currently working with half a dozen blockchain experts to explore building new products for background screening and identification and hopes to be in beta-testing with clients later this year, says CEO Marco Piovesan.

“We think blockchain is definitely advantageous to jobseekers and consumers in making sure their data is secure,” he says.

Caerus Connections operates a blockchain-based recruitment and employment platform in which employers and jobseekers purchase subscriptions via cryptocurrency. Jobseekers complete a 50-question assessment designed to analyze their “key workplace motivators,” which is then stored on the blockchain. Founder Morgan Browning says he was inspired to start the company after repeatedly running up against a lack of “solid, verified information about people” during his work at assessment firm Emergenetics International, where he serves as president.

Thanks to the help of so-called “resume polishers” and loosely regulated diploma mills, he says, it’s relatively easy for job candidates to overstate or even invent qualifications for themselves to increase the likelihood they’ll be hired.

“Lots of times, the person a company thought they were hiring isn’t the person who actually reports to work,” says Browning.

An end-to-end blockchain-based recruitment platform could solve many of the recruitment problems that plague employers and jobseekers alike, he says.

“Recruiters are tired of dealing with the inefficiencies caused by inaccurate data, and jobseekers are tired of being treated like pieces of meat,” says Browning.

Blockchain-based Recruitment Pitfalls

One potential sticking point for blockchain, particularly for companies that recruit in the European Union, is the EU’s new General Data Protection Regulation, a robust data-protection law scheduled to go into effect on May 25.

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The GDPR mandates the so-called “right to be forgotten,” under which individuals can legally compel organizations to delete their personal data in certain circumstances. This could pose a problem for recruiters who rely on blockchain, which – as an “immutable distributed ledger”—means that data entered onto a blockchain can never be erased, says Laura Jehl, a partner with BakerHostetler’s privacy and data protection team.

“Although what we think of as ‘personal data’ is unlikely to be entered onto a blockchain in readable form, an individual’s public key [the encryption that can be used to give others access to restricted information] will almost undoubtedly be entered onto the chain, and that public key may be considered ‘pseudonymized’ personal data, subject to GDPR’s erasure right,” she says.

Although there may be legal or technological work-arounds to this issue in the future, says Jehl, in the meantime HR leaders who recruit in the E.U. should exercise caution with respect to blockchain-based recruitment tools.

Blockchain’s advantage for job candidates is that it gives them “self-sovereignty” over their data, says Piovesan. It can give jobseekers personal control over their vital information while allowing them to share it with potential employers in a secure format, potentially making screening and assessment faster and cheaper, he says.

“The speed of recruiting and background screening could certainly be improved, and we think blockchain may enable that,” says Piovesan.

Black’s firm, Maco.la, invests in and advises companies that are designing blockchain-based products. One of the hindrances to blockchain’s wider adoption for HR is that it’s still viewed primarily in terms of cryptocurrency.

“Blockchain is recordkeeping, and there are so many other utilities for it aside from cryptocurrency,” she says. “Blockchain vendors need to get those tools into people’s hands so they understand the value, the trust and transparency that it brings.”

Another big impediment to wider adoption is the current severe shortage of blockchain experts available to build new tools, says Black.

“Right now, it’s easier to hire an astronaut than it is to hire blockchain talent,” she says.

Andrew R. McIlvaine is senior editor for talent acquisition at Human Resource Executive®. He oversees coverage of talent acquisition and recruiting and also edits the weekly Recruiting Trends Bulletin e-newsletter and its associated website, RecruitingTrends.com. A Penn State graduate, Andy also spent two years in the U.S. Army prior to attending college and attained the rank of sergeant while serving in the Army Reserves. He can be reached at [email protected]

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