Blockchain integration: Redefining how HRs manage security, transparency of employee records
Blockchain technology streamlines business processes, including recruitment processes, onboarding of candidates, verification of credentials, automating payrolls, and enhancing employee benefits.
In organisations that are digitally accelerated, talent managers are no longer merely confined to recruitment and managing payrolls. The entire function has become vast yet complex, recording employee data and ensuring privacy.
According to a recent IBM report, the average cost of data breaches in India has increased significantly by 28%, reaching an all-time high of Rs 17.9 crore in 2023. Now, data security and privacy have become paramount concerns for HR professionals.
Over the past decade, blockchain technology has emerged as one of the major technological advancements. Its integration into traditional HR functions holds great promise in challenging areas—managing and maintaining security and transparency of employee data, and verifying the authenticity of their credentials.
Blockchain enablement for perennial shift
In the initial years of integration, the decentralized ledger was considered instrumental among cryptocurrency market players due to its function of sharing and storing critical information at a high-security level. However, the technology implications are not always clear and its vast impenetrability can change the industries from the bottom up.
Beyond financial applications, blockchain technology is proving to be a game-changer for multiple industries and HR is not an exception. As talent managers are entrusted with maintaining the security, transparency, and efficiency of employee records, it can be challenging in the modern workplace scenario at the same time. Hence, when it comes to HR functions, blockchain empowers talent managers to handle critical tasks of maintaining the integrity of data.
The inherent qualities of blockchain and its decentralized nature ensure data is not stored in a single point, reducing the failure risks at multiple levels, and holding endless possibilities in redefining the HR processes.
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Blockchain applicability in HR processes
Potentially, blockchain technology offers unparalleled security and transparency across different levels of HR functions. The technology streamlines business processes, including recruitment processes, onboarding of candidates, verification of credentials, automating payrolls, and enhancing employee benefits. Its impact is further magnified by the convergence of other technologies—AI, ML, VR, etc.
Strengthening data security
Every people-centric organisation needs to have a robust cybersecurity mechanism in place. In tandem with the growing number of data breaches, the most pressing concern for talent managers is to handle sensitive employee data with utmost safety and security.
The traditional HR database system is bound to have limitations and is susceptible to data manipulation. To overcome this, blockchain integration works as a proven strategy due to its immutability and cryptographic security mechanism. Talent managers can securely store confidential employee records, performance evaluations, and payroll information on a blockchain network. The technology makes each piece of data tamper-proof, resulting in the restriction of unauthorised access or alternations.
Interestingly, the decentralized nature of blockchain makes the entire employee recording process safe and highly secure, which in turn, is a bonus for the talent management team.
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Promoting transparency and authenticity
In a fiercely competitive market landscape, it is common for employers to come across fraudulent claims made by candidates about their educational and professional background. This poses a big challenge for talent managers to identify the right candidate by verifying the authenticity of their credentials presented—education degrees, work experience, and professional certifications.
The traditional process of verification is often time-consuming and results in delays in recruitment. Additionally, it is also prone to human errors and bias, making employers perplexed in informed decision-making.
Considering the decentralized nature of blockchain technology, talent managers make the most out of the tamper-proof advantage of this technology. The immutability of blockchain assures employers that the information presented by the candidate is accurate, authentic, and up-to-date.
Simultaneously, it expedites the entire process of credential verification as it eliminates the role of intermediaries like education institutions and former employers who were an integral part of the traditional verification process.
Blockchain integration in HR processes and functions has the potential to transform the way talent managers handle and view employee records. Having said that, it is still at a nascent stage considering the standardisation and integration of frameworks at the employers’ end. Yet, the HRtech landscape continues to evolve and is projected to bring a revolutionary change in the industry.
(Sarbojit Mallick is Co-founder of Instahyre, an AI-based HRtech startup.)
Edited by Kanishk Singh
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)