How could blockchain affect recruitment

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Bitcoin is known to almost everyone these days. But what about the blockchain technology behind this virtual currency? What is meant by blockchain technology, where and how it is used in HR work processes, and what effects it could have, are questions that the Professorship for Personnel and Organization at the University of Basel is also addressing.

What is blockchain?

A blockchain is a list of data records that are chained together using cryptographic methods. A bookkeeping system can be managed decentrally using blockchain, which is always correct despite the fact that several people work with it, since each transaction is based on an earlier transaction. New transactions are therefore first checked for their correctness by proving knowledge of previous transactions. In this way, manipulations cannot occur because inconsistencies in the calculations would become apparent. The blockchain thus represents an open database that is transparent, secure and unchangeable. It is either public or only accessible to a certain group of people (private or semi-private blockchain). Blockchain offers a secure way to have data available in real time.

How can blockchain technology be used in HR and for which areas?

The decentralized computer network verifies and automates the flow of information. Blockchain is therefore a reliable system that collects and processes data so that an exchange between two acting partners can take place without an intermediary. Blockchain technology enables automated contracts, known as smart contracting. From employment procedures and taxes to pay slips, wage payments, contract management and much more - blockchain can therefore appear in different processes. Blockchain is cheaper and more effective than time-consuming and personnel-intensive methods - and creates trust between exchange partners.

What effects could the use of a blockchain have in HR and can work processes be streamlined in this way?

Back office functions are no longer required: By using a blockchain, for example, the time required to complete back office tasks can be significantly reduced, which means that employees have more time for other important tasks. The HR team can thus place a greater focus on the further training of employees and train them specifically in the areas that will also serve the company in the future. In this way, costs can also be saved in the long term. However, the use of a blockchain can also mean that many intermediaries are eliminated and jobs are lost.

Employment procedures and qualification and data management are becoming more efficient: a blockchain can replace both conventional CVs and web-based social networks such as LinkedIn, as the blockchain collects detailed data on people. A new recruiting platform is created. Employers can simply access the public blockchain to access their applicants' data and thus recruit suitable employees. A blockchain can therefore help to better coordinate labor supply and demand.

New contract and recruitment models can emerge that would allow future employees to be booked not for a specific job position, but more for specific projects. The use of blockchain technology can accelerate the spread of crowdworking or work-on-demand.

Blockchain can also influence the payout and reward system, because the use of the technology enables real-time compensation, but also flexible compensation methods. For example, employees experience a new type of reward in the company with a coin barometer. In addition, an employee coin could be introduced, which is part of the wages.

Cross-border payments are becoming easier: Blockchain technologies can be used to create currencies. These currencies can simplify various transactions and enable employees to be deployed and paid worldwide.

The likelihood of fraud is significantly reduced: the cyber security of a blockchain defuses cyber attacks on employees' personal data in contrast to insecure data networks. This supports a secure exchange of contracts over smaller or larger distances between employees and employers.

The use of blockchain technology can also lead to increased monitoring of employees, because every single activity can be observed and verified via the blockchain. The client can thus view the qualifications of the contractor as well as the work rhythm and performance via «click-exchange» models.

Contact Person:

Prof. Dr. Michael Beckmann, Elisa Gerten and Birgit Knöpfli