How Will Blockchain Transform HR?

Blockchain has the potential to allow HR to finally break the shackles of administrative processes and claim the seat at the decision table to shape and enable business strategy through its most valuable asset—its people. But how?

How Will Blockchain Transform HR?

15 Feb 2018 by  Vikas Verma

The year 2017 will be remembered as the year when Bitcoin became a household name. Overnight, we had websites, articles, and TV shows educating the masses on how to invest in Bitcoin. But, just like any other disruption, there are split opinions from experts: Jamie Dimon, Head of JPMorgan Chase & Co., called Bitcoin “a fraud” ; while Morgan Stanley Chief Executive Officer, James Gorman, called Cryptocurrencies “something more than just a fad”. However, what’s most exciting about this development is the Blockchain—the backbone technology behind Bitcoin. Bitcoin is just an application of block chain. In days and months from now we will start seeing applications of block chain technology all around us and the impact could be profound.

What is Blockchain?

According to, “A Blockchain is a decentralized and distributed digital ledger that is used to record transactions across many computers so that the record cannot be altered retroactively without the alteration of all subsequent blocks and the collusion of the network”. Unlike conventional ledgers, Blockchain is freely available and accessible on the Internet—and most importantly, it’s not owned by anyone. The ledger is updated for any transactions by users through blocks. These blocks are interlinked, and therefore, theoretically impossible to corrupt.

Blockchain is defined as a trustless system—it allows people, who do not know each other, to trust a transaction. To authenticate the veracity of the documents, we typically go to an intermediary we trust, but Blockchain makes these intermediaries redundant.

Now, this could be pretty powerful and disruptive if you can imagine the applications beyond bitcoins or cryptocurrency. Millions of dollars are being invested in Blockchain applications, in the areas of healthcare, real estate, utilities, IoT, voting, and of course, human resources.

What’s in it for HR?

Blockchain is just emerging, so why should we be talking about it now from the HR perspective? As HR professionals, our track record in adopting new technologies has been a mixed bag at best. In the last decade, we saw the rise of a breadth of technologies—from enabling sharing, liking, and commenting to artificial intelligence, machine learning; and tools to drive business outcomes and improve the employee experience.
However, Blockchain should not be confused with these other technologies as an incremental evolution. From a human behaviour perspective, it’s changing something very fundamental on the internet that we all depend on for any type of interaction: Trust.

Today, we pay a fee both in terms of time and money to intermediaries to buy trust. In the world of HR, these intermediaries could be recruitment agencies, outsourcing partners, and managed service providers, among others. In the next decade, we’ll see a layer of Blockchain technology added to most of our digital transactions, whether it’s machine-to-machine, machine-to-human or human-to-human.

With the proliferation of internet devices, the rise of trustless systems is inevitable. And this will have a transformational impact on the future of HR. This impact will not be just operational, but it will allow HR to fundamentally rethink and redesign most of its HR systems, be it sourcing, training, rewarding, or engaging. Even the definition of ‘employee’ will change.

Let’s look at one emerging application of the Blockchain technology on talent sourcing.

The rise of gig economy will be accelerated by Blockchain

Though Blockchain may not be the cause of the unbundling of jobs or the rise of the gig economy, but it will fundamentally change the way we source, deploy and pay employees, especially gigs. It will do so by addressing three bottlenecks as we move to the gig economy:

1. Sourcing of verified profiles

Imagine a “LinkedIn” of gigs on Blockchain that stores information about you and all the projects you have done, along with the feedback on the projects. An employer can search the profiles, seek permission to access more details, and simply engage the gig without the need for elaborate verification of knowledge, skills and background.

2. Contracting and on-boarding

As you unbundle jobs and identify projects, you can simply convert these projects into smart contracts, which are delivered on Blockchain and tamper-proof once issued.

3. Payment

As cryptocurrencies gain acceptance, an employee can be paid automatically once the job has been completed and approved by the manager.

Today, we already have platforms like Ethlance, which runs on Ethereum Blockchain, charging zero fee—against the usual commission of 20% charged by intermediaries for contract workers. So it’s not a matter of if but when, and the key question will be whether we, as HR professionals, are prepared to leverage Blockchain.

There are certainly more questions than answers at this moment, but it will be prudent to keep a close eye on the growth of gig economy in your industry and what can you do to benefit from the same while managing the risks. With the pace of innovation, there are also discussions on promoting at enterprise level gig networks, and internal network may be a good place to start piloting few of these concepts

It may be too early to predict the future in Blockchain; however, one thing is for sure, Blockchain has the potential to allow HR to finally break the shackles of administrative processes and claim the seat at the decision table to shape and enable business strategy through its most valuable asset—its people.

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Vikas Verma

Vikas Verma is Principal, Aon Hewitt, Talent, Rewards & Performance (TRP) practice and based in Singapore. With over 18 years of rich and diverse experience in Talent Management & Leadership Development and managing businesses, Vikas enjoys partnering with leaders in charting out the talent management strategy that is aligned with the business strategy. Vikas is also an avid follower of technology and advises clients on the adoption of cloud-based learning and performance management systems.

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