HR and blockchain: what does HR need to know?

Published 18th April 2018 by Investors In People

What is blockchain?

Blockchain is an extremely secure way of recording transactions that have taken place between two or more parties. Each transaction is called a block and blocks are joined using cryptography to form a chain of blocks – hence the name blockchain.

Blocks can only be added to the blockchain with the majority consent of all actors who have access to the blockchain. The technology essentially does away with the need for an independent, third-party actor to verify transactions because verification is provided by consensus. Blocks can never be taken away or deleted.

Blockchain therefore provides a secure, unmodifiable record of every addition made – a paper trail, so to speak. Some of the potential applications for blockchain include a permanent record of food supply chains, identify management, the management of legal contracts and proving ownership of property.

Blockchain and HR: how could blockchain add value?


Data validity afforded through blockchain could give both candidates and organisations more confidence in the recruitment process. Blockchain could give all candidates a verified record of achievement, eliminating organisational concerns over falsified information on CVs.

For example, university degrees would only be added to an individual’s blockchain-based CV if the university validated their achievement. Organisations seeing this on the individual’s record of achievement would know it was a truthful claim.

More informal achievements could also be added to the blockchain via consensus between two parties, so a candidate’s claim that they had “improved results by 20%” could be validated by the previous employer so the new one had confidence in the person’s ability.

Using blockchain for global payroll would reduce the costs of using intermediaries, such as banks, to verify transactions.


Using blockchain for global payroll would reduce the costs of using intermediaries, such as banks, to verify transactions and ensure that the money has been sent to the right location at the right time.

It would also increase the speed of these transactions, which would happen as soon as consensus is reached in the blockchain and the new record of payment has been added to the ledger.

In an article for SHRM, Deloitte senior manager Daniel Roddy says that using blockchain for payroll is not difficult, but the idea faces regulatory hurdles, particularly if it involves cross-border payments.


Blockchain could be used to control who has access to sensitive employee information and ensure that changes are only made by authorised parties.

It would have the added advantage of helping employees stay in control of what data is stored and changed about them, something that fits the ideals established in the GDPR, the EU-mandated data regulations.

Smart contracts

Smart contracts use digital technologies to sign contracts, verify them and ensure compliance over time, all without using third-parties.

In terms of recruitment, smart contracts could make issuing and accepting job offers extremely quick.

A shared blockchain between employer and employee would also keep track of all contractual changes throughout the employee’s tenure. It could be used to enforce conditional clauses, for example releasing bonus payments if achievements are met.

Blockchain and HR: looking to the future

Blockchain is a new, embryonic technology, even in financial markets and banking, where most commentators agree blockchain will have the greatest initial impact because of its origins in this industry.

Because of this, the financial aspects of HR are likely to be the first to see maturity in blockchain applications, such as payroll and cross-border payments to highly-mobile staff.

As well as these, it’s likely that jobs under HR’s remit that are expensive, slow and labour-intensive will be the first to be disrupted by blockchain technologies Background checks are a good example. Blockchain could make the process far quicker, cheaper and accurate and give HR more confidence in hiring decisions.

Some blockchain-based platforms are available that would interest HR, such as in the recruitment of freelancers. These use blockchain to verify skills by consensus. Individuals upload their portfolio and the community ‘votes’ on whether they show competency in a skill. This skill is then added to the blockchain underpinning their profile on the platform.

In terms of recruitment, smart contracts could make issuing and accepting job offers extremely quick.

Blockchain and HR: what should HR professionals do?

HR professionals need to keep track of how blockchain will affect the way the HR function works and performs its tasks in the organisation, but they should also broaden their remit and understand when and how blockchain disrupts other parts of the organisation.

Taking an industry-specific view is important: if you work in financial services you may well be introducing blockchain technologies across the organisation and in the HR department sooner than your counterparts in, for example, retail or publishing.

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