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Human Resource Management and Blockchain: Analytical Essay


Blockchain has already shown it applicability in cryptocurrencies over the past few years, but its potential does not end there. Blockchain can transform finance & banking even more in the future & even serve as a solution for government challenges. It has some ways to improve HR management in recruiting, payroll & safety concerns that could transform the industry as well. The paper addresses blockchains impact on multiple areas but focuses on the functional areas that are slated for a paradigm shift using blockchain.

Does Blockchain technology have the potential to cause the paradigm shift in business practices that many experts are predicting?

When most people think of blockchain, their minds go straight to crypto currencies. News & media have made it common knowledge to the world that blockchain is drastically transforming the finance and banking industries through development & popularity of cryptocurrencies like Bitcoin & Ethereum. There are entire sub sections of industries that solely operated using these currencies, or alternate versions of these crypto currencies (Kumar, 2019). Looking away from the mainstream applications, there are many developing nations that are also taking their first steps in using blockchain to solve their own problems. For example, accurate and reliable invoicing can be a challenge for small businesses in Africa, which is why a blockchain solution is being developed to create standardized digital invoice contracts within the network & facilitate payments to farmers in within countries in the African subcontinent (Shevchenko, 2020). The point being that banking is making the most of blockchain cryptocurrencies, even outside of what the majority of the public knows about. Facebook & JP Morgan Chase are also developing their own in-house blockchain technologies (Allison, 2019)!

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Mobile applications and messaging tools have also gravitated towards blockchain as a way to create in app traceable and reliable currencies. Kik & Telegram have already implemented their own blockchain technologies and are also funding their own ICOS, which are another disruptive tool that many industries are using to raise capital for their expansion effort & long term growth plans – in this case mobile application development (Kumar, 2019).

The paradigm shift in government will be specifically focused on using a version of blockchain technology to improve the speed and reliability of the voting process. As of now the main aspect of voting that gives it the credibility it need to select the upcoming leadership of the country is the effective verification, authorization, accuracy of data, and record keeping for verification & vote count. This does NOT mean that it is always without flaws – if anything, most traditional voting systems have always been plagued with incorrect counting issues. A quick skim through the books of history will demonstrate how many countries have already faced alleged election tampering through physical and digital voting collection systems, both physical and online. When applying the elements of blockchain into the voting process, each vote would have a verifiable trail that could be verified through any block within the system. This would mean that the “paper vote check” that is sometimes done to verify accuracy between the paper vote and electronic submission could be all done through the blockchain. This way, anyone trying to tamper votes through editing a few block would be quickly caught and weeded out of the system.

A couple of organizations that are already gaining traction in this space are Follow My Vote & Agora. Both technologies are aiming to reduce if not completely remove election fraud by using a custom blockchain record to track and verify vote counts. Similar solution have already been tested and used for subgroups of elections in Sierra Leone in 2018 and the final counts aligned with the official tallies using the traditional voting system (Liebkind, 2020)– demonstrating the start of paradigm shift in government applications of blockchain.

Blockchain is without a doubt developing into a field of technology and networking that will transform the way we do business, communicate and form partnerships in most industries. Let us now focus on the way it can transform accuracy for human capital in public & private enterprises, specifically focusing on HR functions and capabilities. A well implemented & maintained blockchain HR technology can serve as a reliable source of employee information at any point in time and as an unchanging source of data – one that can easily scale as a company or government grows and evolves over time with its people/employees. Within the blockchain, itself can be all of the education and work history, emergency contacts, and performance reviews of the company’s labor teams. Lastly, if for nothing, it can be the soft-copy backup (that never gets deleted) for paper files, which are still being used when completing transactions in most private and public organizations (Biswas, 2018)

Secondly, the entire payroll process is in the midst of going through a paradigm shift as a result of Blockchain. Payroll for both hourly and salaried associates can be managed through this technology as a whole. Not only that but the entire compensation package, including benefits, stock options, medical insurance plans, and retirement savings accounts can all be centralized within the single system and all elements of its usage can be tracked effortlessly. Another way that blockchain will drive a paradigm shift in HR functions within all industries is by simplifying and smoothening out the whole process of recruitment and retention of employees. The blocks within any blockchain network have the capabilities to use AI and vet resumes, track each candidate through the hiring process, and finally, even store compensation increases and manage succession planning for the human capital of the organization (Day, 2019).

Is there evidence to suggest that Blockchain technology will change the way HR is practiced? What issues exist that impede its adoption?

The main evidence to suggest that blockchain will change the way HR is practiced is the current state of the space. For example, 70% of HR managers identify and inaccuracy or a lie on a candidate’s CVs, and given the fact that most managers spend less than 30 seconds on reviewing a resume could mean many more instances of fraud and inaccuracies are missed as well (Editorial Staff, 2019) Blockchain is, based on my answer to the previous question, well poised to solve this through verification through blocks and fraud prevention through immutability. It can in essence be a central, verifiable, and consistently accurate database and transactional space for potential candidates and current associates to partner with the company HR teams in many ways to achieve the tasks they need for their work.

As discussed & reviewed earlier in the year, the main challenges of implementing blockchain are more focused on challenges during the deployment process – and are especially apparent if the execution is done in a speedy manner while skipping critical steps in the process. These 3 main impedances to effective implementation are regulations, scope, motivation, and governance. The first challenge of regulation is that the corporate and government rules & compliance aren’t built for blockchain and the speed at which it develops, which means that most implementations will likely run into compliance issues when being implemented in most industries. Sadly, this is a factor out of the implementer’s control and the solution is more focused on partnering with the company’s legal team and government relations team as well to ensure your blockchain technology is operating within the bounds of the law & compliance during development & full-scale usage. Secondly, the blockchain solution MUST be scoped out clearly & effectively to avoid under-building or over-building the solution (Marr, 2018). This is much harder said that than done, and therefore the scoping process must be executed by first focusing on a minimum viable product, setting S.M.A.R.T. goals, and creating a feedback loop where you are consistently analyzing performance, identifying risks & vulnerabilities, and generating potential applicability solutions for the main business.

Next comes motivation (or incentives). The solution that is developed needs to have an effective incentive scheme that pushes members to join the network and continue to use it. It can be connected to compensation, reduced fees or processing time or anything else the users value. Finally comes governance, which needs to be comprehensive enough to support & reflect the wants & needs of the members within the network, while also driving the correct (law-abiding) behavior within the network. The governance team must also set rules and regulations and specify consequences for non-compliance to ensure just practices (Massessi, 2019)

Which functions of human resource management could be most impacted by Blockchain technology? How might the HR functions change?

Let’s first begin with an overview & explanation of what HR management is in an effort to help ground us. Human Resources Management is 1) the team that manages all elements of employee hiring, compensation, benefits, retention, and HR related workplace issues and 2) the software packages, networks and tools that are in place to support HR teams manage data. The focus of blockchain is how it can improve these systems & software packages to not only speed up operations and make them more accurate & reliable but also to make the lives of the HR teams easier by removing wasteful and redundant administrative tasks. For example, blockchain solution can allow employees to input & verify their own information without the need for HR teams to intervene: like personal details, payment history, organizational structure (Arun et al, 2019).

According to my research, the top functions of an HR that will be impacted by blockchain, in order of importance, are:

  • Database
  • Recruitment & Retention
  • Payroll
  • Benefits
  • Time & Labor Management

Blockchain will impact HR by being the solution for long term data storage, changes, and updates. The blocks can store information like education and work history, emergency contacts, and performance review. This means that HR team & employees don’t next to set up meetings and spend time sharing documents and getting approvals. All of this can be managed by the blockchain as the intermediary, and the blocks themselves will ensure reliability & immutability of the information as it is updated over time.

The second area that HR function could change is the management of the recruitment process and retention of employees. The blockchain can serve as a central place to track candidates through the hiring process. This would mean resume vetting, communications, interview notes and offer details.

The blockchain solution can also transform payroll tremendously – since blockchain’s most advanced capability is its ability to effectively manage and coordinate transactions. The blockchain could 1) manage both hourly and salaried associates’ monthly payments and just credit accounts on a consistent predictable frequency, without having any errors (which, in the payroll space can create a lot of issues). Bonuses, taxes withheld and awards can all be integrated within the system.

Benefits, medical insurance plans, and retirement savings accounts have the possibility of being changed for the better with blockchain. Workday already offers a capability to sign in to your healthcare provider that close to (but not entirely) the perfect solution. Blockchain can integrate the systems together and allow users to view all their healthcare, investment and payroll all in the same system and can count on its accuracy & reliability (Ahmed, 2019).

The blockchain, as it tracks payroll of hourly & gig employees, can also

Track the metrics of how and when contractors clock in and out of work, allow salaried teams to submit or approve vacation requests. All of this can help the HR team’s punctuality & it’s correlation with productivity.


All in all, blockchain has the ability to transform the fundamentals of how we do business in the modern world. It definitely wont happen anytime soon but expect to see situations coming up (one by one) that transform processes & technologies by making them quicker, more reliable, and accurate. Looking forward, I expect a majority of the private & public industries having all adopted blockchain in some element of their business.

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