Blockchain Use Case: HR and Freelancers
Blockchain is could have serious consequences for HR departments. Check out this article to learn more about the role of blockchain in employee management.
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With freelancing on the rise, various industries are being disrupted on different scales. Freelancing affords employees and employers alike the opportunity to be specific in the work they do or need to be done.
As a result, many companies (especially small- to medium-sized businesses) are seeing the benefits of temporarily hiring freelancers with specific skills instead of more permanently adding someone to their staff.
The effects of freelancing will, therefore, soon reach HR departments everywhere. And because more and more projects are completed online, with clients and freelancers having little to no face-to-face interactions, this could change the way HR departments function.
Also, technology, such as blockchain, is further disrupting workforce norms. If freelancers utilize blockchain-based platforms, HR departments could see even more drastic changes in how they are run.
Why Is Freelancing so Popular?
Freelancing has boomed in recent years. For employees, it offers the freedom to work whenever and wherever they want, and on their terms. Many who feel stifled by the traditional 9–5 office hours and environment welcome the prospect of being their boss.
For employers, especially those running small businesses, freelancing is a cost-effective alternative to hiring someone full-time. Smaller companies do not have the same financial freedom as their well-established counterparts. Therefore, hiring someone to be a permanent staff member, when the skills needed are temporary and specific, is not a financially wise decision.
This is where freelancers come in. Freelancers usually have particular skills (e.g., web design, writing, editing, social media management, and online marketing). If a company needs a short-term project completed, a freelancer with the specific expertise to complete the project is a great option. The two parties work together for the allotted time and part ways once all the terms of their agreement have been met. This means that a company is not paying someone full-time for general skills that only sort of fit with a task. Additionally, freelancers do not receive benefits, so smaller companies save money there, too.
How Does Blockchain Fit Into All of This?
Blockchain has ledgers that contain all the transactions among those in a network. It is a secure, reliable, private way to store data. It also has no centralized authority, making the chances of bias and corruption very slim. In a network, changes cannot be made to data in the system unless the majority of users approve. This adds yet another level of trust and transparency amongst those involved in the network because data cannot be tampered with by an individual without the knowledge and approval of others.
So, how much does all this affect HR? Well, according to PWC, quite a bit! Blockchain has the potential to disrupt the way HR departments are currently functioning completely. It would hasten the process of skill, education, and performance verification; it would be a cheaper, more convenient method of managing cross-border payments for international employees; it could reduce data-heavy processes (such as dealing with VAT and payroll); it also increases cybersecurity and protection against fraud.
Verifying Education and Work History
A staggering 75 percent of human resources managers say that they have found a lie on a resume. Clearly, resumes aren’t always reliable. But blockchain is. For instance, with blockchain, students are able to own a verified digital file of their diploma, which they can literally carry around with them on their phones.
This makes verifying education so much simpler because HR personnel merely needs to check a potential employee’s digital credentials. Instead of this process taking weeks, blockchain makes it smoother and more streamlined. Blockchain is also useful against the current onslaught of fake degrees being bought and sold.
By having an education and work history on a secure platform, like a blockchain-based system, those in HR can rest assured that the person they interview is exactly who they say they are on paper. The costs associated with verification and background checks could be greatly reduced. This could eliminate a lot of the stress and mistrust that comes with working in HR.
Managing Employee Mobility
One perk of freelancing for freelancers is the ability to work anywhere. For employers, however, hiring people internationally can present quite a headache. Different tax laws and transfer costs are just a few of the things those in HR have to deal with when paying an international employee.
Luckily, blockchain can manage international money transfers and tax issues. The conversion of Bitcoin to the employee’s local currency happens seamlessly within blockchain, reducing the hassle all around. Costs are reduced on both sides, too, because third-party entities, such as banks, are not involved in the transfers (so neither are their often hefty fees).
HR and Blockchain: a Fruitful Partnership
HR departments would do well to start taking advantage of blockchain solutions, as its popularity shows no sign of diminishing. By utilizing blockchain technology, HR departments could do their jobs more efficiently by screening and vetting employees faster than before. They would also be able to easily manage international employees by using blockchain and Bitcoin to make payments, knowing that the system would take tax laws into account. All this would be done on a decentralized, secure platform, eliminating opportunities for fraud and mistrust.
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