Beyond HR borders with blockchain
The digital assembly line
How does blockchain work?
Use blockchain to improve HR operations
01. The digital assembly line
After the farm, the factory, and the office, the digital assembly line appears, based on blockchain technology. No human operational interference is needed anymore, and this will change the way we organize work forever. HR should be aware of that.
- Paul Bessems, CEO, Weconomics
HR-professionals and (large) organizations are lagging behind in deploying new organization forms and disruptive data technologies, such as Internet of Things, blockchain, data logistics and artificial intelligence. A new organization concept is built with these technologies, and we call it: the digital assembly line.
When you combine this with new organization forms, such as the decentral autonomous organizations (DAO), a new organization paradigm emerges. In a DAO, no human operational interference is needed anymore. This concept will change the way we organize work forever, and HR should be aware of that. What the physical assembly line did in factories, will the digital assembly line do in offices.
The question is not how HR can improve office work for humans, the question is what will come next, after the farm, factory, and office?
What is a digital assembly line?
A blockchain-based digital assembly is a self-operating collection of technologies, databases, and computers to produce information from data, verify claims, facilitate interactions, and validate transactions.
For example: you could replace a course offering with a token (a digital twin, or digital replica). Via a smart contract the participant and course supplier agree on the transaction conditions. The ‘know your customer process’ is done automatically and ‘proof of done’ is agreed on. In the end, the course token is exchanged with a payment token.
All is done with a fraction of the original transaction’s costs and time. Frederick Taylor and Henry Ford were able to reduce friction costs in factories by 70% in fifteen years. Will the digital assembly line have the same effect in offices?
“The better we use tech, the more we become human again”
Waste is the death of any achievement, especially for HR. A McKinsey study shows that bad data is on average costing businesses 30% or more of their revenue, and that 45% of the activities people get paid for can be automated. Gartner has found that the average cost of poor data quality amounts to anywhere between $9.7 million and $14.2 million annually per organization. An Accenture report shows that up to 30% of total organization costs is spent on checking each other’s databases, 36% of businesses say they are working with at least double the partners they were two years ago.
ServiceNow concluded that managers spend two days a week, on average, on requesting data from other departments. At a macro level, bad data is estimated to cost the US more than $3 trillion per year (Harvard Business Review). In other words, bad data is bad for business and HR. These statistics are comparable with those in Europe. In the Netherlands, we could save up to 2,3 billion hours, or 1.8 million FTE, every year if we reduce digital waste. But legacy business systems weren’t built to support this kind of expansion, and soon, outdated systems will be major hindrances to growth.
The traditional solution
To combat digital waste, you could set up a digital transformation program, led by the IT-department or a traditional consultancy firm. But that will not work. According to Boston Consulting Group, only 30% of the digital transformation projects succeed. How is that possible if we spend billions of dollars worldwide? The problem is not information technology, but the way we look at work and how we organize it (the narrative that we have to work to earn a living, work addiction, workism, and the pursuit of full-employment). The problem is that we don’t have a shared, reliable and accessible reality despite billions of investments. A blockchain-based digital assembly line will help you to reduce digital waste and improve productivity, but professionals won’t be able to help you with this if they cling to the old organization-DNA. You need them to change, and develop new skills, or find new people.
The new solution
A blockchain-based digital assembly line is an automated concatenation of reliable, accessible decentral databases and processors within an ecosystem. It is an organization concept to organize supply and demand of data in ecosystems at the lowest friction. The assembly line makes it possible for buyers and sellers to do business, without local HR- or IT-systems, the use of expensive middlemen, or complex contracts. In short, you don’t need a local HR system because you (have to, according to GDPR) connect to the personal data service of your employees. Not data ownership (big data) is the new oil, but access to rich data, provided by the digital assembly line. Not the technology, but the way we organize supply and demand of data is the challenge.
Organizations worldwide are looking for effective ways to reduce digital waste, lower information costs, and improve customer services. The question is: what will be the role of HR in these challenges? HR-professionals should be aware that real digital transformation is not about information technology, but about a new context (from physical to digital, with data as a representation tool), that needs new ways of thinking and organizing work (networks and DAO’s), transition (training and development), and just a little bit of automation. The future is durable, digital, and decentral. It’s time for you to prepare yourself, so you can lead your organization or customers in their transformation.
02. How does blockchain work?
A blockchain is a type of digital database, an electronic ledger that keeps a record of different data operations. These records are kept in ‘blocks’ and linked together by a strong cryptographic hash function - hence the name blockchain.
In each block, a cryptographic hash of the previous block, the transaction information and timestamp are stored.
03. Use blockchain to improve HR operations
Blockchain has shown enormous potential in numerous areas. Starting today, and continuing into the decade to come, blockchain will add human resources to the long list of industries it is sure to disrupt.
- Ike Bennion, Principal Portfolio Marketing Strategist, Cornerstone
Even in a rapidly changing work landscape, prompted by the global skills shortage that’s only been accelerated in a Covid-19 world, the fundamental things you need to know about a person — who they are, what their professional background is — haven’t changed. Roles and the demand for new skills have been affected, as has the increased ability to see an individual’s potential when matching them to a job.
For those displaced workers who are eager to get back to work, employers can accept and instantly verify credentials, which include their employment and identity, a process that historically takes as long as two weeks to complete. So what, exactly, can HR managers expect to see as blockchain technology realizes its full potential? Here are several ways blockchain will add value to organizations over the next decade.
The job description and the resume are both formats that are designed to match talent to need in an era when careers were more linear, and jobs didn’t flex with change nearly as much as they do now. The nature of work today includes more jumps between companies, roles or even skillsets than what the labor market saw in the past. Not to mention that employees today are constantly learning new skills and competencies — and not every single one translates specifically to a certificate or degree. The new resume should be able to reflect these credentials. Blockchain provides an opportunity to better understand the skills, work experience and other value a candidate brings to the table.
It also helps us to see jobs in terms of their fundamental components, which can help match with better clarity, speed and accuracy than what is available today. When we can better understand how someone does their work, their attitudes and interests, and how they work with others, we can move past how long someone operated in a certain role and understand how their unique perspectives and background can match critical needs of a company to support growth. That includes external hiring, but even more critical in our current environment, what talent is already available within the company.
Recruiting and talent acquisition
The problem of ‘resume fibbing’ has crept up over the last few years — and it only seems to be getting worse. A 2017 survey found that a whopping 85% of employers have caught people lying on their resumes, up from 66% five years prior. These stats are disappointing but not necessarily surprising. After all, with fierce competition from all-star candidates who boast Ivy League diplomas and experience at Fortune 500 companies, many job applicants feel the pressure to stand out.
With blockchain, however, hiring managers looking to fill open roles with the most qualified people will be able to trust the integrity of the information candidates provide — and avoid misleading or completely false resumes that currently plague the industry. Blockchain can also help level the playing field by highlighting additional accomplishments and presenting information in a clear, objective way rather than weighting certain credentials, like a college affiliation, too strongly. And as a result, resumes become more than a list of an employees’ accomplishments.
With the support of blockchain, candidates could provide employers with additional insight into what it might be like to work with them from the very start of the hiring process.
“Blockchain can offer more reliable information about candidates”
Control for applicants
When someone applies to a job, it can often feel like their information is going into a black hole. But with new data privacy regulations like GDPR in Europe and CCPA in California, people are becoming increasingly aware of how their data is being used and who has access to it. With blockchain, applicants have more control over their information and can request that their data be deleted. Instead of contacting all of the jobs they have ever applied to, they can make changes to their blockchain network and control who sees their data.
Blockchain also enables applicants to set a time limit for how long a company can see their data. So, for instance, when someone applies to a job using their blockchain credentials, they can elect to only allow that company to access their information during the recruitment process. This functionality also benefits employers because they won’t need to manage expectations around compliance amid new data privacy regulations. Blockchain will do that work for them.
Powering the gig economy
With blockchain, someone who works multiple gigs will be able to add a portfolio of projects and skills to their blockchain record, helping them get hired quickly for the jobs they do best. As we continue to talk about the future of work, technological advances that bring artificial intelligence and machine learning into the workplace or home office tend to comprise the majority of the conversation.
But it’s time we add blockchain to that list of innovations. By 2030, 30% of commercial activities will be supported by blockchain. There’s a lot of work to be done to bring the real-world applications of this technology to life, but one thing is clear: blockchain has the potential to become a game-changing tool for HR departments and employees alike.