Bitcoin enjoys a high level of publicity. But what about the technology behind this virtual currency? Have you ever heard of Blockchain? What is meant by blockchain technology, where and how it is used in HR work processes, and what effects it could have are issues that the Chair of Human Resources and Organization at the University of Basel is also focusing on.

What is Blockchain?

A blockchain is a list of records chained together using cryptographic techniques. Using blockchain, an accounting system can be decentralized, which, despite the fact that several people are working with it, is always correct, since every transaction builds on an earlier transaction. New transactions are therefore first checked for correctness by proving the knowledge of previous transactions. In this way, manipulations do not appear, because inconsistencies would be noticed. The blockchain thus represents an open database that is transparent, secure and unchangeable. It is either public or only accessible to a specific group of people (private or semi-private blockchain). Blockchain provides a secure way to have real-time data available.

How can blockchain technology be used in HR and for which areas?

The decentralized computer network verifies and automates the flow of information. Blockchain is thus a reliable system that collects and processes data so that an exchange between two trading partners can take place without an intermediary. Blockchain technology enables automated contracts, so-called “Smart Contracting”. From recruiting and hiring, taxes to payroll, contract management and more, Blockchain can revolutionize all HR processes. Blockchain is cheaper and more effective than time and labor intensive methods - and creates trust between exchange partners.

What effects could the use of blockchain have in HR and how can work processes be streamlined in this way?

Back-office functionality is no longer needed: Using blockchain, for example, can significantly reduce the time required to complete back-office tasks, leaving employees more time to do other important tasks. The HR team can thus place a greater focus on the further training of employees and train them specifically in those areas that gain in importance in the digital future. In the long term, costs can be saved. However, the use of blockchain can also lead to many intermediaries dropping out and thus losing jobs.

Employment processes, qualification and data management become more efficient: blockchain replaces traditional CVs as well as web-based social networks like LinkedIn, as the blockchain gathers detailed data about the people. A new recruiting platform is created. Employers can easily retrieve the public blockchain to access their applicants' data and recruit suitable employees. Blockchain can thus help to reach a better matching between labor supply and demand.

New contract and employment models can emerge that would allow firms to book future workers not on a specific job but more on specific projects. Using blockchain technology can accelerate the spread of crowdworking or work-on-demand.

Blockchain can also influence the payout and reward system, as the technology allows for real-time compensation as well as flexible compensation methods. For example, employees endowed with a coin barometer experience a new kind of reward in the company. In addition, a “worker-coin” could be introduced, which represents a component of the wage.

Cross-border payments are getting easier: Blockchain technologies can be used to create currencies (as f. ex. bitcoin). These currencies can simplify various transactions and enable the worldwide deployment and payment of employees.

The probability of fraud is significantly reduced: the cyber security of a blockchain defuses cyber attacks on personal data of employees as opposed to insecure data networks. This supports a secure contract exchange over smaller or larger distances between employee and employer.

The use of blockchain technology can also lead to an extended monitoring of the employees, whereby each activity is observable and verifiable via the blockchain. By means of “click-exchange” models, the client can also see the contractor's qualifications, working rhythm, and performance.

Contact Person:

Prof. Dr. Michael Beckmann, Elisa Gerten and Birgit Knöpfli