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LETTER: How blockchain will affect HR processes

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Blockchain transactions are immutable and offer
Blockchain transactions are immutable and offer end-to-end transparency. FILE PHOTO | NMG 

Blockchain technology has become a buzzword globally but despite this excessive attention, it remains a concept well understood by a few mostly due to its narrow definition driven by its relationship with crypto currency and bit coin technology.

Blockchain is more than just crypto currency and based on its capability to establish trust between people and machines and transfer value from different entities efficiently and transparently, its impact is basically going to be felt across sectors globally.

One such sector that is rarely discussed is the HR industry which would benefit a lot from the adoption and implementation of the block chain technology. To many organisations, HR processes becomes a challenge as they grow as this means expansion of the workforce and development of complex HR processes to handle the growing work force. This complexity is caused by system inefficiencies and more time consumed by manual and third- party driven processes.

Blockchain that simply means a distributed peer- to- peer network can solve these challenges and therefore making the HR process less cumbersome and create systems that are employer and employee friendly in the following ways:

First, with the block chain capabilities to provide permanent proof of providence and non-alteration of the records without the knowledge of the third parties, it will greatly improve the HR process of talent sourcing as the ability to maintain and control access to reliable and broad employees education, skills, training, interests and workplace performance records is enhanced. This will be beneficial to employees as they will be able to turn their skills, experiences and interest to full value and also reduce underemployment through accurate matching to the right jobs. For the organisations, the benefit will be realised through enhanced capability to match employees to their right jobs easily and effectively and this can be improved by combining data analytics and artificial intelligence systems in their processes and therefore eliminating time and energy wasted in scrutinising the employee lifecycle process.

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The second benefit of developing a system that enhances accurate talent sourcing and recruitment process would be improved productivity. This is because efficient matching of workforce, experience and performance would not only be of great benefit to the large firms but also SMEs that face a larger burden especially in developing countries in attracting and recruiting the right talents.

Thirdly, the capability of block chain technology to remove the need of third parties in the middle of a transaction improves the efficiency of organisations that have cross- border transactions as it enhances the capabilities of creation of their own block chain corporate currency or coin that would help them to carry out their cross border transactions by eliminating third parties such as banks, auditing and reconciliation processes, tax compliances within their working jurisdictions and cross border cumbersome expenses verification processes. In addition, this lean back office overheads help organisations to save colossal amounts of money through restructuring.

Fourth, firms that adopt block chain technology also have a tendency of having secure systems that are not privy to cyber security and fraud challenges with ease. As HR departments handle sensitive financial and personal information, systems that are free from cyber-attacks and fraud would be of great benefit and this is guaranteed by block chain technology as the information stored on the block chain networks are protected through cryptography a concept that is difficult to alter. In addition, systems that are cyber-attack and fraud proof would be of much significance to SMEs which in most cases are not well prepared for cyber-attacks and fraud tendencies within their systems.

Lastly, the ability of block chain networks to embed business logics in to single business transactions is of great benefit to HR teams due to the enhanced capability of creating smart contracts between the employers and employees. This would have immense benefits to the employers such as automatic payments, elimination of ghost workers, elimination of manual processes such uploading payrolls and giving the HR teams the capability of switching on and off contracts in case employees leave or join the organisation latter.

Although I have a highlighted just a few of the benefits of block chain technology, it gives a sneak preview of the disruptions that are on the way to organisations that a will be slow in adoption. Organisations should start including emerging technologies such as block chain in their long- term digital strategies.

Dr Kabata Githinji Lecturer, Kirinyaga University

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