How Does Blockchain Aid the HR Industry in Managing Efficient Employee Experiences?

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Written by
Shivani Tripathi
Published on
November 2, 2022


Ever since the growth of IT sectors in the early 2000s and SaaS and startups in the 2010s, the need for skilled employees has grown worldwide. At the same time, due to growing unemployment and attrition, the hunt for qualified employees became more difficult.

According to a survey by McKinsey, around 40% of employees are likely to leave their job in the future. In such situations, finding and retaining the right talent is becoming a critical task for HR managers. 

HR experts expect more deployment of HR techs to streamline the process as the need for skilled manpower grows. Blockchain technology can lend a hand to HRMs in hiring talents and altering employment strategies. 

Blockchain in Human Resources

The inclusion of blockchain in HRM can bring various benefits for recruiters. The current hiring system revolves around several processes of streamlining the employment lifecycle, making them very time-consuming and leading to errors as they are performed manually.

The chance of reducing these human errors and improving skilled talent acquisitions rises with blockchain usage. Tokenizing human talent gives the company a competitive advantage for a streamlined hiring process. Thus, the shift seems to lessen the workload and increases accuracy.

Additionally, employees shall be recruited only based on their skills and talents, not because of biases. This is highly efficient in eliminating personal gains for any of the parties.

Human Resource Tokenization

Human Resource Tokenization

Tokenizing, in simple terms, refers to encoding data. To protect privacy, data like employee numbers, year of joining, etc., are converted into codes. Even the employee's skills and expertise from previous jobs are kept as tokenized data.

Only entities with access rights are enabled to operate these data. Tokenizing employee data is highly effective for HRs to maintain data controls and prevent employee data leakage. 

Organizations and HR managers access the data shared by the employees to ensure a smooth employee lifecycle process.

It enables employers and employees to work and march towards the same vision by inducing the right managerial training to elevate their skills. Employee recognition for their successes is also converted into a credit score that aids their credibility.

Impacts and Benefits Blockchain Brings to Human Resources

Although blockchain technology has only been in the market for a dozen years, it has brought significant features to the HR industry. These game-changing benefits are appealing to both organizations and employees.

Some promising values Blockchain technology given for HRM are as follows:

  • Background Verifications - To recruit employees, a background check that confirms their legal status, physical health, and credit history is essential. Thus, the recruiter can access the distributed network to verify the information independently without relying on third parties.
  • Streamline Recruitment Process - Screening credible candidates is crucial to select the right employees. Most candidate information, like employment history, experience, and expertise scores, is uploaded for access. This makes it easy to filter through the credentials and onboard skilled employees.
  • Smart Contracts - With smart contracts, employers and employees benefit from automatic submissions and rewarding protocols. In such a way, there is no need to wait over project submissions, and delays or non-payments for additional tasks are avoided. This ensures that employee credit is recorded and compensated when they fulfill all duties.
  • Increased productivity - With the right hiring processes comes increased productivity. Small and medium enterprises benefit highly by hiring competent workers as it's not feasible for them to recruit extensively. Internal communications that speed up the workflow among a large workforce are made feasible in companies without worrying over data security.
  • Payroll Benefits - With reward mechanisms and smart contracts come several payroll benefits. Payments will no longer rely on a central system that takes more time to clear additional incentives. Existing seniority-based reward schemes may be replaced with more performance-based bonus payments. This can make employees happier and boost job satisfaction.
  • Employee Life Cycle - Blockchain disrupts the current time-consuming employee life cycle process and shortens it with the help of smart contracts and distributed networks. With streamlined HR processes, employees and employers enjoy the quickest onboarding and promotional processes.
  • Data Security and Access- Blockchain, which is known for securing data, keeps the employees' data secure and private via tokenization. With the help of a permissioned blockchain, access is restricted only to qualified professionals. Even the records on employee history, medical information, and familial records are secure unless shared.


The business world is transforming as the widened use of blockchain technology elevates to a huge extent. In that regard, HRM shall face several persuasive effects leading to strong management without depending on third parties.

As HRs rely on blockchain to analyze intangible traits like skills and knowledge, a widespread transition will likely be essential. This also increases the chance of acquiring ideally skilled employees with ever-fast and accurate history checks.

Blockchain technology thus makes the process of recruiting easier and encourages employees to equip their skills. Though there wasn’t much attention to HRM in association with blockchain, startups like Beowulf, Wolfwork, and Etch are serving as gateways to make the recruitment process more credible. 

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