What is Blockchain Technology
Blockchain Technology, in simple terms, is a decentralized and safe digital ledger system where transactions and data are recorded across a network of computers. This system often comprises a chain of blocks, each with a set of data, that are maintained by nodes- a distributed network of computers.
Blockchain technology offers a transparent and safe way to store and transfer data, which reduces the need for middlemen. In Human Resources, Blockchain technology is fast gaining ground as it offers innovative solutions to some of the persistent challenges that are faced by HR departments globally.
Why is Data Security important in HR Tech?
Data security is essential in HR because it is one of their core responsibilities to protect the company and its employees. It is crucial that everyone in an organization has a fundamental knowledge of data security and privacy in order to reduce or completely eliminate the threats of data exposure or information breaches.
Here are some reasons why data security should not be overlooked in HR
1. Personal Information Confidentiality
The employees’ personal information is one of the most priceless data in an organization, and HR must ensure that it is optimally protected. Not everyone in the organization should have access to some sensitive information except authorized personnel.
For instance, individuals like the HR staff, supervisors, managers, legal and compliance personnel, etc, should have access to employee records, background checks, financial information, and applicant information.
2. Identify Theft Prevention
Ensuring identity theft prevention in the workplace is a core function of HR personnel. It is vital to incorporate measures to create a culture of awareness and security among employees. This can be achieved through employee training and awareness where they will learn how to identify various phishing tactics.
HR managers should also make provisions for employees to learn stringent user authentication methods like creating a strong password, protecting sensitive data with data encryption technologies, multi-factor authentication, etc.
3. Legal Compliance
HR personnel need to be aware of the data protection laws, industry-specific regulations and laws that apply to their organizations. Detailed privacy policies and procedures should be developed, stating how personal information is collected and protected in line with the applicable laws. It is also important for HR tech personnel to remain updated on data protection regulations and laws so that they can implement new changes in their organizations.
4. Safety against Insider Threats
Insider threats are a common security concern that some organizations suffer from. These threats can come from past or present employees, partners, or contractors with access to sensitive organizational data. HR personnel can eliminate these threats by conducting proper reference and background checks before employees are hired.
It is also important that employees only have access to the data pivotal to their job roles. When employees leave the organization, a seamless exit procedure should be conducted, including submitting company-owned properties, proprietary or confidential documents, and access credentials.
How does Blockchain improve Data Security and Trust in HR?
Data security is one of the major pain points in HR, and Blockchain technology can potentially be a huge game-changer in this regard. Here are some ways in which Blockchain can improve Data Security and Trust in HR
1. Immutable data
One of the core features of blockchain is that it creates an unalterable and permanent ledger of transactions that is difficult to tamper with. Each transaction is entered as a block and cryptographically linked to the previous and succeeding blocks, creating an unalterable information chain. HR can leverage this feature to store employee records, ensuring they cannot remain unchanged over time. This helps to validate the accuracy of these records because changes cannot be made without proper authorization.
2. Safe data storage
Blockchain technology provides a decentralized and impenetrable system that improves data security in the workplace. It offers more assurance and protection than traditional centralized databases, where data can be compromised when there’s a single point of failure.
Every piece of data on the blockchain is timestamped and encrypted, making it difficult to hack or alter any information. Some information that can be safely stored on blockchain include Employee Personal Information, Education and Certification Records, Payroll and Compensation Data, and Recruitment and Hiring Data.
3. Data control and ownership
The impact of blockchain technology on data control and ownership regarding Human Resources processes is different from traditional HR systems. In conventional HR processes, companies have centralized control over their employee data, but with blockchain, individuals have more autonomy over their personal information.
It is interesting to note that employees can tell who accessed their data, thereby ensuring accountability and transparency. This helps to build how data is handled and managed in the confines of HR processes.
4. Reduced Middlemen
Blockchain technology eliminates the need for third-party or intermediaries when managing HR data and processes. HR managers can directly interact with stakeholders in the organization without any interference. This reduces the risk of manipulation or errors by middlemen, thereby improving trust.
Unlike traditional HR systems, where middlemen have access to sensitive data due to unauthorized access and other factors, blockchain technology prevents data from being exposed to possible vulnerabilities. Automating some HR processes with blockchain technology becomes easier when intermediaries are removed from the equation. This automation helps to reduce administrative costs and reduces the occurrence of errors.
Challenges and Concerns of (Blockchain Adoption in HR)
While blockchain has its benefits, not all organizations have been able to incorporate this technology into their processes due to various reasons. Understanding the challenges of blockchain incorporation is important to overcome them and putting your organization on the path of growth.
1. Adoption Barriers
One of the reasons why Blockchain hasn’t been integrated in some organizations is due to a lack of understanding among employees and HR professionals. Having limited knowledge about how cryptocurrency works may create uncertainty and doubt about the advantages of Blockchain technology, making it challenging to integrate it into present HR processes and systems.
Another adoption barrier is the cost of implementation. Not all organizations may be open to adopting a blockchain network, which is often quite pricey because of the manpower, infrastructure and technology required.
Training and education could also pose a barrier because if HR professionals and employees are not trained on blockchain technology, they might be unable to use it effectively, slowing down adoption.
2. Privacy Concerns
Privacy and safety is a worthy concern regarding blockchain technology adoption, and while it promises improved security features, there are some potential threats. First, Blockchain’s immutable nature can make it difficult to update or correct employee information, paving the way for a potential privacy risk if the incorrect data is not rectified on the blockchain.
Blockchain’s temporary can also pose a privacy risk, since employees can view information like salary and compensation details, which might be sensitive data to some parties. Even though blockchains are considered safer than traditional systems, they can be compromised due to smart contract vulnerabilities, phishing attacks, malware, and inadequate security practices.
3. Integration with Existing Systems
Not all HR professionals may be open to integrating blockchain into their systems due to reasons like security concerns during data migration. When transferring HR data to a blockchain-based system, maintaining data accuracy, security, and consistency is essential, to prevent data loss, data mapping errors, and other security risks.
Another integration concern can be customizing blockchain concerns to meet the specific needs of a company. This process can be laborious and complicated, making HR professionals discouraged from going on with the integration.
4. Scalability Issues
Scalability in blockchain adoption is one of the most notable technological challenges that might affect adoption, particularly in the workplace. It can affect HR professionals by possibly slowing down data verification and transaction processing. This may hinder the efficiency of HR processes like employee records management, payroll, and other transactions requiring reliable and quick data updates.
How to Overcome These Challenges- Crucial Takeaway
Blockchain technology offers interesting prospects for revamping HR processes, promising efficiency, security and transparency. Knowing how to solve the challenges associated with blockchain adoption will enable HR professionals to leverage the full blockchain potential.
1. Address the Skill Gap
One of the ways to ensure that everyone in the workplace understands how blockchain works and what it involves is to get trained. HR professionals should prioritize organizing training programs to build sufficient blockchain expertise. Hiring ad-hoc consultants or partnering with educational institutions can be helpful for specialized training.
2. Regulatory Compliance
HR professionals often handle sensitive employee data, making regulatory compliance an important measure. To ensure that employee data is not tampered with, HR professionals should regularly keep themselves updated on evolving regulations. They should also integrate blockchain platforms with promising privacy features.
3. Improve Data Security
While Blockchain is notable for having stringent security features, some concerns about its overall safety still persist. HR professionals should choose platforms with exhaustive encryption mechanisms, incorporate multi-factor authentication, and conduct frequent security audits. It is also beneficial to educate employees on the best blockchain security practices to prevent security vulnerabilities from occurring.
4. Adequately communicate the Change
Many organizations often struggle with blockchain adoption, and this may be due to poor communication among its stakeholders. It is essential for HR professionals to clearly communicate the integration of blockchain adoption clearly among the crucial stakeholders, and introduce change management strategies for a smooth transition.
