Envisioning a Blockchain Future for Recruiting

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Aug 23, 2018

The road ahead will be paved by blockchains. Great things will happen. Like what? Patience, wait for the revolution. When is it coming? Soon.

We’ve seen this movie before. A technology emerges in another industry and the recruiting world becomes agog with what will happen.

Some of the excitement associated with the hype is understandable. One can only talk about diversity and InMails for so long. Blockchain technology, though immature, is very real, and will, eventually, underpin many applications used in recruiting. This will happen for very good reasons, but whether it will transform recruiting, as some like to claim, is debatable.

What Blockchains Can Do for Recruiting

The technology’s main value proposition is that it allows people and organizations to interact with each other — conduct transactions — without the need for an intermediary. The technology enables creation of peer-to-peer networks. Participants can exchange money (Bitcoin, Ethereum), contracts, records, services, and pretty much anything. The retail site OpenBazaar allows buyers and sellers to transact with each other without paying a fee to an intermediary like eBay or Amazon. This also allows transactions to be done faster and spreads the cost of developing applications between partners.

Recruiting processes are highly inefficient and consequently packed with costs of dealing with those inefficiencies. Filling a job requires getting resumes, verifying employment, checking credentials, eligibility to work, conducting background checks, and issuing offer letters. In a blockchain-enabled process, any candidate contacted by a recruiter could simply authorize the release of a resume including verified employment records, licenses, education records, and proof of identity. An example of this is the service offered by APPII — giving candidates a platform to create a verified resume including many of the components listed above.   

Having a true verified resume can significantly lower costs and time to hire in industries like retail and hospitality. Employers fill millions of jobs every year in hotels, casinos, cruise ships, and stores. In most cases, evidence of past employment in a similar capacity and a license is all that’s needed. With blockchain-enabled processes most hiring activities could be completed in seconds, leaving only an interview to be the deciding factor.

Hiring Gig Workers

Processes for hiring and paying gig workers are already seeing the impact of blockchains. Platforms like CanYa and Blocklancer offer a marketplace for freelancers to interact with employers and find work. These platforms do charge a small (compared to other sites for freelancers) fee but sites that charge no fees are also emerging, such as Ethlance, since it is completely open source. These types of platforms will continue to gain in popularity because they can also streamline the process of onboarding freelancers by providing verified credentials, making it much easier to bring on freelancers for short-term contract work.

Beyond the Hype

Research firm Gartner describes blockchains as reaching the “peak of inflated expectations.” That is, the point before reality starts to set in. We may be headed for a blockchain-enabled future in recruiting, but there are some major barriers in the way. For one, the technology scales very poorly. What makes a blockchain secure is that it is a distributed database where records are stored on multiple “nodes,” i.e. the computers of participants in the network. Updating one requires updating all other nodes. This can take a long time if it’s a large network or there are lots of transactions taking place. In combination, the result can make the application seem unresponsive. Think what it would be like if took hours to retrieve a resume from a job board or update a job posting.

And there’s the trust issue. Blockchain enthusiasts like to make the case that any records embedded in a blockchain are unchangeable and hence completely trustworthy. The first part of that claim may well be true but the record has to be created somewhere before it can be embedded in a blockchain. A verified resume is only good as the verifiers. Knowing someone worked at a certain employer tells a recruiter nothing about how true any claims are about what they accomplished. Having a blockchain-verified academic transcript reveals nothing about the quality of the education.

The problems of scalability will eventually be solved. But the trust issues cannot be fixed by building recruiting systems on blockchains. The technology will almost certainly underpin HR and recruiting products in the future, if for no other reason, than it is much more secure than anything we have today. The need to simplify data exchange will also drive adoption. The effect will be to make recruiting more efficient, but not fundamentally different. For a true transformation of recruiting, wait for Edge Computing.

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