What Blockchains Can Do for Recruiting

Blockchain is a young technology, first conceptualised in 2008, and still mainly used to support cryptocurrencies like Bitcoin and Ethereum. It has dubious antecedents; some of the motivation to create it was to make it difficult for law enforcement agencies to identify suspicious users and obtain transaction records. It’s estimated that half of Bitcoin transactions (about $72 billion) are associated with illegal activity. But the technology is making its way out of the darkness and finding its way into mainstream financial services and supply-chain management. Recruiting is a highly transaction-based activity that includes elements of both, so blockchains will certainly impact recruiting as well. Some of the ways in which this could occur include:

Verified credentials: There have been many attempts to create the so-called “verified resume” that a candidate could present to employers as the definitive proof of who they are. None has been successful, but blockchain could provides a partial solution — a single record of education, licenses, and dates of employment — that could be immediately accepted by an employer without the need for further checking. This could substantially speed up the hiring process for jobs requiring limited skills such as in casinos, hospitality, and food service. Support and contract workers in healthcare could be hired on the spot with blockchain credentials.

Digital vaults: Today getting resumes and candidate profiles from job boards, social networks, and other sources into ATS’ and HR systems is a convoluted process. It requires the use of tools to convert the documents into usable and searchable text. Adding data, like that from assessments and video interviews, increases the complexity. Widespread adoption of blockchain could make the entire process much easier, with resumes and records being easily retrieved and combined into a single record without the need for intermediate systems to pull them together.

The idea of a blockchain is that it is a network of “distributed ledgers” (nodes), each of which is an identical version of the database. When new data are added, the network uses algorithms to determine whether they are plausible, and only accepts the ones that meet the verification criteria. For recruiting this could mean that instead of having candidates submitting resumes and credentials, they could authorize the release of the same and an ATS or other system could simply reach out to a node and pull them in.

Compliance: From verifying employment eligibility to passing an OFCCP audit, compliance is inherent to recruiting processes. A blockchain resume could either include employment eligibility or the data elements needed to be checked against records in the eVerify system or equivalents in other countries. OFCCP audits are another matter, since determining that an employer is treating applicants equally involves some subjective judgements. A blockchain solution could at best only be used to guarantee that the records are reliable and have not been tampered with.

The Road to Oz

Blockchain-based systems becoming commonplace will require getting over some significant hurdles. Products becoming interoperable will require the development and acceptance of common standards,systems and rules. Products built on blockchains will also have to integrate with the existing infrastructure, since it isn’t about to be thrown out. Technology vendors like SAP and Oracle, social networks like Linkedin/Microsoft, and integrators like IBM, all have a stake in the outcome and will likely create consortia to ensure that their applications become the industry standards. The battle for dominance could go on for decades.

It could also also take a long time for recruiting technology to become fundamentally different from what it is now. Blockchain is a foundational technology, the value of which can only be realized from products built on it. It has been compared to TCP/IP — the protocols for transmitting and receiving data that underpin the Internet. The protocols in use today were developed in 1975, but only went mainstream in 1989 when AT&T placed the TCP/IP code developed for UNIX into the public domain. Prior to that, all major vendors of computing products had their own proprietary data exchange protocols.

Something like the above is how blockchain will develop for HR technology. In the near term, maybe lasting a decade, we’ll see the emergence of proprietary blockchain standards created by major industry players or consortia of smaller vendors. How long this will actually last and what happens next is anyone’s guess. In the case of TCP/IP, a key impetus for the industry to accept the standard was the Defense Department’s decision in 1982 to make it the standard for all military computer networking. So doing business with the DoD required accepting the standard. Maybe the EU, with the data protection standards enforced by the GDPR, will become the star that pulls the planets of the HR tech industry into its orbit. Or it might be the Government of China with its version of GDPR.

The Road to Oz