How Blockchain is Transforming the Recruitment Process

Blockchain technology with a purple gradient background

Originally designed to support the cryptocurrency Bitcoin, blockchain has transformed financial operations and has the potential to disrupt industries from healthcare to logistics dramatically. Companies and staffing agencies are leveraging blockchain recruitment to vet candidates and streamline hiring. 

If you’re still scratching your head over what blockchain is and how it’s used, don’t worry. We’ll break it down in simple terms and share some use cases where blockchain can be applied directly to the recruitment process to increase security, efficiency, and transparency. 

What is Blockchain?

Blockchain is a decentralized ledger, which is a fancy word for a record-keeping system. It stores the records of many transactions across a decentralized network of computers. 

Blockchain records are the ‘blocks,’ and the blocks are linked together in a chronological ‘chain.’ You can’t change one piece of data without also changing every piece of data that comes after it in the chain, making blockchain records incredibly difficult to tamper with. 

Key Features of Blockchain 

Decentralization

Unique traditional, centralized systems where records are stored in one physical location, blockchain operates on a decentralized network of computers known as nodes. Each node has a copy of the entire blockchain, meaning that a single failure point will not compromise the entire system. 

Also, blockchain does not have a central authority (like when a company controls ownership of its entire database). Instead, control is distributed among the system’s users. 

It’s important to note that there are private blockchains, like those used by employers. To participate in a private blockchain, users must receive an invitation or comply with a rule-set created by a system administrator. 

Security

Blockchain records are unique in that they’re very difficult to alter. To edit a blockchain database, all subsequent records must also be altered, and the network must agree on the changes. 

Think of it like keeping score in a tennis game. If only one person were watching and keeping score, it would be very easy for that person to alter the records for malicious purposes like influencing sports bets. 

But imagine a tennis game where everyone in the stands was also watching and keeping score, then comparing those records against one another. If one person tried to create a false record, it would very obviously stand out. 

This characteristic makes blockchain a highly secure and fraud-resistant system of recording data.

Transparency

All participants can see all transactions on a blockchain in the network. This means that every transaction can be tracked and verified by anyone. 

Additionally, each transaction contains a precise date and time stamp, which allows participants to see how events occurred in chronological order and adds another level of transparency.

Blockchain in the real world

All of the features above sound great in theory, but it can be hard to wrap your head around how this technology would be useful in a real-world setting. To help illustrate, here are a few examples. 

Jewelry trade

In the diamond industry, sustainability and traceability are important values. The De Beers Group deployed Blockchain to create an immutable and secure digital trail for high-value stones from the diamond mine to the cutter and polisher and eventually into the hands of jewelers. This use case can help minimize the trade of conflict diamonds and increase trust in the provenance of valuable stones.  

Logistics

Grocery giant Walmart moves massive perishable goods across international borders, time zones, and climates. Every load shipped requires hundreds of data tracking points, including stop locations, fuel levels, truck temperature, etc. If any one of these data points is incorrectly logged or recorded, it can result in a time-consuming reconciliation process and an extended payment delay for the supplier.  

Walmart and its partners created a Blockchain network that automatically and consistently gathers information at every step in the distribution process, from the farm where the produce is harvested to the delivery and approval for payment. Before using this system, an estimated 70% of supplier invoices were disputed over possible discrepancies. Today, fewer than 1% of invoices have discrepancies, and those that occur are easily flagged and resolved. 

Music industry

With the prevalence of streaming services, distributing royalties to musicians for the music they’ve created has become incredibly complex. Blockchain allows artists to bypass many of the intermediaries in the traditional music ecosystem and collect royalties directly, in real time, using smart contracts that anyone can scrutinize and review. With widespread use, this system could prevent another Taylor Swift music rights fiasco from ever happening again. 

Blockchain recruitment use cases

Now, on to our main concern: blockchain for recruitment. 

You’re here because you’re looking to utilize every tool available to make hiring easier, faster, and more cost-effective, so let’s look at some ways blockchain can be applied in a recruiting setting.

Resume verification

One of the biggest problems in recruiting is that candidates can put whatever they want on their resume. Sure, we have ways to identify discrepancies by checking references and verifying educational credentials, but that’s a labor-intensive process. 

Blockchain can be used to securely store and verify a candidate’s professional and educational credentials, like their degrees, technical certifications, and work history, reducing the incidence of falsified resumes and increasing our ability to hire with confidence. 

Identity verification

Gathering identification documents is a tedious step in the new-hire process. Blockchain-based identity verification offers a tamper-proof way to confirm candidates’ identities and automate background checks, which can take days off your hiring timeline. 

Privacy

The volume of personal data turns off some candidates they’re asked to provide during the job search. How can we help guarantee that their sensitive data is in good hands? With Blockchain. 

Using Blockchain to store candidate data can greatly enhance privacy and security, giving candidates greater control over who can access their information and for what purpose. 

Feedback

Feedback is invaluable in creating a good candidate experience. Still, it’s difficult to get candidates to speak freely amid concerns that it will hurt their chances of a job in the future or reflect negatively on them as a professional. 

Blockchain-based review systems can give candidates a reliable and secure way to leave feedback after the recruitment process, which can aid in providing a more enjoyable and transparent candidate experience. 

Gig workers

One aspect of Blockchain that we haven’t covered yet is smart contracts. These digital contracts stored on a Blockchain are automatically fulfilled once certain conditions are met. All participants in the contract can be immediately certain of the outcome (like the terms and payment) without the need for any intermediary or third party. 

This feature can be applied to streamline hiring and paying contract workers, which can be an asset to your workforce. 

Onboarding

The benefits of Blockchain don’t end with hiring. The principles can be used to streamline and accelerate new hire onboarding. Blockchain enables employers to have necessary new hire information, like an applicant’s driver’s license, banking details, and tax forms, available instantly.  

This cuts down on administrative work and maintains strong momentum between the offer and the new hire’s first day on the job. 

Blockchain holds incredible promise for enhancing and transforming the recruiting world, which could be key in solving some of the biggest hiring challenges we face. Suppose you’re not ready to dive into applying Blockchain right this minute. In that case, that’s okay–simply arming yourself with an understanding of the technology and staying open to the possibilities puts you at a great advantage in the competitive talent landscape we’re living in. 

Staffing your team doesn’t have to be so hard.

Reach out and see how we can help.

Pete Newsome

About Pete Newsome

Pete Newsome is the President of 4 Corner Resources, the staffing and recruiting firm he founded in 2005. 4 Corner is a member of the American Staffing Association and TechServe Alliance, and the top-rated staffing company in Central Florida. Recent awards and recognition include being named to Forbes’ Best Recruiting Firms in America, The Seminole 100, and The Golden 100. Pete also founded zengig, to offer comprehensive career advice, tools, and resources for students and professionals. He hosts two podcasts, Hire Calling and Finding Career Zen, and is blazing new trails in recruitment marketing with the latest artificial intelligence (AI) technology. Connect with Pete on LinkedIn