How Blockchain Will (and Won’t) Impact Recruiting and HR

October 23, 2018

The noise about blockchain and its potential impact on business and government has gone from a hybrid hum to a jet-engine roar. According to a report published by McKinsey & Company earlier this year, “The past two years alone have seen more than half a million new publications on and 3.7 million Google search results for blockchain.”

As the product leader for LinkedIn Talent Solutions, I was intrigued by the clamor around blockchain and particularly by the idea that this emerging technology could revolutionize talent acquisition. I had heard plenty about blockchain at a high level and about how it could upend recruiting, but I was still unclear on exactly what was possible.

A way to track a transaction without a central authority

Blockchain is the technology behind Bitcoin, ether, and other cryptocurrencies. It’s a distributed digital ledger made up of verified and nearly unalterable blocks of data, which may capture, say, a monetary transaction or an individual’s work history.

No single member of the community can alter the chain without all other members knowing about the change and validating it. Once a new transaction is verified, it’s added to the chain.

The idea for blockchain is less than 30 years old and was originally described in a 1991 article in the Journal of Cryptology. “[B]lockchain is still an immature technology,” McKinsey notes, “with a market that is still nascent and a clear recipe for success that has not yet emerged.” McKinsey’s analysis, however, points to three major sectors with “fundamental functions” best suited to blockchain applications — financial services, government, and health care.

In the financial arena, for example, blockchain might be an ideal way to move payments from country to country. And the industry is pursuing the possibilities: “Approximately 90% of major Australian, European, and North American banks are already experimenting or investing in blockchain,” McKinsey reports.

Blockchain in hiring

The most obvious way in which blockchain might add value to the world of talent acquisition is by providing an alternative method for checking academic credentials. A number of colleges and universities around the world, some with distinguished — and verifiable — pedigrees, have started to use blockchain to give their graduates ownership of their academic credentials. This year, for example, all of MIT’s graduates will receive digital copies of their diplomas as well as the time-honored paper version. Other schools in the U.S., Australia, and Europe are following suit.

While there are many companies that currently perform educational background checks, they could potentially be done for little cost and in almost no time using blockchain. At MIT, students downloaded an app called Blockcerts Wallet that “enables students to quickly and easily get a verifiable, tamper-proof version of their diploma that they can share with employers, schools, family, and friends,” according to MIT News. Blockchain could also slow down the kinds of folks who veer toward embellishment when writing their resumes.

Blockchain resumes present some difficult challenges

There’s also a lot of speculation about blockchain being used to verify employment as well as education. “The potential for blockchain to become a new open-standard protocol for trusted records, identity, and transactions cannot be simply dismissed,” McKinsey says.

I do, however, have some concerns about blockchain’s potential to capture the content of a resume or professional profile, and apparently I’m not alone. In a piece for TechTarget, author Pam Baker says, “Verifying education is one thing, documenting the nuances of employment history is quite another.”

If the only thing that mattered to a potential employer is where someone worked, your resume would be a list of five bullet points. We all have a personal career narrative that we can’t tell in a blockchain. There is so much more that we want to convey.

And while a college may have a vested interest in ensuring the accuracy of who has and hasn’t earned its diplomas (which is part of the reason it has a registrar’s office), it’s not clear that many companies will feel it’s in their best interest to confirm employment and work details publicly so other employers can start snapping up their top talent. We’ll be back to reference checks. “Blockchain cannot assess whether an external input is accurate or ‘truthful,’” McKinsey notes.

Another thing that could be difficult to verify is skills, particularly soft skills. Who’s going to be the verifying entity for, say, good presentation skills?

Is it even legal?

Blockchain credentialing seems to clash strongly with the demands of the General Data Protection Regulation (GDPR) that the European Union put in place earlier this year. Under GDPR, people must be able to have their personal information changed or deleted under many circumstances. A blockchain makes that essentially impossible. In fact, one of the core benefits of blockchain is that it keeps a transaction history that can’t be changed.

Both GDPR and a regulation in the United States, the Fair Credit Reporting Act, specify that people have rights about how they are presented to companies when being considered for a job. Blockchain would prevent people from ever removing something like a job they had in high school, which may not be relevant now.

In short, it appears that today’s blockchain technology is incompatible with both U.S. and international law as it pertains to certain industries. And this incompatibility exists at the core of blockchain itself.

It will probably be decades before we see how blockchain plays out

The biggest obstacles for blockchain are not specific to HR, recruiting, or the candidate experience. “The lack of common standards and clear regulations is a major limitation on blockchain applications’ ability to scale,” McKinsey says. Industries will have to overcome underlying coopetition challenges — competitors will have to work collaboratively to create standards that allow for widespread and successful adoption of blockchain.

There is a clear precedent for that, however. The Harvard Business Review last year compared the potential rise of blockchain with another foundational technology—the adoption of TCP/IP, the internet protocol suite that made the internet feasible. The authors note that it took more than three decades for TCP/IP to reshape the economy and they conclude, “It will take decades for blockchain to seep into our economic and social infrastructure.”

Which is why I’m going to be patient and continue to assess how blockchain is likely to play out in HR and recruiting. For the time being, I’m going to hedge my bets — both in dollars and Bitcoins.

*Photo by NASA on Unsplash

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