Blockchain dreams: Payroll innovations come true
On July 31, Paul Fyfe, founder and CEO of Humanity.com, stepped down from the company he created to become the new CEO at WorkChain.io. This positions WorkChain.io innovations to change HR and business as we know it. No, it’s not drama; this is real, life-altering stuff. I’m talking about blockchain technology, and in a way you have not yet imagined — mainly what it can do to change the way we process and receive payroll. Well, what I really mean is making payroll obsolete. (Queue crowd cheers.)
Workchain.io, with the leadership of Fyfe, is positioned to use blockchain technology to automate payroll in real-time to give employees, contractors, and gig workers instant access to their earned money. This will seriously disrupt the multibillion-dollar payroll industry, and remove a lot of frustration around personal finances and money matters for EVERYONE.
HR and businesses will spend less time — or no time — and money processing payroll, and employees and workers will not have to wait two weeks — or more if there is an error, which enviably happens — for the funds they have earned. I have payroll stories that will give you night terrors. Like the time there was a “glitch” in in the payroll system, and hundreds of thousands of dollars in out-of-state direct deposits did not get deposited in employee accounts, including the account of the CEO of the company. Or the time an employee’s paycheck flew out of his hand during a major whiteout snowstorm right before the Christmas holiday. Or the time I had to approve a payroll report on my honeymoon. (Side note: the Andes, altitude sickness, and a 50-pages payroll report are not a good combo for romance.)
Fast forward five to seven years from now (the timing depends on which experts you ask) and imagine receiving compensation at the end of every workday. Alternatively, if you are a freelancer or a contractor, receiving funds within hours of completing a project. Also, consider this futuristic scenario of sharing a work project or a “job” with a team, where you are paid in real-time when you complete specific milestones laid out in a “smart contract” (also a blockchain innovation).
As an employer, think about the opportunities for productivity, and not just in your HR department. Not to mention the decrease of discord that can result from a payroll verification process that often bounces between employees and managers, then managers with HR, then HR back to managers, then to the payroll system, then maybe back to HR, and finally to the bank or additional third party. With so many hands in the pot, and with so many opportunities for error and failure, it’s really a broken system. Of course, until recently it’s all we had.
What is blockchain?
Blockchain technology is best known as the core technology behind bitcoin and cyprtocurrencies. After reading numerous literatures on blockchain, the best way to describe it is as a “decentralized” digital ledger or database where users can share information in real time, and collaborate, receive, and make payments — nationally and internationally — and other contractual transactions. Essentially, a third party (a central ledger), such as a bank or record-keeping institution, is not needed and transactions can happen instantly.
Records are organized into groups of data that are encrypted, the “blocks,” and the global peer-to-peer network is the “chain.” The blocks are replicated across potentially tens of thousands of computers in real time, keeping track of all the transactions as they happen. No single block can be altered unless all the computers/users in the network are in agreement. As more data is stored and verified, you get a chain of blocks. Hence, blockchain.
All users receive a digital ID to use when inputting and verifying information. That digital ID is traceable, so if there were to be an attempt to alter data, all users would know who was the culprit and take immediate action. Blockchain is said to provide information security, credibility, and ease of access to users and organizations. I also really like how fellow IB blogger Mindi Giftos explains blockchain in her blog, “Tackling blockchain: What every business should know.”
Blockchain can be accessed from anywhere, and at any time, while being secure, authenticated, and verifiable, with appropriate visibility. It is a platform that has enhanced cybersecurity capabilities and transactions can be carried out in an efficient, error-free way. This, versus data, sensitive information, and transactions being kept on one server and owned by one entity where there is single point of failure. If servers go down, get hacked, or the unimaginable happens, your information could be lost or compromised.
Blockchain creates what tech experts are calling “self-sovereign identity,” where the individual, not an organization or a third party, owns personal data. Individuals could have control over the data of their lives, providing access keys rather than resumes when they apply for jobs. They could include degrees, certifications, courses taken, grades, employment history, salary, and passion projects, if they choose to. Hence, employees, contractors, and workers are accountable for maintaining the correct real-time information.
In fact, MIT is one of the early adopters of this application. The proprietary MIT program Blockcerts is a permanent and tamper-proof diploma system. The university is giving graduates the option to receive their diplomas in a digtal, secure app that is based on blockchain tech.
How can blockchain assist HR and your business?
Because the information that anyone that inputs into the blockchain system is verified secure, and the technology removes unneeded intermediaries and the fees associated with them, this is a perfect application for the time-consuming processes that bog down HR, the talent acquisition process, and the employment process.
The other segments where blockchain can disrupt HR and business include:
- The use of cryptocurrencies for expenses related to global employees and global employment, such as time lag, third-party fees, changes in exchange rates, and other international expenses such as tax liability. This is all through the conversion of bitcoin;
- Recruitment, selection, and work-matching platforms;
- Almost all employment related details, including insurance, salary, travel expenses, and rewards;
- The improvement of cybersecurity in how fraud protection and data protection are handled in HR; and
- Payroll and the movement to just-in-time payment for work and projects.
Why is WorkChain.io innovative, how do they look to disrupt payroll with blockchain?
Most of the pay-related applications for blockchain have surfaced as cyrptocurrency and cross-border payments using bitcoin. Notably, Bitwage has an interesting solution to costly expenses associated with exchange of funds between global business and their global workforce. To streamline cross-border employee payments, Bitwage combines blockchain with mobile and cloud technology. Employees and contractors can choose to receive funds from among 25 currencies and can receive their funds within 48 hours of doing so.
Etch has a similar platform, using chip payment cards that employees can use to receive and cash bitcoin funds, or receive multiple cards with different amounts on them that they can then send to relatives in different parts of Europe. Chronobank.io is another disruptor using blockchain to develop a financial system for freelancers, gig, and short-term contract workers to obtain work and pay them in their own labor-hour token.
Workchain.io is working on how blockchain tech can solve process and payment problems associated with organizational payroll. They play in the same space as Bitwage, Etch, and Chronobank.io; however, Workchain.io is the first vendor startup to concentrate solely on just-in-time payroll process applications. The startup also is set to fast track the transition from current payroll process to just-in-time wages, which experts said earlier this year could take us anywhere from three to five years to complete. Beyond their technology, this could be a logical jumping point for organizations to pair smart contracts with payroll capabilities that Workchain.io is currently working on.
A smart contract is an automated contract that executes an action on the blockchain when specific conditions are met between two parties. Smart contracts are essentially written code that determines what happens when money comes in, when services go out, or when certain conditions are met. Smart contract documents can be stored electronically and verified via blockchain, making them authentic and unbreakable. This has the potential to automate a lot of workflows that currently require human intervention. All parties would be guaranteed that the other side would uphold agreed-upon terms and deadlines, or adjusted deadlines, without having to spend as much time ensuring project oversight and management.
Referring back to the futuristic scenario I proposed earlier, things start to take shape. As a project leader, and using your blockchain access key, you can scan through multiple professional profiles — with all credentials and skills verified and maintained — and pick and choose whom you want on a project. Many of us could actually be working in the gig economy in the next five years, which really opens up the talent pool if you don’t have the skills in house. You could then propose the terms via smart contract, and have talent starting work on your project at your office door or from across the globe the very next day. The organization you work for could even pay out funds in its own trademark corporate currency of blockchain-based coins. I’m sure Google already has this in the works.
In addition, in the near future, blockchain technology will incorporate biometric data — fingerprints, facial recognition, and iris scan — to track attendance and work. This will be possible thanks to the efforts of Accenture and Microsoft, who have partnered to impact the humanitarian cause — ID2020. The partnership of the organizations created a blockchain solution that functions as a digital identification for refugees, providing access to education, banking, health care, and housing to the 1.1 billion people worldwide talked about in a June article from Entrepreneur magazine.
No innovation is without drawbacks and barriers to scale. To put it in perspective, blockchain only really works if it achieves scale for verifying data. It also requires a higher level of trust than what we may be able to give at the moment. However, as members of Generation Z — who are accustomed to sharing information online and essentially have higher levels of trust for the process — enter the workforce, that shift will accelerate.
The potential to fail is there, but in a world where we all feel the need to be more human, the first move is toward trust.
What to do next?
Ultimately, the premium in the future of work will be on speed and innovation. To credit IBM Chief HR Officer Diane Gherson, this means work will be “highly collaborative and performed by teams that can assemble and disassemble quickly, responding in real time to external and internal needs.” Blockchain technology will make our workplaces agile and progressive, serving everyone involved. If you have not done so already, make good friends with your IT department — and not just because you need someone to wipe away your digital footprint in the event that you accidently send the company payroll information out via the intranet (true story).
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