How aid orgs are experimenting with blockchain in their HR operations

NAIROBI — While some players in the international aid sector are capitalizing on blockchain technology to improve programming, others in the sector are also using the technology internally in their organizations, in areas such as improving efficiencies around human resource processes. Blockchain has been praised as the next major transformative technology in development and humanitarian relief, mainly because of its potential to create efficiencies in areas such as supply chain logistics. The technology uses a decentralized network to record and authenticate transactions and is valued because of its heightened security, transparency, and ability to streamline processes. Konektid International, a consulting firm that advises organizations that work with the United States Agency for International Development, is planning to begin offering payments to employees in cryptocurrency this month, as well as accept it as payments from clients. Blockchain technology is used in the transfer of cryptocurrencies. The firm decided to make this switch in order to avoid expensive wire transfer fees and prevent delays in transfers of payments. “It’s just a better payment system,” said Mike Shanley, founder and chief executive officer of Konektid. “We want to offer another option for our teams around the world to make the process of delivering development impact more efficient.” The costs to make the shift will be minimal and the move will ultimately save the firm time, he said. As a small business, every time Konektid sends a wire transfer, one of the company’s employees has to physically go to a bank branch for the transaction. For cryptocurrency payments, this won’t be necessary. Given the fluctuating value of cryptocurrency, Konektid will make the payments based on the U.S. dollar value of a set cryptocurrency, at a set date and time. The firm anticipates that the majority of its payments will still be in fiat currencies because the use of cryptocurrency is so new. It also expects that the first ones to opt in will be vendors, staff, and consultants that already have experience using cryptocurrencies. “The end goal is to have the highest return on the investment, which is impact return on USAID dollars invested into projects. This is yet another way to improve that process and make it more efficient,” said Shanley. Chemonics, an international development company that primarily manages USAID contracts, is also working on ways to improve internal HR processes through blockchain technologies. The company has implemented a pilot that incorporates blockchain technology into its salary and employment verification processes. When an organization implements a USAID contract and seeks a consultant to work on that contract, the organization is often required to verify and submit proof of the consultant’s professional credentials and salary history for three years through USAID’s Contractor Employee Biographical Data Sheet, FORM AID 1420-17, commonly referred to as a biodata. This process requires companies to collect copies of backup documentation such as diplomas, passports, and pay stubs to verify the accuracy of the data on the form. Chemonics goes through the process of assembling these documents to complete these forms as many as 4,000 times per year in order to staff people onto its projects and proposals globally. The company estimates it spends about three hours processing each form. Through its pilot, using the software technology company BanQu’s blockchain platform, it is developing a solution that will reduce the amount of time needed to develop and process these forms, with all the backup documentation data residing with the consultant. The company is hoping to cut the time spent on verification of biodata forms by as much as 50 percent through this method. Using blockchain is also expected to reduce the potential for errors and fraud, which can cost both USAID and Chemonics money. “Blockchain is an ideal fit for this type of application because it gives people better control of their own data, allows them to share it more efficiently, and creates an immutable transaction history that can be used to reduce the time and effort expended by consultants and USAID implementers to create accurate, verifiable, and trustable biodatas,” said Joshua Leland, the managing director of the Diversified Growth Unit at Chemonics. “A blockchain-based solution can create one, distributed, secure, and shareable record. In the future, with blockchain technology, we won’t need the biodata form at all.” The most appropriate interventions for blockchain in human resource departments includes replacing processes that are “slow, cumbersome, labour-intensive and expensive due to the need of significant data collection and third-party verification,” according to a report from PricewaterhouseCoopers. The report called the technology “game-changing” in the HR field. It is still early days for companies and organizations experimenting with ways to make blockchain technology work for them to create efficiencies, said Mike Cooper, senior M&E specialist for Konektid. “Whether the blockchain is being used as a payment system for clients and staff, or as a logistical solution to a supply chain problem, or integrating it into your management and information systems,” he said. “I think that this is the first step in a marathon.”