How will Blockchain Change Data Custodianship & Payroll
Talking tech: how employee data is influenced by blockchain, smart contracts and more
“We have emerging payroll organizations that are promoting that they use blockchain today. This is no longer a concept - this is reality.”
Blockchain is an innovative technology that has gained lots of media attention in recent years, most notably for its central role in the rise of crypto-currencies like Bitcoin. But did you know that the same technology is already transforming the ways in which global payroll operates?
In this latest edition of the Payday Podcast from CloudPay, we talk to two experts with their fingers on the pulse of payroll technology: Dimitris Papageorgiou, Global Payroll Advisory Leader for Accenture’s Talent and Organization Practice; and Linda Overton, Director of Shared Services at DXC Technology.
In it, they share their detailed views on blockchain, smart contracts, data custodianship and more, and explore what this means for organizations trying to ensure their payroll operation is up-to-date and fit for the challenges of modern business.
This blog highlights some of their key insights, including:
Changes in payroll, and in the wider world of work, have opened a conversation about who really owns and controls employee data.
While employers have long taken charge of the information they hold about their workforce, Linda highlighted that this doesn’t necessarily translate to ownership: “There is a little bit of a false sense of security that the employer is the primary source for the data. We as employers spend millions of hours ensuring that data is current and accurate, but it really, truly does belong to the employee.”
Dimitris felt that a shift is currently occurring where, as well as ownership, the custody and control of payroll-related data will become the sole domain of the individual employee: “The concept that we are introducing is that data custody will move towards the employee exclusively. That employee will then authorize companies or vendors to have access to that data whenever they need access to it for processing something on their behalf.”
Part of the reason for the move away from the current employer-centric model for data custodianship is because of security threats. At a time when cyber-criminals are causing bigger headaches for businesses than ever before, how data is distributed through an infrastructure, and how it’s handled by relevant third parties, can be major weak points.
Linda pointed out that when third parties are involved, employers have even less control over data security: “Employers are spending millions of dollars on cyber-security and perhaps we’re a little bit late to the game. But we’re only as good as the hackers, who have access to similar and sometimes even more advanced tools and that’s really the challenge for so many employers, and especially smaller ones more dependent on third parties.”
New kid on the block(chain)
Where blockchain comes into the new model is to create one version of a piece of data - for example, a social security number - which is then accessed by relevant parties. This prevents that data from being copied multiple times and held by each party that needs it, with the inevitable increased exposure to security risks.
Dimitris explained: “The shift that we are recommending is to utilize emerging technologies such as blockchain to create a single source of truth for data, that is then visited by people who need access to it, but it is not being downloaded or owned by them. It is owned by the individual employee in this case.”
Linda echoed Dimitris’s thoughts, pointing out that the current system has too many manual touchpoints that can be turned into automatic ones through blockchain: “Within all of our ecosystems, we want to have data flow automatically and seamlessly from the entry point all the way through the infrastructure to third parties. Through all these touchpoints, we’re losing quality and integrity of data every single day, and that impacts the employee experience and the services they receive.”
Getting more from data
Just as retailers can use data to send targeted and personalized offers to customers through their smartphones, the same principle can be applied from a payroll perspective, too.
Dimitris explained that businesses can use employee data to ensure people are paid appropriately and taxed accurately, as well as to support performance monitoring and talent management. At a time when employees are working more flexibly and in different places at different times, this can help stop the complexity of global, distributed payroll spiraling out of control.
Linda remarked: “We have a gold mine of data within HR and payroll, and now we see how it can be utilized. If we channel that for our leaders to have predictive analytics, and turn the data into information that can help drive the business, our talent strategy and our results, then this really represents the richness of this data.”
A long-term shift
With blockchain and smart contracts being relatively new innovations, it’s likely to take a long time for enough businesses to gain a sufficient understanding for it to become a global standard for employee data.
Linda explained: “It will take decades. There are early adopters, and we know of some organizations that are already using blockchain and smart contracts to ensure employees are data custodians, but they’re definitely on the leading edge. The first step [towards wider adoption] is education: every university around the world is now offering courses and executive leadership on blockchain. It is entering our organizations through training and education, but there is a significant amount of change to embrace.”
Dimitris added that regulatory bodies also have some catching up to do, in terms of understanding the influence these new technologies have on employee data and how to legislate for it: “I think, as we have digital natives becoming mainstream within the workforce, and baby-boomers are exiting, the demand for ownership of data by individuals will increase. But the regulatory body needs to understand, legislate and catch up very, very quickly.”
This blog only scratches the surface of the detailed insights that both Dimitris and Linda shared around payroll technology, blockchain and employee data. Take a deeper dive in listening to the full podcast here.