Diversity in the worlplace

Is a lack of employee diversity hindering marketing success?

Let me start this article by saying that a) promoting diversity within all walks of life is something I am very passionate about which leads me to b) I know that many of you will feel you are doing all you can to promote diversity already (if you are one of these companies – please shout about it in the comments!). However, the stats suggest not all businesses are doing enough and therefore, in order for real change to occur, we need to encourage more transparency and promote more proactive change. I hope this short article will provide some statistical analysis and thought-provoking encouragement for more businesses to take action. Let me know what you think and if you can, please take a step-forward by commenting and sharing this article if you agree my conclusions. Enjoy…

Controversial marketing campaigns in recent years have raised many questions about the marketing industry as well as the people signing-off on campaigns and decisions that have sparked outrage from consumers. (If you are not familiar with any such campaigns, I recommend you do your own online research into campaigns signed off by Dove or Nivea or even Uber for that matter and you will see why).

The fact is, both financially and morally, companies should be doing more to ensure diversity is represented within marketing and creative departments. Research conducted by Opinium Research (1). indicates that 55% of IT SMEs in the UK said they would be more likely to do business with another company known for its inclusive employment strategies, which further strengthens the business argument for promoting diversity within marketing structures of companies. And yet, despite these reasons, there is still a lack of diversity represented.

Having the presence of a diverse range of people in your creative department not only makes financial sense, but it would also help to ensure that sensitives are not overlooked during the development of campaigns and thus provide more trust and relatability towards your brand from consumers.

In addition, we live in a world that is more interconnected than ever, so surely it would be wise for businesses to consider the diversity concerns that exist as part of its marketing strategy, if it wishes to connect with a broad, multi-cultural demographic? The reality is however, that this is not happening as much as it should be. Working in Marketing Recruitment, I get to see organisational structures for all types of businesses and it is evident that companies need to do more to reflect diversity within its marketing operations – especially at management levels. By doing so, a business could easily increase its prospects of a return on investment (2). For example, by establishing a return on investment (ROI) based approach to diversifying a creative department, a business can increase its pool of ideas and creativity and improve the range of perspectives and experiences at its disposal to create campaigns that appeal to broader audiences.

The presence of ethnic minorities

As much as businesses may deny any negative bias in relation to recruitment, the fact of the matter is, I have seen first-hand how the cycle of reserving most of the senior marketing positions for people who are predominantly male, white, and middle-aged continues.  When you combine this with the limited presence of women and ethnic minorities in senior marketing positions, it highlights that there must be both positive and negative bias (3) that exists within recruitment processes of marketing and creative departments. The prejudices around gender as well as the attitudes towards ethnic minorities (4) also serves as an explanation for the lukewarm pace in addressing diversity concerns within the senior ranks of marketing operations.

However, this should not be the case. On the contrary, it is likely hindering marketing success.  For example, an independent review of race in the workplace carried out by Lady Ruby McGregor-Smith on behalf of the UK government, estimated that by ensuring full representation of ethnic minorities in the workplace, including senior roles, this could boost the British economy by £24 billion (5). Furthermore, research by McKinsey and Company revealed that businesses with the presence of ethnic minorities within the leadership structure were 33% more likely to outperform their peers on profitability (6).

The Gender Pay Gap Continues

A recent study conducted by Marketing Week (7) recently highlighted that there is still a long way to go to redress the gender pay gap too. The 2019 Marketing Week Career and Salary Survey showed that women are still earning less than men across every sector and at every level of seniority.  This is unacceptable on all grounds – ethical, moral and financial. In fact, this gender pay gap is more than likely hindering business success rather than saving in employee salaries.

There are many studies that highlight the added value for companies that diversify the gender set up of their executive teams so it is important businesses start to do more to redress the balance and improve.  In fact, when considering employment, 56% of women look at whether the organisation publicly shares its progress on diversity (8) – so perhaps this would be a good place for businesses to start?  There is a battle for talent right now (I should know as I am tasked with locating it) so this is one step a business can take right now if it wants to improve its ability to attract the best marketing employees to its brand. If you are proud and transparent with your diversity and inclusion metrics then promote them, by doing so, you could strengthen both your employer brand and credibility and boost your competitive edge at the same time, helping you ensure you win the race for the best talent available in a competitive marketplace.

So why, despite the strong indicators regarding the benefits associated with encouraging a diverse workforce, do we still see such disparity and under-representation?

Age discrimination – Too old for tech?

There is a tendency, especially within marketing departments, for recruiters and hiring manager to focus solely on attracting the millennial demographic. This was indicated in an interview with the HubSpot founder who claimed that:

“in the tech world, grey hair and experience are really overrated”.

This begs the question of how prevalent views such as this may exist within the industry and if this impacts the access older workers have to securing marketing related positions (9).

The fact of the matter is the population in the UK that is aged 65 is increasing and so when you combine this knowledge with the purchasing power of this demographic (10) it suggests there should be potential financial benefits in diversifying the creative department of your company with the inclusion of older professionals too. By tapping into the wealth of experience and knowledge of this age group, this will enhance your company’s ability to connect with a growing ageing consumer base.

I may be being harsh so I would like to highlight that there are success stories…

  1. Sodexo: A landmark lawsuit on the grounds of racism in the workplace saw services company, Sodexo, pay $80 million to former employees who brought the case to court.(11) Since then, the company has invested in many diversity and inclusion programs within the company and now has ethnic minorities in 14.5% of the senior leadership positions as well as a strong female presence on the executive board. Indeed, Dr Rohini Anand, the company’s Senior Vice-President and Global Chief Diversity Officer noted that “for every $1 it has invested in mentoring, it has seen a return of $19”.(12)
  2. Accenture: Accenture became the first consultancy firm to publish data regarding employee diversity (13). Also, the company developed a business which saw the success of its Diverse Supplier Development Program, a venture which engages with small and medium-sized companies to incorporate them in the Accenture supply chain. This venture reported a 30% increase from total procurement spends from expanding their suppliers. (14)
  3. Livity: The London based agency which centres on promoting diversity and inclusion, it is part of the Hospital Club Hot 100 and BIMA Entrepreneurial Business of the Year. Promoting inclusion and diversity from the top down, the company works with people from diverse backgrounds and links them with businesses that are keen to diversify. (15)

Conclusion – let’s encourage diversification, transparency and improve marketing success at the same time!

I think my views are pretty apparent within this article, however, I think a summary is needed to drill home the points.

  1. If businesses continue to limit the presence of a particular demographic within senior positions, then they will lose the opportunity to have fresh perspectives on ideas for strengthening marketing success.
  2. By failing to diversify creative departments, a business risks missing the mark concerning its ability to gain wide appeal to broad consumer bases, subsequently affecting the reputation or brand appeal of the company.
  3. With the growing importance of social media acting between companies and the consumer, it is now more essential than ever that companies create a relatable and personable presence online if they wish to achieve marketing success.
  4. By encouraging transparency in relation to diversity and inclusion, your brand will be more attractive to talented marketing professionals seeking new opportunities. Subsequently, it could help your business to secure a competitive edge in the current marketing war that exists when it comes to securing and attracting the best talent.
  5. Companies should not underestimate the purchasing power of certain demographic groups. For example, ethnic minorities have the purchasing power of over £300 billion in the UK (16), women are responsible for 83% of all shopping purchases (17) and the UK population aged 65 and over will account to £1 in every £4 spent by 2030 (18). These are striking figures which indicates strong margins of profitability for companies willing to embrace diversity proactively.
  6. With less than 20 women in CEO positions on the FTSE 250; it is obvious that the UK still has a long to go. It raises the question of whether negative perceptions regarding the capabilities of women in senior positions, similar to the controversial views aired by the former Saatchi & Saatchi boss (19), are still acting as a barrier for women to attain more of a presence in senior positions.

If the reasons for a lack of diversity isn’t down to negative bias then what is it that is stopping all businesses from introducing a top-down approach to promoting diversity and inclusion? Businesses need to take an empowered approach to promoting diversity – if they can do this then they will be making an essential step towards driving effective and long-term change that will not only benefit its brand, creative capabilities and reputation; but will also improve its global appeal and its bottom-line profits.

What do you think? By Commenting, Liking and Sharing, we can make a collective difference. Let’s get involved!

Thanks,

Nick

Why not visit our website where you can access more marketing articles,  FREE Marketing whitepapers and more!

This article was written by Nick Day, Managing Director at JGA Marketing Recruitment – a boutique agency with a “quality over quantity” approach to creative recruitment practices.

If you are looking for expert talent in the fields of Marketing, Social, Search, Creative or Digital fields, then please call me or email me and I would be delighted to discuss how we can help.

Nick Day | Managing Director

JGA Marketing Recruitment

Email: nick@jgarecruitment.com | Tel: 01727 800 377

SOURCES:

1 Opinium Research – http://opinium.co.uk/belief-diverse-workforce-smes/

2 Diversity Best Practices – https://www.diversitybestpractices.com/sites/diversitybestpractices.com/files/import/embedded/anchors/files/diversity_primer_chapter_02.pdf

3 The Royal Society – https://royalsociety.org/~/media/policy/Publications/2015/unconscious-bias-briefing-2015.pdf

4 The New York Times – https://www.nytimes.com/2016/03/19/business/j-walter-thompson-gets-new-chief-after-departure-over-suit.html

5 The McGregor- Smith Review – https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/594336/race-in-workplace-mcgregor-smith-review.pdf

6 McKinsey and Company – https://www.mckinsey.com/business-functions/organization/our-insights/delivering-through-diversity

7 Marketing Week – https://www.marketingweek.com/2019/01/10/salary-survey-brands-gender-pay-gap-failing-female-marketers/

8 PwC – https://www.pwc.com/gx/en/about/diversity/iwd/iwd-female-talent-report-web.pdf

9 Financial Review: https://www.afr.com/leadership/workplace/disrupted-dan-lyons-the-hubspot-worker-who-took-his-revenge-by-writing-a-book-20160518-goyfqj

11 AGE UK – https://www.ageuk.org.uk/globalassets/age-uk/documents/reports-and-publications/reports-and-briefings/active-communities/rb_feb17_age_friendly_business.pdf

11 Corp Watch – http://www.corpwatch.org/article.php?id=12160

12 Diversity Best Practice – https://www.diversitybestpractices.com/sites/diversitybestpractices.com/files/import/embedded/anchors/files/diversity_primer_chapter_02.pdf

13 Fortune – http://fortune.com/2016/02/08/exclusive-accenture-is-the-first-big-consulting-firm-to-publish-race-and-gender-stats/

14 Accenture – https://www.accenture.com/us-en/company-supplier-inclusion-diversity

15 The drum – http://www.thedrum.com/news/2016/05/09/saying-isnt-doing-meet-individuals-walking-talk-diversity

16 IPA – http://mediareach.co.uk/wp-content/uploads/2013/11/Multicultural_Britain-2012.pdf

17 The independent – https://www.independent.co.uk/news/uk/this-britain/shopping-its-all-in-the-gender-8547059.html

18 Retail think tank study – http://www.retailthinktank.co.uk/whitepaper/how-will-demographic-trends-in-the-uk-affect-the-retail-sector/

19 The Guardian – https://www.theguardian.com/media/2016/aug/03/saatchi-saatchi-boss-kevin-roberts-resigns-amid-sexism-row

IMAGE: Photo by Sharon McCutcheon on Unsplash

Blockchain for Payroll & HR: My Conclusions. article 10 of 10

This is article 10 of 10 forming my final part of my series of articles dedicated to my attempt at helping Payroll & HR professionals understand the potential impact that both blockchain and cryptocurrencies could have on the future of Payroll & HR. I hope you have found the journey an interesting and helpful one. Please do share your thoughts if you have enjoyed them (or not) – I would love to know! I will be creating a full (free) whitepaper soon that will include all of these articles in one place for easy reference so look out for this and let me know if you are interested in receiving a copy!

To view the earlier article in the series – click here:

  1. Article 1: How will blockchain and cryptocurrency affect the future of Payroll & HR
  2. Article 2: Will companies start to payroll its employees in cryptocurrency?
  3. Article 3: How will blockchain affect HR Recruitment Processes?
  4. Article 4: What are smart contracts and how will they affect payroll and HR?
  5. Article 5: What benefits could blockchain bring to the payroll industry
  6. Article 6: Are blockchain Payroll Companies the Payroll Future?
  7. Article 7: How to build a blockchain payroll system
  8. Article 8: When should businesses start planning for blockchain?
  9. Article 9: blockchain for Payroll & HR: The Risks & Costs

Also, check out The Payroll Podcast with Anita Lettink which discusses ‘Blockchain and the Future of Payroll & HR’ in considerable detail if you wish to fast-track your learning. You can subscribe to the Payroll Podcast here: Apple Podcasts

Blockchain for Payroll & HR: My Conclusions

Before we get into my conclusions regarding blockchain, I think we should first tackle cryptocurrency.

You may have read other media articles and feel that paying people in cryptocurrency would be a natural evolution for businesses. After all, companies involved in the crypto industry are already doing this such as Japan’s GMO Internet which announced in 2018 that it would allow workers to take home up to $890 a month in Bitcoin. However, cryptocurrency is also extremely volatile, and it’s not unknown for the price of Bitcoin, Ethereum or any of the better-known crypto-coins to increase or decrease by 10% to 20% in a single day. Therefore, I believe it is highly unlikely that we will see any wide-scale adoption of cryptocurrency as a genuine payment option.

Also, the HMRC has recently warned that traders, investors and holders may have to pay Capital Gains Tax on any profits made in cryptocurrencies. With this in mind, you have to wonder why employers would even want to pay employees in cryptocurrency when there is already a mainstream currency (the good ol’ English Pound), that already does the job well enough and this can be spent more easily on the open market too!

So with Cryptocurrencies covered, let us get back to Blockchain for payroll.

If you have followed my previous nine articles to date on the subject of blockchain, then you will already know that the future pathway for blockchain technology in relation to payroll applications, is challenging to predict for two main reasons:

  1. Enterprise-level applications of blockchain technology are so new that it means there are few unique, “battle-tested” products available to test in the field.
  2. Because parts of the technology are based on some very advanced mathematical concepts of cryptography and probability, it is sometimes difficult to explain to those without a computer science background.

While several companies have launched as blockchain-based payroll firms, their client base is unclear.

So what are the pros and cons?

My research tells me that at present, there are still blockchain security and risk issues concerning its use within payroll related applications that need to be ironed-out before widespread commercial solutions will be made available in the marketplace.

The main blockchains such as Bitcoin and Ethereum blockchains are ‘permissionless’ – that is, public and not password-protected which continues to be a significant barrier for many companies in adopting the technology. I am not convinced that any business would be happy for all its transactions to be publicly available to anyone who wanted to view them – but that is what is possible on both the Bitcoin and Ethereum blockchain networks.

Of course, you can create private, permissioned blockchains but these also ultimately have one major flaw, which is, if only a handful of people are allowed to update and validate transactions on a private blockchain, they become single points of control – and therefore single points of failure. I think this could make them an easy potential target for hackers, who could (in theory) gain control of an entire blockchain by attacking only a small number of computers.

There are other risks too. 

For example, for blockchain to function as it was intended, the code behind a smart contract needs to be free from bugs. If blockchain technology was being used to make a payroll payment, a bug might allow the receiver of a payroll payment using a smart contract to request that payment multiple times and get away with repeat payments before the blockchain system has a chance to update itself. Now, I know that all software, including professional, enterprise-level software, contains bugs but smart contract payments are irreversible, so if this happened to a payroll payment there would be no chance that the company could get its money back if a bug like this were to exist and get exploited.

In fact, in 2017, nearly $55 million-worth of ETH was stolen because of an exploitable bug in Ethereum’s source code, and it became one of the biggest backdoor hacks in history. It came down to the capital T in line 666 which, if it had been a small t, that would have prevented the hack. Unbelievable huh!?

I am making this point because only a very tiny proportion of code is ever technically “perfect” and again, for commercial adoption, I think risk-averse companies may therefore, avoid it until larger clients are on-board and have proven its safety.

There is no doubt too blockchain technology offers significant advantages that people may feel may outweigh the risks.

 These include speed, the ability to make fast, cross-border payments and the ability to eliminate the need for a 3rd party acting in the middle of the transactions which would effectively reduce transaction costs. I have highlighted how blockchain transparency may be perceived to be a risk, but it could also be a benefit. For example, with blockchain technology, employees and employers will be able to see the exact status of all payments at all times.

Many could argue that blockchain also offers more security than existing enterprise solutions, after all, enterprise solutions currently in use are hackable too! One advantage of blockchain is the fact that because it is encrypted and distributed, it is virtually impossible to falsify its content.

If the speed benefits are appealing to you, then remember that these speed gains also come at a cost. Blockchain transactions use up significant energy consumption and computing power because they are verified using extremely complex algorithms. In addition, as the size of the blockchain grows, the requirements for storage, bandwidth, and computing power also increases.

Of course, we had the same problems with early computers and phones. A computer that took up the size of a small house and consumed the energy of a small town is now available in a form that is 100 times more powerful, fits in the palm of our hands, and uses almost no power at all to operate – such as a smartphone. In fact, I still remember my mum refusing to for many years to swap her typewriter and tippex strips for a computer (although, like everyone else, she did finally relent). The fact of the matter is, almost no employer or employee could operate without either of these technologies now.

So, will we see widespread adoption of blockchain technology within payroll applications?

Ultimately, yes. But, like the computer example above, I cannot see this adoption happening until many of the issues regarding security, speed, power usage, bandwidth requirements and other issues have been improved and streamlined. I am sure we will see a lot of news in this space coming out in 2019 and beyond as payroll providers sell the many potential benefits blockchain technology could offer payroll departments. However, for me, these companies have yet to prove that blockchain is the right medium to solve current payroll problems or convince me that it is ready in its current form to be a cost-effective solution.

It is likely that if blockchain technology does not take off, you will instead begin to hear more and more about DLT-based databases instead! After all, a blockchain is just a chain of blocks and therefore a type of distributed ledger technology (DLT) right? Well, yes, but not all blockchains are the same. DLT is ultimately a decentralised database that is managed by various participants – and therefore, I believe that this is where we will see quicker progress as new DLT-based products are developed by payroll providers.

With this in mind, get ready for an explosion of new DLT options to hit the market…

I truly hope you have enjoyed this series of 10 articles. I would love to hear your thoughts!

So, what do you think?

As always, whether you love payroll or HR, love what you do, work smart and work hard – just be careful not to overdo it 🙂

Visit our website to access more blogswhitepapersThe Payroll Podcast and more content about all things “Payroll and HR”.

If you are looking for expert talent in the fields of Payroll, HR or Reward, then please contact me and I would be delighted to discuss how we can help.

Nick Day | Managing Director

JGA Recruitment | JGA Payroll & HR Recruitment

Email: nick@jgarecruitment.com | Tel: 01727 800 377

Sources & Credits:

Dom Jolly Image: https://www.radiotimes.com/news/2016-09-12/dom-jolys-trigger-happy-tv-to-return-as-all4-web-series/

Blockchain for Payroll & HR: The Risks & Costs. article 9 of 10

 

This is article 9 of 10 forming the ninth part of a series of articles dedicated to my attempt at helping Payroll & HR professionals understand the potential impact that both Blockchain and Cryptocurrencies could have on the future of Payroll & HR.

To view the earlier article in the series – click here:

  1. Article 1: How will Blockchain and Cryptocurrency affect the future of Payroll & HR
  2. Article 2: Will companies start to payroll its employees in Cryptocurrency?
  3. Article 3: How will Blockchain affect HR Recruitment Processes?
  4. Article 4: What are smart contracts and how will they affect payroll and HR?
  5. Article 5: What benefits could Blockchain bring to the payroll industry
  6. Article 6: Are Blockchain Payroll Companies the Payroll Future?
  7. Article 7: How to build a Blockchain payroll system
  8. Article 8: When should businesses start planning for blockchain?

Also, check out The Payroll Podcast with Anita Lettink, SVP of Global Alliances at NGA HR which discusses ‘Blockchain and the Future of Payroll & HR’ in considerable detail if you wish to fast-track your learning. You can subscribe to the Payroll Podcast here: Apple Podcasts

Blockchain for Payroll & HR: The Risks & Costs

Transferring payroll to the blockchain will require you to integrate (relatively) untested software into your own internal systems.

Immutability is both a benefit and a negative. And where decentralised systems interact with the real world is where they are weakest.

Speaking about a 20th June hack of South Korean cryptocurrency exchange Bithumb, worth upwards of $35 million, Mati Greenspan, a senior market analyst at social trading and brokerage platform eToro, said:

“The immutability of a decentralised currency system plays into the hands of fraudsters.

He went on to comment:

“Once a transaction happens, it can never be undone, which is one of the reasons cryptocurrencies can be a target for hackers. However, immutability is also one of Bitcoin’s most attractive qualities. The fact that it operates transparently and independently is a clear advantage for many.”

As discussed above, blockchain or DLT in the business of Software as a Service (SaaS) is still relatively new.

All the hype around blockchain-based systems as ‘The Next Big Thing‘ does tend to cloud the in-built negatives that blockchain technology brings to the table, as well as the technology’s level of immaturity.

In the payroll and HR business, those constraints are around slow payments and insecure databases which can be edited, hacked or stolen.

But is the application of blockchain really the solution we are looking for? 

What do you think?

  • The last article in the series will be my conclusion!

“So, Is blockchain and crypto the future…?

As always, whether you love payroll or HR, love what you do, work smart and work hard – just be careful not to overdo it 🙂

Visit our website to access more blogswhitepapersThe Payroll Podcast and more content about all things “Payroll and HR”.

If you are looking for expert talent in the fields of Payroll, HR or Reward, then please contact me and I would be delighted to discuss how we can help.

Nick Day | Managing Director

JGA Recruitment | JGA Payroll & HR Recruitment

Email: nick@jgarecruitment.com | Tel: 01727 800 377

Images:

When should businesses start planning for blockchain? article 8 of 10

This is article 8 of 10 forming the eighth part of a series of articles dedicated to my attempt at helping Payroll & HR professionals understand the potential impact that both Blockchain and Cryptocurrencies could have on the future of Payroll & HR.

To view the earlier article in the series – click here:

  1. Article 1: How will Blockchain, Cryptocurrency and DLT technologies affect the future of Payroll & HR
  2. Article 2: Will companies start to payroll its employees in Cryptocurrency?
  3. Article 3: How will Blockchain affect HR Recruitment Processes?
  4. Article 4: What are smart contracts and how will they affect payroll and HR?
  5. Article 5: What benefits could Blockchain bring to the payroll industry
  6. Article 6: Are Blockchain Payroll Companies the Payroll Future?
  7. Article 7: How t build a Blockchain payroll system

Also, check out The Payroll Podcast with Anita Lettink, SVP of Global Alliances at NGA HR which discusses ‘Blockchain and the Future of Payroll & HR’ in considerable detail if you wish to fast-track your learning. You can subscribe to the Payroll Podcast here: Apple Podcasts

When should businesses start planning for Blockchain?

We will no doubt hear much more about blockchain in the coming months and years.

Institutions and governments appear to be more interested in Distributed Ledger Technology (DLT) than blockchain, although the terms are beginning to be used interchangeably.

In Parliament on 6 June 2018 Prime Minister Theresa May revealed that several government departments were working on proofs of concept for how DLT could be integrated into the civil service (link: https://www.theyworkforyou.com/debates/?id=2018-06-06b.297.5&s=distributed+ledger+technology#g300.2]

Sentiment appears to be shifting towards DLT for banks, too.

For example, in a 21 June speech at Mansion House in London, the head of the Bank of England Mark Carney told attendees that the English central bank would be one of the world’s first institutions to build DLT into their payment systems (https://www.bankofengland.co.uk/-/media/boe/files/speech/2018/new-economy-new-finance-new-bank-speech-by-mark-carney.pdf).

Mark Carney said:

“The Bank of England is in the midst of an ambitious rebuild of the Real Time Gross Settlement (RTGS) system – the backbone of every payment in the UK. There are three ways the Bank’s new RTGS will provide a platform for private innovation. Each will make it easier for people to plug in and pay, even across borders. First, RTGS is being re-built so that new private payment systems, including those using distributed ledger, can simply plug into our system.”

Current research on DLT and blockchain in HR and payroll tends to claim that these new systems are faster than current applications, and transaction fees are much lower.

We should therefore ask:

  1. How much lower?
  2. How much have businesses who have adopted blockchain in their HR and payroll saved, on average?
  3. When will blockchain adoption be reflected in savings on a company’s balance sheet?
  4. When do we move from ‘this is what the technology can do in theory’ to ‘this is what the technology has done in practice’?

Transaction fees tend to increase over time on a blockchain-based system. This is down to the ‘miners fee’, or the amount of time it takes a mining node to verify a correct transaction. Included in this amount is the cost of electricity and bandwidth.

And yet, feedback from business is that DLT is not really suitable for real-time, high frequency payments systems (http://www.longfinance.net/LongFinance/DLTCoursePDF2.pdf).

This is because the cost per DLT transaction is significantly higher than through a centralised database, and the consensus mechanism – requiring all parties to agree on changes to the ledger – slows down the system

As the DLT grows in size – as the audit trail is continuously added to, it creates an ever-increasing ledger which makes computer storage a serious issue, especially for smaller firms who are not ready to splash out on new hard drives every time they want to update their payroll!

What do you think?

Please share and comment – I will try to interact with as many as possible!

Future articles in the series will include:

  • Risks and costs
  • Conclusion – is blockchain and crypto the future?

Thanks 🙂

As always, whether you love payroll or HR, love what you do, work smart and work hard – just be careful not to overdo it 🙂

Visit our website to access more blogswhitepapersThe Payroll Podcast and more content about all things “Payroll and HR”.

If you are looking for expert talent in the fields of Payroll, HR or Reward, then please contact me and I would be delighted to discuss how we can help.

Nick Day | Managing Director

JGA Recruitment | JGA Payroll & HR Recruitment

Email: nick@jgarecruitment.com | Tel: 01727 800 377

Sources:

  1. https://www.theyworkforyou.com/debates/?id=2018-06-06b.297.5&s=distributed+ledger+technology#g300.2]
  2. https://www.bankofengland.co.uk/-/media/boe/files/speech/2018/new-economy-new-finance-new-bank-speech-by-mark-carney.pdf
  3. http://www.longfinance.net/LongFinance/DLTCoursePDF2.pdf

Images:

How to build a blockchain-based payroll system. Article 7 of 10

This is article 7 of 10 forming the seventh part of a series of articles dedicated to my attempt at helping Payroll & HR professionals understand the potential impact that both Blockchain and Cryptocurrencies could have on the future of Payroll & HR.

To view the earlier article in the series – click here:

  1. Article 1: How will Blockchain, Cryptocurrency and DLT technologies affect the future of Payroll & HR
  2. Article 2: Will companies start to payroll its employees in cryptocurrency?
  3. Article 3: How will blockchain affect HR Recruitment Processes?
  4. Article 4: What are smart contracts and how will they affect payroll and HR?
  5. Article 5: What benefits could blockchain bring to the payroll industry
  6. Article 6: Are Blockchain Payroll Companies the Payroll Future?

Also, check out The Payroll Podcast with Anita Lettink, SVP of Global Alliances at NGA HR which discusses ‘Blockchain and the Future of Payroll & HR’ in considerable detail if you wish to fast-track your learning. You can subscribe to the Payroll Podcast here: Apple Podcasts

How to build a blockchain-based payroll system

One company produced an interesting blog about creating a blockchain payroll system back in January 2017, before the explosion in the price of Bitcoin accelerated the level of interest from the media, government regulators, and from business service companies. It was this article that inspired these series of articles too, so it is worth a read.

Teemu Turunen of Finnish mobile software company Futurice tasked his team to experiment with using the Ethereum blockchain to recreate the company’s payroll system [https://futurice.com/blog/payroll-system-in-blockchain].

Turunen allows his team of programmers to experiment with open-source software problems in their own time.

When they do this, they report back to the company the number of hours they’ve spent and receive a paid bonus for these hours on top of their normal monthly paycheck.

Calculating these hours, and the relevant payment that should go to each member of staff, is tricky and time-consuming, because not every programmer takes advantage and so there is no “one-size-fits-all” payment that can be made to every employee.

“Some people report contributions every month, some once a year, some never,” says Turunen

“The popularity has been on the rise though and we haven’t had any automation in handling these reports. It’s been slowly becoming a time-consuming chore to collect all the data at the end of the month and report them to payroll.”

Instead of reporting their bonus hours to a central person, who then passes them on to the payroll department, the idea was for each employee to enter their bonus hours onto an Ethereum-based blockchain, where the payroll calculation would be done automatically.

Here’s how it would have worked.

  1. The employee logs on to an internal company webpage where she enters the time in hours and minutes of her free time she has spent on bonus work. She also adds a title of a publicly-accessible URL which helps the company identify the contribution. Along with the time spent, and the URL, is a short description of the contribution made, for example:

“Investigating how to speed up development between teams when we use open source code”.

  1. The above information, along with a unique ID for the employee, gets stored in the Ethereum blockchain.
  2. The same information is also sent to a company instant messaging channel.
  3. At the end of every month, an application is run on the blockchain to automatically calculate the bonus for every employee who has reported doing extra hours in their free time.
  4. This information is auto-forwarded to the Payroll Department and the monthly salary is paid with the bonus intact, if relevant.

 

In creating this experiment, Futurice ask an important question that is not often answered:

  • Why do we specifically need to use a blockchain to make this automatic calculation?
  • Why can this calculation not be made by an equation held in a centralised database?

At the most basic level this could look like an Excel spreadsheet. This spreadsheet is kept in-house and only the Payroll Department has administrator access to confirm that the correct calculation has been made.

  • The Ethereum blockchain is public, but is this level of privacy acceptable?
  • Would you want every one of your employees to be able to see what bonus payments have been made to every other of your employees?

The other fundamental challenge with public blockchains is scalability. As the size of a public blockchain grows (that is, as more information is entered into it), the speed at which transactions can be verified slows down. The storage, bandwidth and computing power required to maintain it also increases.

This is because every ‘node’ that verifies that the information is correct must run through every transaction that came before, as well as all the new ones, to make sure the master copy of the blockchain looks correct.

When we look critically at companies who are trying to sell you the idea of a blockchain-based payroll system, we find the same kinds of issues.

It all comes down to these two linked questions.

  1. Do you as a business owner need to understand every function of a payroll database system? Probably not.
  2. Do you as a business owner need to have an understanding of why using blockchain-based payroll will save you money, over any other compatible programme or system currently available? Probably yes.

Futurice’s conclusion?

“There’s no reason why this couldn’t have been done without using blockchain.

“Deciding on what to use blockchain for is a difficult question, and also a question most companies investing in blockchain implementation are currently asking themselves.

“One thing that is quite certain though is blockchain is mainly suitable for creating data storage systems that work using predefined rules but are not controlled by any single entity.

“In cases where giving away control is not acceptable, it is also possible to create private blockchains with no third-party involvement whatsoever.

This, however….

“would reduce the blockchain to a simple fault-tolerant distributed database…which is quite unlikely the most suitable technology for the job.”

Which basically suggests that we don’t need blockchain at all!

What do you think?

Please share and comment – I will try to interact with as many as possible!

Future articles in the series will include:

  • When should businesses start planning for blockchain?
  • Risks and costs
  • Conclusion – is blockchain and crypto the future?

Thanks 🙂

As always, whether you love payroll or love HR, love what you do, work smart and work hard – just be careful not to overdo it.

Visit our website to access more blogswhitepapersThe Payroll Podcast and more content about all things “Payroll and HR”.

If you are looking for expert talent in the fields of Payroll, HR or Reward, then please contact me and I would be delighted to discuss how we can help.

Nick Day | Managing Director

JGA Recruitment | JGA Payroll & HR Recruitment

Email: nick@jgarecruitment.com | Tel: 01727 800 377

Sources:

  1. https://futurice.com/blog/payroll-system-in-blockchain

Images:

Are Blockchain Payroll Companies the Payroll Future? Article 6/10

This is article 6 of 10 forming the sixth part of a series of articles dedicated to my attempt at helping Payroll & HR professionals understand the potential impact that both Blockchain and Cryptocurrencies could have on the future of Payroll & HR.

To view the earlier article in the series – click here:

  1. Article 1: How will Blockchain, Cryptocurrency and DLT technologies affect the future of Payroll & HR
  2. Article 2: Will companies start to payroll its employees in cryptocurrency?
  3. Article 3: How will blockchain affect HR Recruitment Processes?
  4. Article 4: What are smart contracts and how will they affect payroll and HR?
  5. Article 5: What benefits could blockchain bring to the payroll industry

Also, check out The Payroll Podcast with Anita Lettink, SVP of Global Alliances at NGA HR which discusses ‘Blockchain and the Future of Payroll & HR’ in considerable detail if you wish to fast-track your learning. You can subscribe to the Payroll Podcast here: Apple Podcasts

So, today, I would like to highlight some blockchain payroll companies that have already launched so that we can ask the question: Are Blockchain Payroll Companies the Payroll Future?

If you have read my previous articles on this subject, it may come as a bit of a surprise to you to hear that there are already a number of blockchain-based payroll companies which have launched and exist over the past couple of years.

Several of those companies mentioned also raised seed capital and funding by using ICOs (Initial Coin Offerings).

These are cryptocurrency-based funding rounds bypass venture capitalists and banks by instead, promising future value to individual and retail investors.

In fact, to date hundreds of millions of dollars have been raised by ICOs, the cryptocurrency version of IPOs (Initial Public Offerings) in which companies sell off proportions of their public stock to raise funds for expansion.

The neat trick with ICOs is that blockchain companies do not have to give away any equity in their company to reach astronomical funding sums.

Accountants KPMG advised on the £5m launch of Etch, a Dublin-based service https://www.accountancydaily.co/kpmg-advises-launch-blockchain-payroll-company which claims to be “the first innovation in payroll since the Industrial Revolution”. It employs the Ethereum blockchain to allow employers to pay workers in real time.

Chris Mills, head of blockchain for KPMG UK told the press:

“Etch is a superb initiative because it provides guaranteed payments in real-time for all work completed, something that no other platform is currently known to achieve.

Etch pays workers in the currency of their choice, and they can they forward on some or all of that currency to overseas family members or dependents.

It would appear a good system, especially as it focuses on the construction industry which has a relatively higher proportion of workers who send money overseas on a regular basis.

The question we must ask is:

Do companies always have employee payrolls ready to be paid at the point of commissioning work? Would real-time payments really work well?

Phillipines-based Salarium is one of the more established and better-known blockchain payroll companies.

Salarium has raised tens of millions of dollars with the ICO (Initial Coin Offering) of their SALPay token (SAL).

It claims to automate payroll using its own proprietary software – but appears to have some of the same flaws that affect the more modern cloud-based, mobile-first payroll systems.

  • You cannot outsource your payroll to Salarium
  • You still have to input the payroll data yourself
  • You have to enter into their proprietary payments system

One prominent blockchain-for-business skeptic is journalist David Gerard. In a talk titled Blockchain: From Hype to Reality[https://davidgerard.co.uk/blockchain/2018/04/19/welcome-to-the-blockchain-slides-from-berenbergs-blockchain-from-hype-to-reality/ he noted the questions you should ask any blockchain salesperson.

  1.  Does the software do everything that you are telling me it does?
  2. Are we confusing ‘could’ with ‘is’? How many other companies have already successfully integrated this into their systems?
  3. What does blockchain-based payroll do that a centralised database does not?
  4. Will the system scale to the size of the payroll data you produce? If so, how?
  5. If the system you want to implement to deal with people you already trust? If so, why use blockchain?

Ultimately, the fact that payroll companies based on blockchain already exist suggests that more will follow this trend in the future. However, these companies (at present) do seem to be focused within the FinTech space. For blockchain payrolls companies to become more widespread, I think that we still need to answer the following fundamental question:

Will using blockchain-based payroll software save me money, improve security and enhance efficiency over and above any other compatible programme or system currently available?

What do you think?

Please share and comment – I will try to interact with as many as possible!

Future articles in the series will include:

  • How to build a blockchain-based payroll system
  • When should businesses start planning for blockchain?
  • Risks and costs
  • Conclusion – is blockchain and crypto the future?

Thanks 🙂

As always, whether you love payroll or love HR, love what you do, work smart and work hard – just be careful not to overdo it.

Visit our website to access more blogswhitepapersThe Payroll Podcast and more content about all things “Payroll and HR”.

If you are looking for expert talent in the fields of Payroll, HR or Reward, then please contact me and I would be delighted to discuss how we can help.

Nick Day | Managing Director

JGA Recruitment | JGA Payroll & HR Recruitment

Email: nick@jgarecruitment.com | Tel: 01727 800 377

Images:

  1. Photo by Danial RiCaRoS on Unsplash

Sources:

In a World of Great Social Sites, Is LinkedIn Still the Best Platform for Driving B2B Sales?

 

Marketers have to manage multiple campaigns across a variety of social media sites. Sometimes it can become a challenge because of continually changing algorithms. Whenever that happens, it can make even the savviest B2B marketers anxious.

For example, Facebook and Twitter recently changed their algorithms to boost user experience. However, these same changes have more or less limited the organic reach of posts (from brands) which in turn restrict their ability to generate sales leads on these platforms.

However, B2B marketers need not stress as LinkedIn is still the leading social media site for driving B2B sales. In fact, it’s still a goldmine for generating leads and driving traffic to company websites through promoted thought leadership content.

Why Does LinkedIn Continue to Dominate B2B Marketing?

LinkedIn continues to reign supreme within the B2B marketing space because people use it differently when compared other social networks. For example, people invest time in LinkedIn because they’re looking to solve professional problems.

So if your content has all the answers they’re looking for, you’re more than likely to get some excellent results. This is evidenced by the fact that 80% of B2B leads are generated from LinkedIn. It’s also the primary reason why 94% of B2B marketers use LinkedIn to engage potential clients with relevant content.

If you’re still not convinced, take a look at the following statistics:

  • 46% of social media traffic to corporate websites originate from LinkedIn
  • 79% of marketers consider LinkedIn to be the most effective source for generating B2B leads
  • 43% of marketers state that they have sourced at least one customer via LinkedIn
  • 51% of companies have acquired a user via LinkedIn

As a result, it’s safe to conclude that LinkedIn, home to over 500 million users and three million businesses across 200 countries, is still by far the best platform for driving B2B sales.

 

 

Still don’t believe me?

Let’s take a look at the percentage of B2B leads that have been generated through social media networks:

  • LinkedIn – 80.33%
  • Facebook – 6.73%
  • Google+ – 0.21%
  • Twitter – 12.73%

So if you’re hoping to drum up some new business and you’re looking for new customers in the market, LinkedIn is definitely the place to be.

In fact, it should be the first place to look for new customers. This is because engaging with a potential client on this social platform can boost the chances of them buying from you by as much as 50%.

How Do B2B Marketers Leverage LinkedIn to Generate Sales?

Running a successful marketing campaign on LinkedIn or any other social media network starts with strategy. When you formulate a robust strategy, you’ll be able to ensure that your marketing endeavors stay on point.

However, regardless of the marketing strategy you choose to go with, you should only use this professional social network to engage with your peers, followers, and prospective clients with content that’s relevant to them. This can be achieved by posting compelling brand stories or thought leadership pieces.

Once the content is ready, an excellent approach is to post these on group discussions. This is a great tactic to get potential customers to start a dialog with you. However, whenever you do this, be aware that your competition will be doing the same.

Although it can be highly competitive, it’s certainly worth the investment because LinkedIn is the most popular social media platform for Fortune 500 companies. In fact, according to a study of 488 companies, a whopping 98% were using LinkedIn regularly.

Research suggests that discussion groups are the most effective places to post your “lead generating” content:

  • Company Pages – 0.59% of posts (10.07% of conversions)
  • Discussion Groups – 96% of posts (86.30% of conversions)
  • Personal Profiles – 3% of posts (3.63% of conversions)

Unlike the retail market, B2B sales and purchasing cycles are long and involve a large amount of money. So it’s quite natural for potential customers to gather as much information as possible before making a commitment.

Getting involved in group discussions helps B2B marketers provide relevant information to potential buyers in various stages in the buying cycle. It’s also an approach that can provide additional leads like email addresses in a non-intrusive way.

From LinkedIn video ads to Sponsored InMail ads, the platform offers a wide range of advertising opportunities through the LinkedIn Campaign Manager. However, it’s important to identify decision makers and create a roadmap that will effectively support your marketing plan.

While all the tools available on this platform are useful, it’ll be critical to use the right approach when targeting a potential B2B customer. If you have ever received an irrelevant sponsored message on this platform, you’ll know what I’m talking about.

While LinkedIn continues to be derided, B2B marketers shouldn’t be fooled. If you let that happen, you will undoubtedly end up overlooking the best platform to generate B2B sales.

 

Please share and comment — I will try to interact with as many as possible!

 profile-_0016_ChrisP

Chris Hall

Marketing Recruitment / Group Social Media and Marketing

James Gray Associates Ltd, Marketing, Payroll, HR & Reward Specialist Recruiters

Email: chris@jgarecruitment.com Twitter: @JGA_Marketing Tel: 01727 800 377

Why not visit our website where you can access more blogswhitepapers and social content. You can also download our latest Whitepaper: A Payroll Blueprint Towards Successful Transformation with Marketing Whitepaper ‘Digital Marketing in the New Virtual Experience Economy’ and HR Whitepaper ‘Employee Engagement: A Critical HR Problem in the 21st Century’ also available

 

Photo by Elena Koycheva on Unsplash

Photo by Marc Schäfer on Unsplash

 

References:

Llewellyn, G. (2018). The implications of Facebook’s most recent algorithm update | Smart Insights. Retrieved from https://www.smartinsights.com/social-media-marketing/facebook-marketing/implications-facebooks-recent-algorithm-update-can/

Wong, J. (2018). Twitter announces global change to algorithm in effort to tackle harassment. Retrieved from https://www.theguardian.com/technology/2018/may/15/twitter-ranking-algorithm-change-trolling-harassment-abuse

Rynne, A. (2018). 10 Surprising Stats You Didn’t Know about Marketing on LinkedIn. Retrieved from https://business.linkedin.com/marketing-solutions/blog/linkedin-b2b-marketing/2017/10-surprising-stats-you-didnt-know-about-marketing-on-linkedin

Elder, R., & Gallagher, K. (2018). Linkedin reaches a half billion users. Retrieved from https://www.businessinsider.com/linkedin-reaches-a-half-billion-users-2017-4

Sabbouh, A. (2017). Social Media Marketing: What social media is Best For B2B Marketing. Retrieved from https://www.linkedin.com/pulse/social-media-marketing-what-best-b2b-ashley-sabbouh/

Ganim Barnes, Ph.D., N., & Pavao, S. (2018). The 2017 Fortune 500 Go Visual and Increase Use of Instagram, Snapchat, and YouTube. Retrieved from https://www.umassd.edu/cmr/socialmediaresearch/2017fortune500/#d.en.963986

Hunt, E. (2018). LinkedIn is the worst of social media. Should I delete my account?. Retrieved from https://www.theguardian.com/culture/2017/jun/09/linkedin-is-the-worst-of-social-media-should-i-delete-my-account

The Rise of Micro-Influencers within Marketing

Influencer marketing is without a doubt a credible component of the marketing mix. In fact, research suggests that as much as half of young people in the U.K. purchased products that were promoted by influencers in 2017.

According to a survey of 2,293 adults aged between 18 and 30, consumers in the U.K. were five times more likely to buy products that were reviewed or promoted by an influencer (than someone who wasn’t). These results can be attributed to the fact that influencers bring authenticity to sponsored posts and that adds value to marketing campaigns.

While influencer marketing campaigns originally began with celebrities and brand ambassadors, brands have started to figure out that it’s not all about celebrity endorsement.

This is because while celebrities might have hundreds of thousands or even millions of followers if they don’t have the ability to change behaviours or influence the masses with their tastes, they don’t have influence over their audience.

Who are Micro-Influencers?

Micro-influencers are individuals who have gained a considerable amount of respect within a particular niche (travel, wellness, fitness, etc.). These individuals are deeply connected to their audience, and they can change the behaviours and tastes of others.

While the number of followed required to be considered a micro-influencer is always up for debate, anywhere from 10,000 and 500,000 followers on social media channels will suffice. In the grand scheme of things, it’s not the number of followers that really matter, it’s audience engagement.

Why are Micro-Influencers Important?

Compared to celebrity social media channels, micro-influencers have far fewer followers. However, engaging them in promotional activities can be more profitable because they have built trust and have nurtured a close relationship with their audience (and this is critical when it comes to purchase decisions).

Micro-influencer marketing is important because the influencer’s opinion is trusted, their audience is brand relevant, and they have the power to turn fans into loyal brand advocates. But to get the maximum exposure for your micro-influencer campaigns, a single mention by one influencer might not be enough.

Instead, it’s better to engage multiple micro-influencers to extend your reach. However, this won’t be easy as you’ll have to find relevant candidates, engage them, evaluate their channel, and this will be time intensive.

Micro-influencers on Instagram with over a 100,000 followers can command as much as $5,000, and that doesn’t include all the free stuff (that usually goes along with an endorsement).

When micro-influencers grow their audience and become more prolific, their fees will also increase. But marketers will need to tread carefully because engagement tends to drop as the audience grows.

For example, research suggests that individuals with less than 1,000 followers generally attracted likes on their posts about 8% of the time and generated comments about 0.5% of the time. When that number rose to over 10 million followers, the likes they received fell to 1.8% and generated comments about 0.04% of the time.

So there’s a clear downward correlation that can’t be ignored. So if you’re looking to engage a micro-influencer, what should you look for?

While there isn’t a sweet spot when it comes to the number of followers a micro-influencer should have, experts believe that the 10,000 to 100,000 range offers the best combination of broad reach and engagement.

In this scenario, the likes and comments rates often exceed those accounts with a higher number of followers. As the audience is keyed into their niche, you can get a higher return on your investment at a fraction of the cost you would typically have to pay a celebrity.

Micro-Influencer Marketing Today

Today, micro-influencers are more popular than ever within marketing. In fact, it’s one of the most successful strategies employed by marketers in the digital age.

This can be attributed to the fact that enterprises can gain as much as $7.65 in earned media value for every dollar spent on influencer marketing. So it’s not surprising that 57% of marketers have dedicated budgets for micro-influencer campaigns while another 37% plan to do so shortly.

As micro-influencer marketing grows exponentially, brands have to make an effort to identify the right influencer for their product and campaigns. Often, brands will look at a variety of statistics ranging from authentically grown audiences for individual campaigns, relevance, and the growth of their own USP.

However, whenever these statistics include personal data, regulations like the General Data Protection Regulation or GDPR will come into effect. Whenever this is the case, both the brand and the micro-influencer will have to have a reasonable justification for collecting and using this information.

Going forward, it will be imperative for brands to build a long-term relationship with relevant micro-influencers to connect with their target audience. As these advocates cover a wide range of niche markets, there’s a micro-influencer for just about any type of business.

For brands and micro-influencers, it will be critical to build strong and mutually beneficial relationships to help create authenticity and credibility without breaking the bank.

 

Please share and comment — I will try to interact with as many as possible!

 profile-_0016_ChrisP

 

Chris Hall

Marketing Recruitment / Group Social Media and Marketing

James Gray Associates Ltd, Marketing, Payroll, HR & Reward Specialist Recruiters

Email: chris@jgarecruitment.com Twitter: @JGA_Marketing Tel: 01727 800 377

Why not visit our website where you can access more blogswhitepapers and social content. You can also download our latest Whitepaper: A Payroll Blueprint Towards Successful Transformation with Marketing Whitepaper ‘Digital Marketing in the New Virtual Experience Economy’ and HR Whitepaper ‘Employee Engagement: A Critical HR Problem in the 21st Century’ also available

 

 

 

References:

Mirreh, M. (2018). Half of UK Adults Have Bought Products Promoted by Influencers. [online] PerformanceIN. Available at: https://performancein.com/news/2017/12/06/half-uk-adults-have-bought-products-promoted-influencers/

McLaren, L. (2018). What would you do if your teenager became an overnight Instagram sensation?. Retrieved from https://www.theguardian.com/technology/2018/jul/22/what-would-you-do-if-your-teenager-became-an-overnight-instagram-sensation

Instagram Marketing: Does Influencer Size Matter? – Markerly Blog. (2018). Retrieved from http://markerly.com/blog/instagram-marketing-does-influencer-size-matter/

The Remarkable Rise of Influencer Marketing [INFOGRAPHIC]. (2018). Retrieved from https://influencermarketinghub.com/the-rise-of-influencer-marketing/

EUGDPR – Information Portal. (2018). Retrieved from https://eugdpr.org/

Photo by Verena Yunita Yapi on Unsplash

Photo by Adam Jang on Unsplash

What benefits could blockchain bring to the payroll industry? Article 5 of 10

This is article 5 of 10 forming the fifth part of a series of articles dedicated to my attempt at helping Payroll & HR professionals understand the potential impact that both Blockchain and Cryptocurrencies could have on the future of Payroll & HR.

To view the earlier article in the series – click here:

  1. Article 1: How will Blockchain, Cryptocurrency and DLT technologies affect the future of Payroll & HR
  2. Article 2: Will companies start to payroll its employees in cryptocurrency?
  3. Article 3: How will blockchain affect HR Recruitment Processes?
  4. Article 4: What are smart contracts and how will they affect payroll and HR?

Also, check out episode 09 of The Payroll Podcast with Anita Lettink, SVP of Global Alliances at NGA HR which discusses ‘Blockchain and the Future of Payroll & HR’ in considerable detail if you wish to fast-track your learning. You can subscribe to the Payroll Podcast here: Apple Podcasts


Today, I would like to help you understand what benefits blockchain could bring to the payroll industry. 

So, lets start with the (in theory) obvious benefits that blockchain technology could bring to the payroll industry:

  1. Blockchain-based payroll systems should be more secure, and cheaper, than non-blockchain-based systems.
  2. The distributed ledgers are practically impossible to change once information has been entered and the data confirmed by all participants on the network.
  3.  Transaction fees between parties should be much lower, because blockchain-based payroll cuts out the need for a middleman (usually a bank) to process payments.
  4.  Any technology which can both speed up and simplify payroll will be of huge benefit to the millions of businesses worldwide.

Of course, blockchain enthusiasts will know all of the above which is why they are busy trying to apply their technology to this system.

Clearly, then the field is ripe for innovation. What’s not yet clear is whether blockchain is the right innovation.

So let’s examine the practicalities a little closer to see if we can get to grips with the reality.

Firstly, any company that has in excess of probably 500 employees, will likely require a dedicated payroll function that is responsible for processing payroll and potentially also for invoice management too if they are running large contractor payrolls.

As the payroll employee volumes increase, so do the risks and chances of errors occurring which can result in disputes, problems and payment delays.

Removing the possibility of human input error by using a tamper-proof blockchain like Ethereum would appear to be a step in the right direction.

In addition, it appears that the companies who will really benefit from blockchain-based payroll are those with international workforces, at least part of which are based remotely.


Why?

Because blockchain promises faster cross-border payments, less expensive cross-border payments and less error-prone payments, thus solving one of the biggest costs associated with international payroll.

Fewer errors and faster payments means fewer disputes between a company and its employees.

For companies with many international employees applying themselves to projects all across the globe, it would seem that blockchain-based payroll systems would work well.

But few serious developments have been made for companies like yours to easily integrate blockchain-based payrolls into your current systems, or to move your entire payroll away from user-controlled databases and into a blockchain system.

ADP is one of the world’s best known payroll software companies. In a report from May 2018 to the Global Payroll Association, ADP noted that it is currently investigating how blockchains could be used

ADP’s vice president of corporate strategy Tashina Charagi told the GPA:

“As far as blockchain applications and payroll [go], one of the first things that comes out is…not only faster cross-border payments but less expensive and less error-prone cross-border payments.”

Put that statement alongside this rather critical one, published by newswire Reuters on 13 June 2018.

“Banks are unlikely to use distributed ledgers [another word for blockchains] to process cross-border payments for now because of scalability and privacy issues, according to Ripple, one of the most prominent startups developing the technology.”

Remittances and payments

The main issue that blockchain is thought to be able to solve in payroll is remittances – sending money across international borders more quickly and without the hefty transaction fees that workers face when converting salary or contract payments back to the local currency.

International businesses with many overseas employees feel the pain of payroll more than smaller, domestic, companies.

There are the costs of currency volatility – Deloitte’s 2017 report on blockchain notes that:

“Hourly changes in exchange rates are routinely taken advantage of by intermediaries”. However, it continues: “So, time is money and an international payroll blockchain solution simply offers a faster solution than existing models.”

Is this strictly true? Are blockchain payroll systems “simply faster” than existing models?

Not necessarily, given our earlier focus on how the size of blockchains increase as more data is inputted.

The longer your company’s blockchain-based payroll is running, the harder it becomes – and therefore the more time it takes – to verify transactions.

The calculation of the hash function that every block requires to be added to the chain scales up in difficulty along with the size of the blockchain. Does this sound “simply faster”?

Essentially, it is clear that blockchain could bring a number of benefits to improving a payroll processing operation. However, at present, it is unlikely we will see the technology become widespread until concerns regarding privacy, scalability and integration are tested and improved.

What do you think?

Please share and comment – I will try to interact with as many as possible!

Future articles in the series will include:

  • Blockchain payroll companies
  • How to build a blockchain-based payroll system
  • When should businesses start planning for blockchain?
  • Risks and costs
  • Conclusion – is blockchain and crypto the future?

Thanks 🙂

As always, whether you love payroll or love HR, love what you do, work smart and work hard – just be careful not to overdo it.

Visit our website to access more blogswhitepapersThe Payroll Podcast and more content about all things “Payroll and HR”.

If you are looking for expert talent in the fields of Payroll, HR or Reward, then please contact me and I would be delighted to discuss how we can help.

Nick Day | Managing Director

JGA Recruitment | JGA Payroll & HR Recruitment

Email: nick@jgarecruitment.com | Tel: 01727 800 377

How Blockchain, Cryptocurrency & DLT affect the Future of Payroll & HR ?

What are smart contracts and how will they affect payroll and HR? Blockchain Article 4/10

This is article 4 of 10 forming the fourth part of a series of articles dedicated to my attempt at helping Payroll & HR professionals understand the potential impact that Blockchain and Cryptocurrency could have on the future of Payroll & HR.

To view the earlier article in the series – click here:

1. Article 1: How will Blockchain, Cryptocurrency and DLT technologies affect the future of Payroll & HR

2. Article 2: Will companies start to payroll its employees in cryptocurrency?

3. Article 3: How will blockchain affect HR Recruitment Processes?

Also, check out episode 09 of The Payroll Podcast with Anita Lettink, SVP of Global Alliances at NGA HR which discusses ‘Blockchain and the Future of Payroll & HR’ in considerable detail if you wish to fast-track your learning. You can subscribe to the Payroll Podcast here: Apple Podcasts

Today, I would like to help you understand what a “Smart Contract” is in relation to blockchain technology and how these are likely to affect payroll and HR processes.

4. What are smart contracts and how will they affect payroll and HR?

Before I explain what a smart contact is, the reason we are likely to encounter them in the future is because they could be used to payroll employees in a way that is near-instant. Smart contracts could streamline existing payroll and HR functions significantly, thereby saving businesses considerable money on its back-office function expenditure.

Smart contracts, in theory, could be used by payroll departments to pay contractors and freelancers who only interact with companies on an infrequent basis to complete specific portions of work.

More pertinently, is the fact that they are already being used on the Ethereum blockchain, which is the second-largest public blockchain in the world.

So what are they, how do they work and why are the relevant to payroll and HR?

A smart contract is a set of promises written out in code which works by using statements like: ‘If This, Then That’ (IFTTT). Once set in motion, it is designed to be entirely dependent on its code and irreversible.

Let’s imagine then, a smart contract between our company and a contractor.

When a certain number of hours of work have been completed (If This), our smart contract automatically pays our contractor (Then That) by deploying this piece of remotely executable code, which is linked to an instruction from our company bank account to the contractor’s bank account.

We wouldn’t need to contact our bank on a monthly payment run, along with all the payroll processing time that entails; instead, we just deal direct with one another, with the smart contract as a guarantee that work is completed.

While banks are investigating the use of smart contracts, they’re not so keen just yet to use public blockchains like Ethereum to link accounts together because of both privacy and security concerns.

Not many companies would be happy for all their transactions to be publicly available to anyone who wanted to view them, but this is possible on Ethereum.

Still, there are some up-and-coming pilot programs in development.

Because Ethereum is a public, open source blockchain, any person or company can view the source code and copy it to develop their own blockchain system.

JP Morgan has done this with their Quorum application, which itself is open source [https://uk.reuters.com/article/us-blockchain-jpmorgan/jpmorgan-mulls-spin-off-of-blockchain-project-quorum-sources] and could be built upon or modified by other parties.

We know that freelancers and contractors face horrendous difficulties getting swift payments for their work, and delayed payments can put fledgling businesses in serious difficulties.

JP Morgan’s Quorum platform is an upgraded version of Ethereum and is being trialled to offer faster royalty payments to the thousands of independent game developers working on Microsoft’s Xbox games.

Currently, payments are slow and laborious, taking up to 45 days to be agreed and arrive. Quorum promises daily payments triggered by smart contracts.

Smart Contract Risks

As we mention above, smart contracts are in theory a sound application of blockchain technology. But there are risks to consider.

In order to function as it was intended, the code behind a smart contract must be perfect.

All software, including professional, enterprise-grade software, contains bugs. Only a very tiny proportion of code is technically perfect.

Developer Steven McConnell writes in his seminal book Code Complete [https://www.amazon.com/Code-Complete-Practical-Handbook-Construction/dp/0735619670] that the industry average is around 15 to 50 errors per 1000 lines of code.

In its code released to the general public, Microsoft manages errors at the lower level, at about 10-20 bugs per 1000 lines.

The only people producing code with no errors at all are software developers at NASA working on the space shuttle, writes McConnell, “who achieved a level of zero defects (bugs) in 500,000 lines of code.”

Smart contract payments are irreversible, so there is no way that a company could get its money back if a bug like this were exploited.

In 2017, nearly $55 million-worth of Ethereum’s cryptocurrency Ether was stolen because a still-unknown hacker exploited that bug in the source code.

The bug allowed a payment receiver to request payment multiple times, getting away with repeat payments before the blockchain system had a chance to update itself.

Covering this story, Bloomberg’s Matthew Leising reported [https://www.bloomberg.com/features/2017-the-ether-thief/] how unforgiving tiny errors really are.

He writes: “The order of commands [in this piece of code] allowed cryptotoken holders to withdraw any profits made on their investments….Instead, it became one of the biggest backdoors in hacking history…If the capital T inline 666 had been a small t, that would have prevented the hack.”

For security’s sake, hosting smart contracts on our in-house private blockchains, instead of in the public Ethereum blockchain, could be the future for smart contracts in business.

But private blockchains ultimately have one major flaw.

If only a handful of people are allowed to update transactions on a private blockchain, they become single points of failure and an easy target for hackers, who could gain control of an entire blockchain by attacking only a small number of computers.

If your payroll department looks after the blockchain, any hardware failure or file corruption would be extremely serious – because there is not a backup network of computers also updating the correct copy of the blockchain.

Conclusion

Ethereum, which launched in 2015, can process transactions at a much speedier rate than its older cousin Bitcoin.

Scalability is a significant issue for Bitcoin, as the more blocks of transactions are added to the chain, the longer it takes to verify transactions. It takes around 10 minutes to update the Bitcoin blockchain. With Ethereum, it takes approximately 12 seconds.

Still, 12 seconds is a very long time compared to modern databases, which store and process information in milliseconds.

Smart contracts may well be the future of contract payments for payroll operations of the future, and these early forms of private blockchain could be used to streamline payments and processes. But there are few tangible products for businesses to adopt as of yet.

It is likely that private companies will continue to develop private blockchains for smart contract development.

However, pilot projects are still at an early stage and will not reach smaller businesses or mainstream adoption for some years.

What do you think?

Please share and comment – I will try to interact with as many as possible!

Future articles in the series will include:

  • What benefits could blockchain bring to the payroll industry?
  • Blockchain payroll companies
  • How to build a blockchain-based payroll system
  • When should businesses start planning for blockchain?
  • Risks and costs
  • Conclusion – is blockchain and crypto the future?

Thanks 🙂

As always, whether you love payroll or love HR, love what you do, work smart and work hard – just be careful not to overdo it.

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