How Web3 will change HR
- 7 Min Read
Web3 is the latest stage of the internet but its applications for HR are rarely talked about. In this article, Simon Hochstrasser and Isabell Welpe discuss 3 key ways Web3 will impact HR professionals and HR work.
Web3 is coming
Web 3 is the latest stage and development of the internet. Web2 – the internet of information – is given a new layer – the internet of value which allows to do transactions of money and property rights as fast, easy, and cheap as sending emails in Web2.
The coordination in Web3 happens through network tokens, that allow users to own parts of the communities in Web3, which is the reason why Web3 is sometimes also called the token economy, the creator economy, or the ownership economy. Web3 users can not only read and write but also use smart contracts to conduct transactions and own property/ financial assets without using the services of intermediaries.
Web3 enables its users to own and control all their data and assets, empowering entirely new business models and applications. So far there has been a lot of talk about DAOs (Decentralized autonomous organizations), NFTs (Non-Fungible Tokens), and DeFi (Decentralized Finance), but the potential applications, use cases, and disruptions of Web3 for HR have rarely been explored which we aim to do.
3 ways Web3 will impact HR professionals and HR work
1) Employer Branding and attractiveness: Established firms losing talent to Web 3 firms and initiatives
It may still be early, but already we are seeing that one former magnet called Silicon Valley and it’s worldwide known technology companies are starting to lose appeal to some of tech top talents. Many firms worldwide face not only the challenge of retaining employees but also the difficulty of attracting new motivated, and well-trained top tech talent. This trend does not only affect BigTech from California but also companies and startups worldwide. The gravitational pull for top tech talent seems to have (at least partially) shifted towards Web3, blockchain, and crypto projects. The appeal of new world-changing technologies as well as new, attractive incentive models in the crypto space can be seen as the reason for this. How quickly times are changing becomes clear when you consider that not so long ago, being hired by large tech companies was the preferred career path for emerging talents worldwide.
This change can be seen in prominent cases such as Ryan Wyatt who left his job as head of the games department at YouTube (Alphabet) to become CEO of Web3 firm Polygon Studios. Polygon Studios deal with NFTs, Gaming, and Metaverse projects, which are on the Polygon protocol. However, Wyatt is not a unique case. Likewise, Meta (Facebook), Amazon AWS Edge Services, and Uber lost key executives to crypto exchanges and young tech companies. The crypto exchange Coinbase attracted particular attention with the fact that it recruited many talents from Google, LinkedIn, and Lyft with its IPO.
It is unlikely that these examples are unique circumstances. Despite the financial strength of the big tech corporations, there are obviously compelling arguments that attract talent to the Crypto space. Web3 and blockchain are about pushing decentralization, which empowers the individual, users and, contributors to and of any product, project, or community. However, this shift in thinking attracts not only customers but also employees. Besides that, it’s also about like-minded people coming together to create something new and drive technological progress.
2) Upgrading HR practices and processes with Web3
The metaverse is already here – This statement may seem a bit sensational at first glance, but from a technological point of view it already matches reality.
There are already HR processes today that can be integrated into the metaverse, serving existing use cases. These include talent acquisition, work structure, and Learning & Development. Metaverse talent acquisition allows candidates to get to know their potential employer at virtual fairs and the younger generations take full advantage of this. By doing so, they can gather first impressions of the office and work culture.
The second aspect, work structure, also relates to this. The metaverse has the potential to transform collaboration by, for example, replacing laptops with hands-free communication or allowing teams to meet in the metaverse for an (informal) chat.
Lastly, the metaverse offers great potential, especially for employee training. Through interactive learning experiences based on virtual reality, real-life situations can be trained and practiced.
However, blockchain’s potential also reaches across other human resource areas. The operation of a secure decentralized network that eliminates redundancies to maximize efficiency and add value seems relevant to most transactional processes such as:
- Bonuses and expense reimbursements: Through increased use of data-driven decisions, employees can be rewarded for achieving specific goals and demonstrating desired key skills.
- Payroll: Improving the payroll process with the help of blockchain. This can be achieved through automation, a higher level of transparency as well as increased speed, especially with overseas payroll payments. Manual processes such as verification and authorization can be replaced by combining blockchain and smart contracts. This can be done, for example, based on a set date or agreed recorded hours.
- Job qualifications and background checks: Verifiability of skills, qualifications, and credentials, as well as trust towards new talent, poses a certain hurdle in the hiring process. This workload can be eased by blockchain applications with appropriate verifiability for diplomas. The Web3 also provides greater interoperability of capabilities shown in a given digital and physical space.
Bonus allocation and project and task-based compensation can be made transparent and automated. This may contribute to self-governance and robustness of organizations.
In addition, blockchain technology can help with employee data privacy. Companies or customers do not necessarily need all of their employees’ data. This includes location, gender, and age. Blockchain technology can ensure just that by creating a unique digital ID that the employee can provide to all business partners, revealing only the necessary information while retaining full control over these data.
3) How blockchain and Web3 will redefine careers
The Internet introduced major changes to business and society through the rapid dissemination of information. Web3 protocols today may represent a similar breakthrough. Protocols like Ethereum are enabling new approaches to collaboration and are challenging traditional organizational forms. This may lead to the following implications:
Today’s understanding and requirements of employment have changed. Employees are open to new work and compensation models, which are also often accompanied by ownership compensation. The possibility of becoming a co-owner of the company as an employee through token ownership is becoming increasingly relevant and provides incentives for both sides through skin-in-the-game mechanisms.
Furthermore, customers and requirements in HR are changing. Instead of large companies, communities and individuals could be among the customers in the future. Already today, there are first forerunners emitting cryptocurrencies by issuing social coins that grant the owner of the token, for example, a right to exclusive content or even a share of the issuer’s income. The same approach also represents a new source of funding for all kinds of profit or not-for-profit communities.
In 2021, there was already a large increase in crypto-related job postings. Most of these job postings were in finance and software. Still, there was a significant increase in other industries as well. Thus, one of the strategically important tasks of HR and executives in the future will be to identify and find the right Web3 talent.
Since Web3 is still a concept in its early stages, creativity is needed to develop the new idea without bias and to identify opportunities for the business. The basis for working with Web3 is the technological understanding that enables use cases to be developed and implemented in real-world applications. It is also increasingly important to build a strong community, e.g. through your DAO or Discord channel. This requires an understanding of customer needs and the ability to communicate with the community in an engaging way. In a final important step, the various aspects must be brought together to profitably incorporate Web3 into the company’s branding.
HR and digital transformation leaders should embrace Web3 and its applications to be prepared for potential disruption. Entrepreneurs and leaders in this space will benefit from approaching talent and new organizational forms.
Simon Hochstrasser is a Master’s student in Management and Technology at the Technical University of Munich. He is working on Web3, leadership and digital transformation as the Chair of Strategy and Organization. He is keen on capital market topics. Isabell Welpe is Professor of Strategy at Technische Universität München and co-founder of TUM Blockchain.