Amid the current talent crunch climate, employee benefits is one of the top priorities of HR leaders. While tech-driven advancement is a prominent feature of improvement agenda’s, those willing to leapfrog their peers should consider adopting blockchain-based offerings and solutions, write experts Paul Lalovich, Tesha Teshanovich and Ivan Bjelajac.
One of the most talked about technologies of today (and the future), the blockchain is here to stay, and it is spreading far and wide, bringing security, speed, and reliability to diverse industries while filling even more varied needs.
An area ripe for disruption by the blockchain is employee benefits. While the rest of the corporate world has been experimenting with blockchain at a growing pace (payments, supply chain, etc), the employee incentive and compensation domain has been traditionally slow to embrace blockchain-based innovation.
A missed opportunity – the blockchain gives employee benefits a chance for significant upgrades that can benefit all stakeholders, from employees to management and shareholders or owners. If done right, the emerging technology best known for the Bitcoin and other coins that leverage its backbone, can be a game-changer for the landscape.
Blockchain-based total reward advantages
We see six key areas emerging within blockchain-based total reward programs. Companies among the first to implement these solutions are likely to win praise for their forward-thinking and vision, but most importantly, develop a significant competitive advantage in the war for talent.
Giving qualified employees the option of receiving some or all of their pay in a restricted company coin, a stable coin, ‘synthetic equity’ incentives, digital benefits, or other cryptocurrency choices are interesting proposals with great potential. Any or all of these possibilities would be delivered on the blockchain.
The direct compensation of employees
Payroll through blockchain-based technologies is the most straightforward of the possible implementations. An employee can be given a choice of receiving his payment either the traditional way or through a cryptocurrency asset, most notably a stable coin.
Synthetic equity on the blockchain
As companies grow, this option would allow employees who meet well-defined goals to share in the success through company shares or options delivered in the form of restricted coins. This helps build employee wealth and their sense of personal investment in the company. By enabling smart contracts, managing these reward programs will be smooth and straightforward.
Synthetic equity or phantom stock plans and stock appreciation rights (SARs) are two types of stock plans that don’t use stock at all but still reward employees with deferred bonuses tied to the company’s stock performance.
Optimizing company benefits management costs
Insurance networks were quick to see the potential of the blockchain, and all big players are making the shift to using the technology. This makes integrating a company’s benefit and compensation programs, also on the blockchain, an obvious choice. The increased speed and communication, plus easy management, will cut costs.
With this being an area of great concern for many companies, finding ways to better handle healthcare and life insurance is a huge win. The blockchain’s security is also a plus for employees with privacy concerns.
Project tokenization
The increased use of freelancers, remote contract workers, and other gig economy elements has left open the question of how to incentivize project work without straining budgets upfront. Blockchain token rewards based on hitting performance goals are a clear and direct solution, enabling high performers who are not necessarily permanent hires to be rewarded fairly and equitably. The effect this could have on gig worker motivation and morale is apparent.
Awards, prizes, and accolades tokenization
The use of tokens for employee prizes and rewards is limited only by the creativity and imagination of a company’s management and human resources team.
Again, the strength of this forward-thinking approach is the ability to tie delivering these tokens to employees in a way that’s bound to performance marks or even specific dates in case of holiday bonuses or related rewards. With all of this operating securely and reliably on the blockchain.
Company-specific restricted coins
A company with its own tokens for use with the programs above and more, which are restricted to its own platform and blockchain network, is an excellent safeguard for company and employee interests. It is also an exciting kind of marketing within its industry, as word about this kind of program spreads. The release of the tokens can follow many different mutually beneficial strategies in tune with the company’s own unique vision and ethos.
Bold action?
2022 is the year to look at company benefit and compensation program issues honestly and open-mindedly. And then make a decision based on today and tomorrow’s shifting work realities. Using strategies and programs made five years ago pre-Covid is not a strategy that will achieve optimal performance.
So there’s no time like the present to bring in experts in this area and see how the blockchain can revolutionize your company’s incentive, rewards, and compensation program now and in the future.
About the authors: Paul Lalovich is a partner at management consultancy Agile Dynamics, where Tesha Teshanovich is a principal. Ivan Bjelajac is chief executive of software engineering firm MVP Workshop.