From web1, known as the “static web”, to web2, the “social web”, to web3, the “decentralized web”, the evolution of the internet has profoundly shaped the way in which contemporary society functions. Global interconnectedness from both a social and professional lens has allowed for unprecedented collaboration and exchange of ideas. And where web2 has fallen short, web3 is picking up the pieces and creating something completely new.
Diverging from the web2 paradigm of centralized control and data mining, web3 is built on decentralization, trustlessness, and permissionlessness. With these core principles guiding its development, web3 provides a more secure means of connecting, transacting, and working. As global markets have increasingly begun to leverage web3 technologies, profound shifts in global workforce management are quickly following suit.
Web3 and Payroll Flexibility
Traditional payroll systems were not built to accommodate a remote and global workforce. While some companies still rely on mailed checks, most have switched over to direct deposits. When catering to employees based in the same geographical location, these systems can function fine, but when payments must be sent across borders, complications arise. These can include high fees, slow delivery rates, and compliance issues.
Web3 payroll provides a flexible and modernized approach to compensation that is designed to make both local and cross-border payments streamlined, scalable, and cost effective. Payroll solutions that are built using blockchain technology rely on distributed ledger systems that record and verify transactions through a network of nodes, eliminating the need for centralized authorities.
Rather than relying on a costly third party to send or approve payments, transactions are permissionless and fees are reduced by up to 70%. In addition to the cost benefits, money sent on blockchain networks arrives in seconds rather than days, weeks, or months. When recruiting global talent, the delays associated with traditional payroll are a major pain point; the ability to offer instant payments as part of a compensation package is a competitive hiring edge.
Whether crypto enthusiasts or individuals seeking a more stable currency in which to hold their savings, the option to receive a full or partial paycheck in crypto and stablecoins is an important feature of web3 payroll. In the case of a hybrid payroll solution, companies can fund payroll in the currency of their choice - from crypto in a digital wallet to fiat currency in a traditional bank account- and employees can cash out in their preferred currency.
The Benefits of Tokenized Equity
In the context of traditional business, equity typically involves the distribution of ownership in a company through the issuance of common stock, granting shareholders voting rights and a share of the company's profits in proportion to their ownership stake. Equity in the world of web3 takes on a different identity and comes in the form of equity tokens, making management and transfers more efficient and transparent.
Equity tokens are an on-chain representation of stake in a company, entitling token holders a part in the company's earnings, assets and potentially governance. They can be transferred directly to a recipient’s digital wallet, cutting out the middleman and saving time and money. In a survey of startups that chose to employ tokenized equity, 60% saw a rise in employee retention.
By offering a tangible and accessible form of ownership in a company, tokenized equity boosts employee’s commitment to their place of work. In order to see their tokens appreciate in value, employees are dedicated to the long-term success of the business. This results in heightened employee retention as they are driven to stay with the company and contribute to its growth.
On-Chain Identity and Ownership in Web3
Surveillance capitalism and data mining have become tacitly consented to, and inevitable drawbacks of the web2 experience. While it has become routine to accept these exploitative practices, web3 is stepping in to offer a scalable and secure alternative. On-chain identity is a secure and verifiable form of digital identity that lives on blockchain networks. These digital identities are composable, trustless, limitless and user-owned.
In the context of workforce management, on-chain IDs possess a multitude of advantages that range from efficient hiring to secure and instant payouts. In the context of onboarding new members to a team, through the use of on-chain identity, credentials can be verified in a more streamlined and efficient manner. Because of the immutability inherent to data stored on blockchains, the information being shared- work history, educational achievements, participation in projects and events, etc- is much more difficult to falsify. For the ID holder, security is greatly enhanced. They can choose which information is shared, minimizing the risk of exposing private or personal data. Across employees in web3, 80% reported feeling more secure about their data privacy.
When it comes to payroll, on-chain identities enable payments to be executed in a more efficient and secure manner. Companies can automate pay schedules to ensure that compensation is sent directly to an employee’s on-chain ID, which is connected to a wallet address. All payments are thus traceable via the public ledger, can be quickly verified, and arrive close-to instantly.
Automated Compliance and Smart Contracts
Smart contracts are a key feature of the web3 ecosystem and can be leveraged across a wide range of business processes from work agreements to compliance checks to automated payments. Through the utilization of self-executing code, smart contracts are especially useful in the context of HR tasks that necessitate high levels of security and precision. These include automating the drafting and processing of work agreements and the instant triggering of funds released once projects, milestones, goals, etc. are met.
Smart contracts are of particular utility when managing a remote and global workforce. Due to the complex nature of adhering to international tax and labor laws, smart contracts provide a more efficient and reliable means of ensuring compliance. They can be harnessed for expedited onboarding and for providing maximum security that all compliance laws are met when sending payouts across international borders. For companies that used smart contracts for their HR management, a 55% reduction in HR-related disputes was reported.
Tapping into Decentralized Talent Pools and Recruitment in Web3
Web3’s emphasis on user ownership plays an important role in giving individual’s increased autonomy and control in the job search. As is the case across many web2 platforms, digital job marketplaces included, if you’re not paying for the product, you are the product. Web3’s divergence from this dystopian new normal has given rise to user-owned talent networks. These decentralized job marketplaces leverage blockchain technology to put talent first and remove the costly middleman of a staffing agency, keeping fees low and autonomy high.
As the workforce has grown increasingly remote and more hiring takes place online, professionals have grown tired of the high commissions and exploitative practices of contracting through a traditional job marketplace. Rejecting the obligation to pay fees of up to 50% of profits earned to a hiring platform, the web3-savvy workforce has instead chosen to be the owner, builder, and manager of decentralized talent networks.
In addition to the benefits provided to the talent, companies that choose to contract through a web3-native, decentralized platform experience their own advantages. Because these networks are built using blockchain technology, they typically leverage on-chain identity verification. This leads to significant time and cost savings, with HR departments that have hired through decentralized networks reporting a 40% decrease in time-to-hire for global positions.
Integrating Web3 Tools into Global Workforce Management
With blockchain technology developing at breakneck speed and the web3 ethos entering into all aspects of business, global companies that want to remain competitive must embrace these changes. By stepping up to meet a more agile and flexible future of work, companies position themselves as leaders in innovation and adaptability.
The tools being built in web3 promise to bring a level of efficiency and scalability to business processes that has not been seen in web2. And with development in web3 at a crescendo, a new wave of comprehensive solutions is emerging to address a wide range of HR functions. The integration of these revolutionary technologies into workforce management is critical for remaining relevant and driving growth.
