HR for the DAO
What will happen when A Distributed Autonomous Organization (DAO) decides it needs to hire? What will it be like to work for a DAO? What if you work for a DAO, and what if you disclose a DAO trade secret? Just kidding, I know, DAO’s do not have any secrets. They only have transparency and Truth.
But what happens when the DAO wants to fire you?
This is gonna happen, no one can stop it so we might as well just get the big family together at the dinner table and have a big family talk.
A decentralized autonomous organization, sometimes called a decentralized autonomous corporation, is a Global organization represented by rules encoded as a computer program. This program is Global in reach and impact, it is diverse and transparent, it is controlled by the organization’s members.
The organization’s members are Global
The organization is not influenced by any central government
The organization’s members are influenced by multiple central governments
Central Governments are not Global
Central Governments cannot regulate Global organizations
Central Governments can regulate any Global organization’s members
A DAO is not completely within the borders of any Central Government
A DAO possesses independent authority and the right to govern itself
A DOW could eventually become Sovereign (it already is)
DOW’s are a bit of a curve ball into the Legislative Branch. An example would be “The DAO” which is the name of a DAO that was launched in April 2016 by a German startup called Slock.it. “The DAO” found itself under attack within 2 months of launch when an unknown hacker started withdrawing Ether from “The DAO” and transferring it to a child DAO that had the same structure as its parent.
In June, “The DAO” announced that a recursive call bug had been found in it but there was no cause for concern and all funds were safe. Within 6 days of this announcement on June 17, an unknown hacker started stealing ether that would amount to $50 million.
The attacker also went on to proclaim that his actions were within the laws of legal jurisdiction and no criminal proceedings could be initiated against him because all he did was take advantage of a feature in the system. You see, A DAO cannot make a mistake, any action taken by a DAO is a sovereign act. When a bad actor transferred millions out of one of the first DAO’s it was a feature, not a bug.
So, this is a legal minefield that is about to hamper adoption in some Nation States as they try to regulate Global Platforms. The early adopter Nation States will suddenly grow, and the late adopter nation-states will fall behind (the US as a third nation-state).
The reason for this is Digital does things one thousand times quicker and one hundred times less expensive than a comparable fiat-based workflow. There is no workflow in fiat that can compete. This is just a matter of time, and the ones who embrace change early are the ones who are rewarded on the risk-return continuum. (this cycle is also 10x compressed S curve)
But what happens when the organization’s members who are influenced by a central government go to work for the DAO?
What does DAO HR even look like?
HALP ME
Human resources are the set of people who make up the workforce of an organization, DAO for instance. A narrower concept is human capital, the knowledge, and skills that individuals command. Similar terms include manpower, labor, personnel, associates, or simply: people.
Traditional HR mitigates risk while providing human capital. It is set up at its core to serve centralized organizations, and all interfaces are formal and regulated to protect the centralized organization. The workflow is time-consuming, it is expensive, and the vast majority of the time results are not positive, as the human capital in traditional HR bounced to another organization taking with it the centralized organization’s Intellectual Property.
Digital HR is completely different, and especially within a DAO.
The DAO uses smart contracts on the Ethereum blockchain network to manage its trustless environment and make corporate, management, or governance decisions.
Nick Szabo
The idea of a “smart contract” was first developed by Nick Szabo in 1997. He gave the example of a vending machine designed to facilitate the transfer of food items for money as a physical embodiment of a contract because it is physically designed to sell food according to specified rules. Nick envisioned the spirit of the vending machine being expanded to a world of “self-executing electronic instructions drafted in computer code.” These contracts would be “smart” because computers would read and enforce their terms when certain conditions are met, without human intervention.
Nick Szabo + Hal Finney = Satochi
Smart contracts on a blockchain network work in the same way as Szabo’s intelligent vending machines, but with the advantages of blockchain technology. Similar to written contracts, smart contracts define the terms and penalties of a contract, but may also monitor, execute, and enforce the contract terms over the blockchain.
Smart contracts promise clarity and predictability in business agreements. Thus, smart contracts on a blockchain earn the distinction of being “trustless,” since the parties to a smart contract need not trust each other or a third-party mediator to execute the contract, only the code of the smart contract and the blockchain’s ability to enforce its terms.
Smart contracts are a set of pre-determined rules and logic coded into a machine or computer software that can be automatically executed to make decisions and perform actions. In the case of “The DAO”, a smart contract both granted investors voting rights according to their level of investment and managed their subsequent votes on investment proposals accordingly. All decisions regarding the distribution and management of its 150 million dollar fund, risk, residual claims, voting rights, and voting itself, are achieved through the consensus of the investing community.
Therefore, The DAO is a unique case of an organization whose corporate governance consists entirely of information technology (IT) governance.
The DAO story is about many things, but one of the most significant of them is how technological advancements have enabled the genesis of a new species of corporate governance based on smart contracts, heretofore unseen and unanticipated.
Until now, IT governance has typically been subordinate to the larger goals and strategies of corporate governance. The DAO has no board of directors or managers, only entrepreneurs and a CEO whose authority is mostly social now since he or she represents the face of the organization, not the beneficiary of the labor pool.
Moreover, all members agree that their participation in The DAO is entirely subject to the code as it is implemented on the Ethereum blockchain, a concept known as “Lex Cryptographia,” or, the “code is law”
A DAO is an entity with no central leadership. Decisions get made from the bottom-up, governed by a community organized around a specific set of rules enforced on a blockchain. DAOs are internet-native organizations collectively owned and managed by their members.
Today the digital segment is substantial yet only a small but rapidly growing portion of the segment would be considered decentralized or autonomous. And soon this segment will be the most economical, quickest, fastest, safest way to conduct commerce globally. Soon this segment will be the largest employer globally.
We need a system where we can digitally contract for service with velocity. So there is a rapidly growing opportunity that will need to be filled soon. And it cannot be filled by Traditional HR.
What will happen when companies function more like a distributed DAO which runs entirely on the blockchain. Would we need a C-Level Suite? Without that cost, would the organization be more competitive?
I will probably write about that next. If you think it might be worth a laugh then if you could just follow me and the DAO will let you know when next I publish.
Be Fair, please share— Michael Noel CBP
On Linked In — https://Linkedin.com/in/MichaelNoel
On the Global Blockchain Association (GBA) Blockchain Consulatnts — https://www.gbaglobal.org/members/blockchainconsultants/
1997 Nick Szabo https://journals.uic.edu/ojs/index.php/fm/article/view/548
