Employee monitoring has mixed results.

Employee monitoring has mixed results

Before the pandemic, I was giving a seminar on implementing hybrid work to drive up productivity, better attract and retain employees, and cut costs. Part of the training included recommendations on the technology to enable hybrid work, such as video conferencing and share sites. I was surprised when attendees asked about employee monitoring technology. My first reaction was that you don’t need it if you have excellent management practices and a mission-driven culture. Now, we have some research on the effectiveness of monitoring technology– and it shows mixed results.

Research from ExpressVPN shows that during the pandemic, 78 percent of employers monitored their employees. Previously, it was estimated that about 20 percent to 30 percent of employers monitored workers, mostly their badge swipes, and the amount of time non-exempt employees took breaks and lunches. Assemblers’ and machinists’ productivity were frequently tracked through paced assembly lines and with software.

The pandemic drove a significant increase in monitoring for remote work for office workers. It included monitoring of time at computers, taking screen shots while working, recording phone calls (even for non-call center workers) and reading email or text messages.

Employee monitoring software can improve productivity

Employee monitoring technology has been shown to improve productivity. Based on a 2013 Massachusetts Institute of Technology studywhen employees knew they were being monitored, profits increased by seven percent. Workers were more efficient and conscious of their actions and work. Research found that employees waste 4.5 work hours a week, which sucks out 20 percent of every dollar companies make. Each year, companies lose $1,685 per employee due to unproductive workers, according to the Centers for Disease Control and Prevention.

Employee monitoring software doesn’t have to be an expensive buy. Typically, it costs $20 to $150 per user, per year. Like most software, the price you pay depends on the features you want and the number of licenses you need for your team.

But monitoring can backfire

The practice of monitoring, however, ruins the employee-employer relationship and can backfire significantly. Most experts who track employee monitoring technology say that productivity surveillance damages the relationship between workers and their managers, even making employees more likely to lie, cheat, steal, and pretend to work. Some people even quit.

The practice of monitoring, however, ruins the employee-employer relationship and can backfire significantly.

Despite the overwhelming evidence that hybrid working (when workers are in the office one to three days a week) is about 20 percent more productive, drives up morale, makes it easier to recruit and retain employees, and saves substantial real estate costs, many leaders, and especially middle management, don’t believe their workers are more productive. For example, about 85 percent of Microsoft Managers blame hybrid work for obscuring whether employees are productive, even though 87 percent of Microsoft employees report they are more productive working from home. Microsoft Chairman and CEO Satya Nadella called on his manager to end their productivity paranoia.

The authors of a Harvard Business Review article in 2022 found across two studies that monitored- employees were substantially more likely to break rules, including engaging in behaviors such as cheating on a test, stealing equipment, and purposely working at a slow pace. They further found that this effect was driven by a shift in employees’ sense of agency and personal responsibility: Monitored employees feel less responsibility for their own conduct, ultimately making them more likely to act in ways that they would otherwise consider immoral. However, when employees feel that they are being treated fairly, the authors found that they are less likely to suffer a drop in agency and are thus less likely to lose their sense of moral responsibility in response to monitoring.

Monitored employees feel less responsibility for their own conduct, ultimately making them more likely to act in ways that they would otherwise consider immoral.

Gartner also said that by next year, 10% of workers tracked by AI-driven systems will attempt to trick those systems. Whit Andrews, a vice president and analyst at Gartner, said in a statement accompanying the research that fooling AI could be “in the interest of lower workloads, better pay or simply spite,” while others could view tricking the tools as “more of a game to be won than disrespecting a metric that management has a right to know.”

Additionally, Morning Consult found that nearly 60% of tech workers said they would reject a job offer if they were surveilled by audio or video to enforce productivity. Roughly half would leave a job if their employers used audio and/or video surveillance, facial recognition, keystroke tracking, or screenshots. Please see the Morning Consult bar graph below.

Legal issues with monitoring employee software

The Electronic Communications Privacy Act of 1986 allows employers to monitor employees’ verbal and written communications under specific circumstances. In general, monitoring must be within reason. For example, video surveillance can be conducted in common areas and entrances, but surveillance in bathrooms or locker rooms is strictly prohibited and exposes a company to legal repercussions. Another issue arises when you retain recordings, especially of meetings. If you record meetings with employees, especially ones dealing with disciplinary actions or HR-related issues, you may be legally obligated to keep those recordings and turn them over to a court if litigation arises.

According to Business Daily News, some state laws regulate this activity. Already, Connecticut requires employers to inform employees in writing that their work is being monitored and detail the tracking methods used ahead of time. California, Florida, Louisiana, and South Carolina have constitutions that explicitly state that residents have a right to privacy. As such, employers in these states may need to tread carefully if setting up employee monitoring systems.

In addition to employee monitoring laws, some states have strict data privacy laws. For example, the California Privacy Rights Act, which took effect on Jan. 1, 2023, substantially expands employee data protection requirements. To be safe, you may be best served by checking with your legal counsel to ensure your employee-monitoring technology usage adheres to federal and state regulations.

The National Labor Relations Board has announced it will vigorously enforce existing laws to protect workers from heightened monitoring. Expect more federal and state regulations in this area.

Expect more regulations around monitoring employee productivity and the privacy rights of employees.

Advice for the use of employee monitoring technology

If you decide to use Employee Monitoring Software, I recommend these steps:

  1. Provide notice to your employees that their work will be monitored by technology by whatever means you choose, such as tracking computer activity, taking screen shots of employees working or their screens, tracking the movement of company cars and vans and the safe driving practices of drivers, listening in on conversions or tracking emails and texts.
  2. Get their consent. For new hires, this can be part of the Employee Contract. It will need to be gathered from current employees.
  3. Explain why you are doing it. This can include preventing theft, tracking productivity issues, and ensuring company resources are being used appropriately.

Above all, I recommend building your culture and management practices.

I don’t believe you need to invest heavily in employee monitoring technology if you have a mission-driven and innovative culture and great management practices. Mission-driven, innovative cultures work to align employees to customer needs and the higher purpose for humanity. These cultures are marked by transparency, learning, employee involvement and benefit from higher productivity, innovation, and financial performance.

These companies have performance-driven managers who are clear about the team’s purpose, goals and milestones and who provide timely performance feedback, coaching and recognition. Above all, these managers build trust.

About Victor Assad

Victor Assad is the CEO of Victor Assad Strategic Human Resources Consulting and Managing Partner of InnovationOne, LLC. He works with organizations to transform HR and recruiting, implement remote work, and develop extraordinary leaders, teams, and innovation cultures. He is the author of the highly acclaimed book, Hack Recruiting: The Best of Empirical Research, Method and Process, and Digitization. He is quoted in business journals such as The Wall Street Journal, Workforce Management, and CEO Magazine. Subscribe to his weekly blogs at http://www.VictorHRConsultant.com


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