The pros and cons of using employee monitoring technology

Edward Sattaur was unsure when he first started using productivity monitoring software. The B2B marketing strategist was working as a director for digital marketing company Majestic Media at the time, and part of his team was in Bulgaria and Argentina. To keep everyone in sync, senior leadership introduced Time Doctor, a software-as-a-service tool that allowed managers to track which tasks employees were working on at any given moment and when each one was completed. As a manager, Toronto-based Sattaur was both monitoring his own team and being monitored, himself, by superiors.

It did not take him long to decide. "For me, it was embraced — because I've always worked from home and been involved in jobs that didn't have very clear, defined lines," he said. "There was always a strong emphasis on needing to be self-managed, so the introduction of that tool gave me the ability to say, 'OK, over the week, I'm spending this much time doing administrative stuff, this much time doing graphic stuff, this much time doing sales and development stuff.'"

The Time Doctor platform took pictures of employees' screens, which managers could check to see if employees were working or scrolling social media. Sattaur found his own productivity improved so much that he continues to track his own work with Time Doctor today. "It forces me to turn on that awareness about my time," he said.

As many continue to work from home, some companies are turning to new techniques and technologies to remotely monitor their employees. Software programs that offer everything from virtual time clocks to email and chat monitoring to work computer usage tracking are helping managers check in on employees' productivity and activity.

Research by advisory firm Gartner found that, around April 2020, among European and US employers, roughly 16% of them had started tracking their staff more frequently, but by the end of July, it was 28%, according to Brian Kropp, group vice-president and chief of human resources research at Gartner. Many companies, of course, used this technology before COVID-19, but demand is accelerating.

It is a large and growing industry. Tech giants such as Amazon, Google, and Microsoft, along with a raft of smaller companies, are offering tools that organisations can use to monitor employee productivity. Organisations can pay anywhere from $5 to $30 per employee to use this type of technology, and the software companies are advertising productivity boosts of 22% to 32%.

While growing in use, these technologies nonetheless present financial, legal, and reputational risks. While the tools can be relatively low-cost, they do not always lead to a significant return on investment, given the negative impact they can have on employee morale. The IT costs, in many cases, will be superseded by longer-term HR costs if employee turnover increases or recruiting becomes more difficult. Then there are the legal and cybersecurity risks that come with data collection and storage, not to mention the general unease that many will feel about using the technology.

All that said, many managers do stand by the technology, if it is used properly and transparently. However, as risk managers, CFOs should pay close attention to the pros and cons of using it. It is important to research and carefully consider the costs and benefits of using such software.

'We're all grownups, let's trust people'

For some financial managers, monitoring their employees' day-to-day activities simply does not sit right. Katie Bedborough, ACMA, CGMA, the CFO of VoCoVo, believes that using productivity tracking software would be "fundamentally at odds" with the culture that she's trying to create.

"That says to [employees] that they are not trusted, and it's just not going to foster the kind of culture and environment we want to get the best out of our people," said Oxford, UK-based Bedborough. "We want to foster innovation ... and that comes when people feel trusted."

For her, productivity is not about "the hours you spend with your bum in the seat" but rather about the quality of work you deliver. "We're pretty clear with people around what output we need and how you get to that — we're all grownups, let's trust people to do that," she said.

Bedborough also stressed that the pandemic has placed additional strain on many people and that employees should be given more, not less, leeway during this difficult period. "You don't know what people are going through," she said. "There's something about just being understanding, at the moment — and being kind to people when they're going through a difficult time — that's potentially going to engender loyalty that will last for years to come."

The rewards

Many managers, however, stand by productivity monitoring technology and believe there are acceptable ways to use it.

Gartner's Kropp stressed the importance of distinguishing between different types of software while considering your company's ultimate goal. For example, some companies aim simply to track productivity. Employee performance on average has not dropped during the pandemic, Kropp said, but some managers nonetheless worry that individual employees have become less productive.

Others are interested in software to help managers understand their employees and recognise what obstacles they might face while working remotely. They are interested in employee engagement, wellbeing, and overall experience. If, for example, every employee seems to get stuck on a certain task or process, tracking software can help leadership look at the big picture and identify problems to make workers' lives easier.

A third goal Kropp highlighted is improving communication and connectivity between managers and employees. He cautioned, however, that this can often feel like employee monitoring by a different name.

"The thought process behind it is, 'I can just pop up and make a meeting happen, just like I can swing by someone's desk,'" Kropp said. "Yes, you can do that, but also what that does is create a situation where those employees feel like they are essentially being monitored and tracked."

Regardless of intentions, usage numbers are rising, according to research by Gartner, and many executives report positive experiences. Lindsey Chapman has used productivity monitoring technology ever since launching her company, Meadows Resources, five years ago. A human resources recruiting, staffing, and training company that serves clients in the oil and gas, technology, and firearms industries, Meadows Resources is almost entirely virtual. There is an office in Houston, but it is a flexible working space, and most staff are permanently remote.

That is why Chapman felt it would be important — both for her, as chief executive, and for her clients — to know what her five employees and multiple contractors are billing for. Part of that instinct came from previously having been a customer of the services she now provides.

"When I was a consumer of human resources, recruiting, and staffing consultant contractors, one of the biggest problems that I had was that I didn't have a real understanding of what they were doing — didn't have a lot of trust in the hours they were billing," Chapman said.

Because her employees know, and have always known, that they are being monitored, she rarely has any issues. She said she has had three or four instances in the past five years in which an employee or contractor had been clocking time while searching recipes or using social media, but usually it is an honest mistake — they thought they were clocked out — and is corrected as soon as it is pointed out.

For clients, remote employee monitoring offers a higher level of accountability than even traditional, in-office employment, Chapman said. "I have clients that say, 'I know more about my remote HR person or my remote recruiter than I do about my secretary in the next room — she could be playing video games,'" Chapman said.

She uses two types of technology — one, called HiveDesk, that automatically takes pictures of employees' computer screens while they are clocked in, and another, Hubstaff, which uses GPS tracking as a timekeeping system when staff are on-site with a client.

For a 50-person team, HiveDesk costs $250 per month, while Hubstaff has plans ranging from $7 to $20 per user per month. For a similar-size team, Time Doctor, Sattaur's program of choice, ranges from $390 per month for a basic subscription to $990 per month for a premium subscription, including additional customer support and the ability to take screen captures of videos.

The cost/benefit analysis, in Chapman's view, is simple. "Can you put a price on trust? It's invaluable," she said. "Honesty and transparency — you can't put a price on that."

The risks

However, Kropp outlined four key types of risks that finance, HR, and legal directors should consider when weighing productivity monitoring software. "The real cost is not the cost of the technology itself," he said. "There are several other costs, though."

The first is the relationship cost between managers and their employees. Using productivity monitoring software can give the impression that managers do not trust employees, which can negatively affect culture and create an environment lacking in trust. It's already an issue for some organisations. Gartner research from January 2021 finds that less than 50% of employees trust their companies with their data, while 44% do not receive any information about the data collected.

Then there is financial risk. Staff data must be handled appropriately and legally. Otherwise, you risk legal and financial trouble. This is of particular concern for multinational corporates, Kropp said, as they will face different data security and privacy regulations in different jurisdictions.

In August 2020, it emerged that Barclays was being investigated by UK authorities over allegations that it had been spying on employees. Barclays could be fined up to £865 million if found guilty of breaching UK privacy laws. According to media reports, the bank allegedly used Sapience software to collect "intrusive" data and insights into employee work patterns. After receiving staff pushback, Barclays said in February 2020 that it would anonymise the data to respect workers' privacy.

Data collection also creates cybersecurity risk. Executives must be even more vigilant about protecting against hacks or breaches if they are holding additional personal information about employees.

Then there is reputational risk. "What is the impact on customers if they know you're tracking information about your employees?" Kropp said. Clients might feel uncomfortable on behalf of employees if the monitoring techniques you employ appear to be excessively intrusive. This type of reputational damage could also make it harder to recruit talent in the future.

Gartner predicts that new regulation limiting the data employers can collect about their workers will soon begin to emerge. In the UK, lawmakers are already beginning to speak about the issue after a November 2020 poll revealed that a growing number of firms were adopting the technology.

Best practice

Ultimately, the first question for management teams considering implementing productivity monitoring software is: What is the purpose?

"If it's really just about 'Are people productive or not?', then you might have better tools to prove it," Kropp said. "If you're using it to understand the employee experience, what is hard for them, what's breaking, what are they spending a lot of time on, that's where the productivity gains are."

If you do decide to use this type of technology, Chapman recommends creating your own parameters and best practice. "The way we use it may not be the way you want to use it," she said.

In a pre-pandemic article about the do's and don'ts of using employee data, Gartner researchers also recommended maintaining strong communication lines between key partners such as HR, privacy, legal, compliance, IT, and analytics leaders.

The various stakeholders should be asking each other: What data is used and how? Who has access and where is the data stored? What policies and procedures are in place to protect our data? What regulations apply to us? The researchers also stressed the importance of paying extra attention when external vendors are involved.

Transparency is key

Kropp outlined three steps to successfully using productivity monitoring software while maintaining the trust of your staff.

First, ensure they know they are being monitored. Second, explain to them what you are tracking, why, what decisions you will be using it to make, and what decisions you will not be using it for. Third, once those decisions are made based on the data, explain them to staff.

"When you do that, you find that the vast majority of employees are comfortable with their employer collecting that information about them," he said.

Sattaur recommended that management teams carefully communicate why they are bringing on monitoring technology.

"Frame it as, 'This is our business goal, and this is a management tool to help us manage our resources — it's not a matter of whether you are working or not, but how that time is being used and what insights we can gain about how to be more productive as a company,'" he said.

Chapman also stressed the significance of transparency. "I would never use it with people that were unaware that you were using it — it would be disingenuous and go against the whole issue of building trust," she said, adding that her company had had no staff turnover in five years.

Committing to that level of "radical transparency" is essential for success, according to Kropp. "If you're willing to do that, there are lots of potential benefits and upsides; if not ... you introduce a really significant risk that your employees will have a revolt against you."

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Learning resources

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Portia Crowe is a freelance writer based in France. To comment on this article or to suggest an idea for another article, contact Drew Adamek, an FM magazine senior editor, at Andrew.Adamek@aicpa-cima.com.