With the explosion of communications technology has come two trends that seem at once inexorable and logically interrelated. The first is employees' growing use of company resources, particularly computers and internet connections, for personal business or recreation while at work. ComScore Networks found that, excluding auctions, 59 per cent of all web purchases in the United States in 2001 were made from the workplace.
A survey by Vault.com reports that 47 per cent of employees spend at least half an hour a day cruising the web for personal reasons.
According to a study by IDC Research, 30 per cent to 40 per cent of employee internet activity is for personal reasons, and SexTracker notes that about 70 per cent of all internet porn traffic occurs during workday hours.
The second trend constitutes what at first glance appears like a logical employer reaction to all this employee activity.
Companies have installed many forms of software and equipment to monitor their people's internet and telephone use. And they then use the results to take action.
For instance, a 2004 American Management Association survey found that 60 per cent of employers used software to monitor incoming and outgoing email, and one-quarter had terminated an employee for violating email policy. A 2005 survey conducted by AMA and the ePolicy Institute reported that 76 per cent of employers monitored their employees' website connections, 65 per cent used software to block connections to some websites and 26 per cent had fired workers for misusing the internet.
Employers frequently tell employees that their computer and email use are being monitored, with more than 80 per cent informing their workers the company is monitoring content, keystrokes and time spent at the keyboard.
And most employers have established policies governing personal email use (84 per cent) and personal use of the internet (81 per cent).
Such actions seem sensible on the surface. A 2004 AMA survey found that 10 per cent of the respondents reported spending more than half the workday - four hours or more - on email, and some 86 per cent acknowledged engaging in personal email correspondence at work.
But like many management decisions concerning employees, things aren't as clear-cut as they first appear when we consider the real long-term consequences. Maybe it actually makes sense to let people do personal business while at work, or even spend some time goofing off. And maybe spying on employees isn't such a great idea after all.
Let's pretend companies got their most desired wish - people stopped doing any personal business such as online banking and stock trading at work. What might happen?
Many households now have two working parents and, given the stagnation in average wages in the US, more and more people work more than one job. So, if more people are working more hours at more jobs, and they can't do personal business at work, then there is a logical consequence: There will be more absenteeism as people attend to personal issues.
In 2003 in the US, the cost of absenteeism was estimated at $800 per employee per year, the top cause being family-related issues.
Second, people don't like being electronically monitored. So, ironically, even as companies build a more committed and motivated workforce, they may be doing things that make employee attitudes worse.
Research shows that people are less satisfied with both the task they are doing and with their supervisor when they are being watched.
Third, when you constrain what people can do you set in motion a process called psychological reactance. As one simple example, have you ever noticed that you most need and want to get up and move around the airplane right after the "fasten seat belt" light comes on? People rebel against perceived constraints. This is consistent with the psychological principle of scarcity - that people want more of what they are told they can't have.
So, in many instances, companies have inadvertently turned somewhat boring and routine work - people's primary jobs - into an interesting intellectual challenge: Can they outsmart the various security systems that limit their freedom?
Fourth, companies need to beware of self-fulfilling prophecies. For example, if people are labelled as smart, they will not only try to live up to this high expectation, they will also see themselves as more intelligent and be motivated to act in ways consistent with this self-conception. Conversely, if people are labelled as untrustworthy and dishonest - the logical implication of being monitored and told what to do - they can respond by living up to that expectation.
Fifth, surveillance regimes can encourage those in authority to try to entrap the people being watched, making it more likely that companies will actually incite bad behaviour and therefore, that proscribed actions will take place. Such entrapment acts as a way of justifying the need for surveillance in the first place.
And there is a sixth consequence of electronic surveillance and proscribing what people can do with their time on the job, and this may be the most important consequence of all: Monitoring your employees makes it very hard to create a climate of trust.
These reasons explain why companies that actually achieve competitive advantage through their people management don't over-control or monitor how their employees spend their time.
Jim Goodnight, co-founder and CEO of the highly successful software company SAS, facetiously told me he considered giving people the web addresses of sports and pornography sites so they wouldn't have to spend so much time finding them.
Goodnight was quite clear that employees were responsible for doing their work in an effective and creative fashion, and how they spent their time and what they did with their computers at work was pretty much up to them.
So, other than flagging for porn sites, SAS just tells its people to use company resources responsibly.
The basic prescription is simple. Before you implement the latest technology to monitor your workers, ask yourself what your decision says about how you think about your people.
If you don't trust your employees, maybe you should get different ones. If you do trust them, or hope to build trust, treat them accordingly.
Jeffrey Pfeffer is a professor of organisational behaviour at the Stanford Graduate School.
Australian Financial Review
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