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How businesses can get employee monitoring right

By Steve Weston, Chief Information Officer, Hays

Organisations are increasingly monitoring their employees. While many workers may have considered this an invasion of their privacy in the past, new research indicates this perception is changing to a more positive one. But how can businesses get it right?

From their keystrokes and browsing history to their brainwaves and emotions, organisations are gathering more data on employees than ever. According to research consultancy Gartner’s 2019 report The Future of Employee Monitoring, in 2015 only 30 per cent of companies were monitoring workers. This had risen to 50 per cent by 2018 and the firm predicted this figure would reach 80 per cent by 2020.

Implementation of staff monitoring has been in mind for many people too, since the outbreak of COVID-19. Google Trends data indicates that the search term ‘employee monitoring’ reached a peak score of 51 in terms of worldwide interest between January and March. However, this rose to a score of 79 by the end of March, reaching its peak of 100 in June.

And as more organisations implement monitoring, employees seem to be more comfortable with it – but only if it is used in the right way. Gartner’s report also found that just 10 per cent of workers were happy with monitoring in 2015, but that this had risen to 30 per cent by 2018. When employers explained their reasoning behind their data collection, this went up again to 50 per cent.

Furthermore, there is a strong business case for staff surveillance. “Monitoring can be beneficial in terms of productivity and performance, also the health, wellbeing and safety of employees,” says Edward Houghton, Head of Research and Service Design at city transformation business DG Cities. But, he adds, monitoring is only justified if it is transparent and fair. If not, it raises serious questions about privacy.

Increasingly however, people are willing to give that up for a benefit, says Brian Kropp, Chief of HR Research at Gartner in Washington DC. We make this trade-off daily with credit card purchases, social media and app use, he adds, so we are more comfortable with it in the workplace. “Employees no longer think workplace monitoring is completely off limits, just a bit uncomfortable.”

Monitor to help, not punish

Developing technology is enabling employers to track workers in far more invasive ways, opening up an ethical minefield. For many organisations, wearable gadgets that glean biometric data are an exciting new area of people analytics, but they also have the potential to erode the already shrinking boundary between work and home life.

“Unless this is done to the exacting high standards of ethical practice, there is a risk it can drive a wedge of distrust between employees and employers,” says Rob McCargow, UK Director of Artificial Intelligence at PwC.

Recently, 70 staff at the professional service firm volunteered to strap smart watches to their wrists, gathering biometric data on sleep patterns and heart rate variance, and taking daily cognitive tests in a trial, with the aim of raising individual wellbeing and productivity.

Analysing the anonymised, aggregate data, PwC found sleep could affect performance, with a correlation between lower levels of sleep, concentration and the ability to multitask effectively. It is early days, but since each employee has access to their own data, monitoring could become a prescriptive tool for raising their game, says McCargow.

But the biggest benefit is empowering staff to take control over their wellbeing: PwC workers assessed their own stress level via heart rate variance monitoring, and if it spiked, could access support such as counselling or a medical assessment.

Meanwhile, McCargow sees a future in which PwC managers crunch the data in aggregated form to improve resource management, bolstering project teams if the workforce seems stretched. “We may be able to run a better business off the back of this.”

Other companies monitor individual employee performance. Some Domino’s Pizza shops, for example, used an AI-powered camera system to monitor how well employees make a pizza – everything from the border of the crust to the temperature. If a pizza misses the mark, the ‘Dom Pizza Checker’ tells the employee to make a fresh pizza.

The company say that the tool is there to train staff and raise product quality, rather than punish people for mistakes.

Be open, and create a sense of trust

Thomas Kochan is Co-Director of the MIT Sloan Institute for Work and Employment Research in Massachusetts. He thinks it is reasonable for companies to act on the analysis of employee data, with more sophisticated technology, such as artificial intelligence, helping to turn insight into action. “The value of big data is the fast turnaround of problems.”

Monitoring can shed light on underperformance: some manufacturing employees use wearables that track their productivity in realtime. If it drops, management step in to diagnose the problem and find a solution, whether offering training, or adjusting workflow or breaks, says Kochan.

But they should be liable for these decisions. “To maintain the trust of the workforce, managers need to explain how they came to that decision and what factors went into it. Monitoring cannot be a black box.”

Employers should be transparent and give staff a say on what data is collected, the method and how it is used, says Kochan. “Define with employees what problem you are trying to solve through monitoring and share the data with the workforce so they can validate it and put it to work.”

Otherwise, organisations run the risk of losing the trust of staff and damaging their mental health. “The dark side of monitoring is it can be unhealthy for individuals to be exposed to excessive levels of surveillance,” says Houghton.

Some employers have taken this too far entirely, monitoring or limiting toilet use. Employers will have to continue reviewing and navigating the ethical line, Houghton adds.

In one infamous example, Barclays installed a monitoring system that tracked how long investment bank staff in London spent at their desks and warned people who took breaks for too long. Barclays axed the system in 2020 after a backlash from employees and criticism from privacy campaigners and HR experts.

Houghton also offers a warning for any businesses that think implementing monitoring will be helpful in keeping tabs on employees that have switched to home working during the pandemic of 2020.

“COVID-19 is a challenging time for many, and workers may feel anxious about their jobs and their ability to work at home,” he says. “If employers do have valid concerns regarding productivity, these should be picked up via line management with employees, and by looking at outputs and quality. Monitoring should only really be used to complement other practices, as opposed to being a quick fix.”

Jonny Gifford, Senior Researcher at the CIPD, agrees: “Employers should think twice before introducing any kind of monitoring. Our research shows that intrusive workplace surveillance damages trust, has a negative impact on morale and can cause stress and anxiety. There are, potentially, even greater privacy considerations to think about when monitoring home working as well.”

Ensure monitoring is legal and above board

The legal line is blurred too. In the EU, lawyers say organisations can process employee data if they prove their justification is superior to the interests of workers.

But as employers conduct their own impact assessment, a potential conflict of interest arises. “You could argue the safeguards do not fully protect employees,” says Daniel Cooper, a Partner at the law firm Covington who advises clients on data protection.

“But if organisations get it wrong, they get hammered by regulators. The fear [of prosecution] is the deterrent of abuse of privacy.”

In the EU, companies have to adhere to the 2018 General Data Protection Regulation (GDPR). If organisations fail to explain why they collect data, or to make sure it is relevant, not excessive, and is up to date and secure, they could be hit with fines of €20 million, or up to 4 per cent of global turnover, whichever is more.

There are also security risks to monitoring, with biometric data a “treasure trove” for hackers, says Nick McAleenan, a Partner at JMW Solicitors who focuses on data protection and privacy: he represented staff at Morrisons supermarket group in the UK’s first data leak class action.

He adds that organisations need solid cybersecurity and data protection policies, as well as audits and insurance.

Global compliance will mean obeying local privacy laws. In the US, individual states have their own regulations. The California Consumer Privacy Act requires many companies to disclose data collection and its purpose, and entitles workers to damages for data breaches.

In a 2018 report, the law firm Freshfields noted that new data privacy regimes were established in China and the Philippines. In China’s case, the new rules mean employers cannot process an employee’s personal information abroad without explaining the purpose, scope, contents and recipient. Furthermore, companies that are found to have publicised private data, or disclosed an individual’s private information, in writing or orally, without the individual’s prior consent, are considered to have caused a civil injury to the employee, which may constitute a criminal offence.

Ensure that it is a two-way street

But above all, companies need to get employees on board. A global 2019 survey by Accenture found that 89 per cent of workers were open to monitoring, but only if it benefited them.

Companies that collect data responsibly could see revenue growth of up to 12.5 per cent higher than companies who do not, Accenture said, because of employee trust that impacts productivity.

But only 30 per cent of executives who the consultancy also surveyed were very confident they were being responsible. And 55 per cent do not ask for employee consent, though in many jurisdictions consent is needed to monitor biometric data, lawyers say.

For MIT’s Kochan, this is “unethical management. It is an invasion of privacy. It breeds distrust in the workforce,” with data scandals like Cambridge Analytica making people more sensitive to privacy.

There is also a risk that employees feel pressured into going along with surveillance, adds McAleenan at JMW Solicitors. “How can employees give proper consent when it could affect who gets the next promotion or pay rise? There is an inequality of bargaining power.”

Employees often fret their employer could use their data against them, he adds. And indeed, PwC’s pledge to anonymise and aggregate staff data helped to win support for wearables: applications to the pilot were oversubscribed within minutes of opening.

Current evidence suggests other organisations will follow suit, gathering data through ever more invasive means with the aim of raising performance, productivity, health and happiness.

But manifold legal and ethical challenges need to be overcome first. Those who succeed will involve employees every step of the way. Monitoring cannot substitute for good management.

“The democratisation of data can have huge benefits to both workers and employers. Data cannot be secretly collected and analysed and decisions made at the top without employee involvement,” says Stacia Sherman Garr, Co-Founder of the human capital research firm RedThread Research in California. “They need insight into how they work, to develop themselves into better, more productive workers.”

Download your free copy of the Hays Journal 19 for more insights.

About this author

Steve joined Hays in January 2008 as Chief Information Officer. His career began in Car Manufacturing in 1977 and he then moved into the Financial Services sector in 1987. In 1997 Steve moved into the IT services sector and held the position of UK Managing Director for Xansa until December 2007. Steve currently holds a number of roles at Hays including Chief Information Officer and Global Head of Corporate Accounts.

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