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Working Like Someone's Watching

A recent study found the presence of monitoring software not only deterred restaurant employee theft, but impacted how workers approached their jobs. Experts say such software can indeed affect employee performance, but employers must be careful to differentiate between productivity monitoring and surveillance, and ensure the workforce understands that difference.

Thursday, September 19, 2013
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It makes sense that putting monitoring software in a restaurant would discourage employees from stealing. But according to a recent study, employees who know they're being watched may work a bit harder as well.

In a new research paper, "Cleaning House: The Impact of Information Technology Monitoring on Employee Theft and Productivity," a trio of academicians outline how software that monitors employee-level theft and sales transactions affected employee behavior as well as deterred employee theft in nearly 400 restaurants.

The software -- Aloha Restaurant Guard from Raleigh, N.C.-based technology provider NCR Corp. -- was installed at 392 casual dining establishments in 39 states, and researchers measured the software's effect before and after the technology was implemented.

Over the course of the study, more than 630,000 transactions were tracked and collected on a weekly basis, with managers receiving an electronic alert when an employee engaged in what appeared to be a clear case of misconduct.

Lamar Pierce, associate professor at the Olin Business School at Washington University in St. Louis; Daniel Snow, associate professor at the Marriott School at Brigham Young University; and Andrew McAfee, research scientist at the Sloan School of Management at the Massachusetts Institute of Technology -- found participating restaurants saw an average savings of $108 a week.

But in a bigger discovery, employees' behavior also changed after the software was installed.

The researchers found many employees, aware the technology was in place, ratcheted up their customer-service levels – suggesting customers order dessert or have another drink, for example. After the software was installed, revenue per restaurant increased by an average of $2,982 a week, according to the researchers.

While the presence of monitoring software seemed to affect how many of the restaurant employees approached their jobs, it's important to note they weren't under constant -- or intrusive -- scrutiny during the study, says Pierce.  

"We don't see it as surveillance. This isn't employers reading [employees'] emails. This [technology] is similar to an inventory management system. It's similar to the alerts that go off when a piece of clothing that hasn't been paid for goes out the door in a retail setting," says Pierce. "What [the software] does is use sales data and looks for suspicious patterns. That's not equivalent to the National Security Agency mining peoples' private transmissions. It's more equivalent to using tools to check up on things."

From a business standpoint, the addition of monitoring technology may indeed improve job performance, and in turn, increase revenue. But more importantly, employers should create a working environment that doesn't compel workers to behave unethically in the first place, says Pierce.

"The best thing you can do for your company is to find people who are intrinsically motivated to always work hard and never cheat," he says. "There are only so many of them, and everyone's trying to find them at the same time.

"So, then the question becomes, 'What are most people like?' " he says. "And many people are susceptible to the environment you put them in. If you put people in bad situations, and if you give them perverse incentives -- low pay or overly lax management for example -- you set them up to fail."

In other words, creating a culture where employees don't feel they need to steal just to get by -- and in which theft and other unethical behaviors are met with punishment -- decreases the likelihood of employees engaging in misconduct.

Indeed, the presence of monitoring software alone doesn't necessarily improve productivity or morale, says Jennifer Newman, a workplace psychologist and director at Newman Psychological and Consulting Services in Vancouver, British Columbia.

Rather, "[workers] knowing that thieves won't prosper does," says Newman. 

"If [an employee] believes that some of his or her co-workers are stealing to make money, then he or she would be unhappy sharing tips with them," she says. "This might affect your productivity. If your employer puts into use technology that limits stealing and either catches thieves or causes them to move on, [other workers] have a better reason to work harder."

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All that said, employees may very well be put off by the prospect of monitoring software being introduced to the workplace, says Pierce.

"When you think about monitoring employees, you have to be very careful about the psychological impact on employees," he says. "That's why I draw the distinction between this system and a camera-based system. [Employers] have to think about whether it's going to create a hostile work environment. How will employees view it? Will they see it as an invasion of privacy?"

HR leaders at companies considering monitoring measures must be very careful to explain to employees the organization's reasons for doing so, and employers' chief takeaway from the study "shouldn't be that monitoring employees is always good," he says.

In certain settings, however -- retail, eateries -- the software can be an effective way to channel employees' efforts into bigger sales and more revenue.

"The wrong way to use it," he adds, "is to play 'gotcha' with it, implementing the system and waiting for someone to do something wrong, then firing them or shaming them in front of other employees."

Legally speaking, "there's not a great deal of legislative restrictions" surrounding the use of such software, says Kevin Zwetsch, a Tampa-based attorney and business adviser with Ogletree, Deakins, Nash, Smoak & Stewart.

"It's essentially just workplace information [employers are seeking]," he says, "to measure efficiency."

Zwetsch, however, echoes Pierce's sentiment that employers and HR leaders should take great care to ensure employees understand what the software does and why it's there.

"If a client called me about taking this approach, the discussion I'd have with them would be 10 percent legal considerations and 90 percent practical employee-relations considerations," says Zwetsch.

"How to retain and motivate a good workforce is what needs to be considered," he says. "If you do it the right way, then a lot of employees embrace the technology and use it to enhance their ability to sell and enhance outcomes. If employees understand why it's being done, then you're much likely to have a positive outcome [with the software]."

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