Algorithmic Management and the Economics of Surveillance

How do firms know that their white collar employees are working diligently?  Years ago, much of this had to be based on trust.  Formal performance measurements, such as the completion of deliverable documents and files, occurred infrequently.  On a day-to-day basis, managers could try to supervise office workers through walk-through observations, but this could be highly subjective and inconclusive.  After all, it only takes a split second to click a work-related tab to replace a tab of entertainment or leisure.

The mass shift of white collar workers to remote work during the 2020 Covid pandemic created a slew of digital work surveillance tools, collectively known as bossware.  Employee surveillance software is now relatively common, with supervisors able to check employee logins and various productivity metrics.  While this has helped firms catch unproductive workers, many claim that bossware can be abused by managers to unfairly penalize workers for normal behavior.  Why has bossware become so prevalent in less than a decade, and what are some economic ramifications of its use?

Economics of Surveillance

Productivity Enhancement (Increased Revenue)

A top argument in favor of firms using bossware is that it forces (or strongly encourages) office workers to be productive.  If a worker does not log in on time and spends hours a day idle, meaning no clicking, typing, or logging into work portals detected, a supervisor can quickly reach out and ask for an explanation.  This can sharply reduce the number of white collar employees who are spending most of their workday appearing busy from a cubicle opening…but are actually online shopping, gaming, or scrolling social media.  

On a more positive note, bossware may reveal struggling workers who want to do a good job, but are somewhat idle because they do not understand task expectations or processes.  These workers can now be addressed and trained more effectively.

Reduced Fraud and Abuse (Decreased Loss)

While the primary focus of bossware is ensuring productivity, an additional benefit can be the reduction of fraud and electronic theft.  In industries with sensitive data, some workers may be tempted to steal or manipulate company data for their own benefit, such as selling it to a rival firm or assisting friends with digital deals (ex: reducing amounts owed).  Bossware can be designed to notify managers if employees are trying to access portals or projects which are above their pay grade or outside of their scope of employment.

Employees trying to access sensitive company data on coworkers, perhaps to engage in gossip, can also be detected via bossware and addressed, helping prevent such gossip from harming the cohesiveness of the workplace.

Higher Turnover Costs (Increased Cost of Production)

Unfortunately for the firm, bossware may be seen as an affront by many employees, especially longtime veterans of the company.  This can result in some workers leaving the firm due to a belief that they are not trusted.  As a result, the use of bossware, especially invasive bossware, can inflict high turnover costs on firms.  Turnover costs include the separation pay to departing employees, time and fees to post and promote new job openings, and resources and time needed to onboard and train the new hires.  If the departing workers were experienced and highly productive, it may take years for a new hire to replace that productivity.

Decreased Entrepreneurial Ability (Reduced Revenue)

Some workers disgruntled by invasive bossware may not leave the firm, but rather engage in quiet quitting.  They avoid being fully productive and thus saddle the company with less output than expected.  Some of these workers, had they felt trusted and valued, may have used their entrepreneurial ability (a factor of production), to create new products and processes for the firm that would have either decreased costs of production or increased revenue.  Some may avoid being innovative out of fear that the company will use bossware to steal their idea outright and not provide any sort of recognition or bonus pay.  Thus, companies lose the best and brightest ideas due to a fear that such ideas will be “stolen” without the normal accolades.

Debatable: Team Building and Employee Loyalty

Used well, bossware can help maintain productivity and build cohesive employee teams in the long run.  Much of this likely depends on how managers and supervisors utilize the bossware data: they can either broach conversations as a way to help an employee reach his or her maximum potential or as a way to punish an employee for perceived slacking.  Thus, the human element after bossware has collected its productivity data is crucial.  Employers can frame bossware as a tool to help build up an employee and help the firm do good things, or as a tool to prevent lazy workers from milking the clock and collecting an undeserved paycheck.

If employees believe that bossware is used sparingly to determine if they need help mastering skills, they may become highly loyal and praise the firm for investing in them as skilled workers.  However, if employees believe that bossware is used excessively to penalize them for any breaks or days when they are struggling, they will likely become quiet quitters or outright resignees.  They may then criticize their former employer online, reducing its future ability to attract talent.

Debatable:  Accuracy of Surveillance Productivity Measurement

How effective bossware is at revealing worker productivity is complex and deals with many variables and metrics.  Bossware implemented without thought and strategy may reveal lots of useless data, such as mouse clicks and keystrokes, that have little to do with quality output.  The algorithm used by the employer may be inaccurate, falsely labeling many workers as unproductive.  For example, much creative work done online may involve lots of “think time” where employees are not constantly typing or clicking, but rather analyzing images.  An untailored bossware program may quickly flag these workers as unproductive and result in awkward conversations with managers.  

If bossware is well-tailored to the industry and firm, it can reveal lack of productivity.  However, if it is implemented hastily and with no adjustments to the default algorithm, it can result in a flurry of angry workers and managers, harming the firm.  Some workers may retaliate by installing controversial “mouse jiggler” and “window opener” software that make it appear that an office worker is busy, and then use their time in leisure until the company is forced to let them go.