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Does Employee Monitoring Software Work?

Employee monitoring and surveillance are hot topics but how effective are they really? Learn how employee monitoring changes employee behavior.

Employee Monitoring and Surveillance

Monitoring and surveillance are becoming more and more prominent. We hear about it from the NSA to employers. There are even two TV shows on the Food Network (Mystery Diners & Restaurant Stakeout), where third parties set up surveillance equipment in a restaurant to monitor what employees are doing. We’re not sure how much is scripted and how much is real but in both shows, there’s some pretty outrageous behavior from some employees. This brings us to the topic of employee monitoring software.

Is Employee Monitoring Viable?

Do these tactics really work in the long term though? Does surveillance have any effect on the behavior of your employees or is it just a one-time benefit? The research paper by Pierce, Snow, and Macfee titled “Cleaning House: The Impact of Information Technology Monitoring on Employee Theft and Productivity”, answers those questions exactly.

In the study, researchers measure the impact of software that monitors employee-level theft and sales transactions, before and after installing surveillance equipment, at 392 restaurants in 39 states. The restaurants were in five “casual dining” chains.

Theft & Fraud

Employee theft and fraud is a big problem, as it costs an estimated $200 billion a year across the economy. In the restaurant industry, analysts estimate the losses from employee theft at 1 percent of revenue. That does not seem like a lot, but restaurant profit margins are slender, typically 2 to 5 percent. So cutting down on theft can be an important contributor to a restaurant’s financial health.

Most of the restaurant industry pays its servers low wages and they depend on tips. Employee turnover is high. Theft is also common and somewhat normalized in the industry.

The savings from employee monitoring software preventing thefts were modest, $108 a week per restaurant. However, after installing the monitoring software, the revenue per restaurant increased by an average of $2,982 a week, or about 7 percent.

The impact, the researchers say, came not from firing workers engaged in theft, but mostly from employee’s knowledge of the monitoring and surveillance. Not only did unethical practices come to a halt, employees also put more effort into their work. For example, prompting customers to have dessert or another beverage. With these small changes, the restaurant was able to increase revenue and the employees also saw an increase in tips.

In human resources, there is a heavy emphasis on employee selection: if you pick the right people, they will do the right thing. Instead, this research suggests that the surveillance effect on employee behavior is striking.

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