Snooping – it seems to be all the rage these days. Everyone’s doing it from the NSA to employers. There are actually two TV shows on the Food Network (Mystery Diners &Restaurant Stakeout) in which third parties set up surveillance equipment in the restaurant to monitor what employees are doing.
It makes for great entertainment seeing employees misbehave, steal, and in some cases run their own businesses out of the owners’ restaurant. I’m not sure how much is staged and how much is real but in both shows we’re shown some outrageous behavior on the part of the employees who are caught in the act by cameras. Each show ends with the offending employees being reprimanded; in one show they’re often fired and in the other they get a pep talk and all’s well.
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? That’s what a group of researchers decided to find out. The results of their research are published here in this paper called, “Cleaning House: The Impact of Information Technology Monitoring on Employee Theft and Productivity”
The researchers measured the impact of software that monitors employee-level theft and sales transactions, before and after the technology was installed, at 392 restaurants in 39 states. The restaurants were in five “casual dining” chains.
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. In that environment, a certain amount of theft has long been regarded as a normal part of the business.
The savings from the 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 their changed behavior. Knowing they were being monitored, the servers not only pulled back on any unethical practices, but also channeled their efforts into, say, prompting customers to have that dessert or a second beer, raising revenue for the restaurant and tips for themselves.
In human resources, much emphasis is placed 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.