Surveillance is not the office management tool of the future

August 30, 2013
August 30, 2013

This originally appeared on LinkedIn. Follow Barry Schwartz here.

New York Times reporter Steve Lohr recently reported on a new surveillance technology that was tested in almost 400 restaurants throughout the US. Three researchers measured the impact of software that monitors employee-level theft, before and after the new surveillance technology was installed.

In the restaurant industry, analysts estimate the losses from employee theft at 1% of revenue, a significant number given the low margins at which restaurants operate. Most of the restaurant industry pay low wages to servers, who 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.

But this new monitoring software can track all transactions and detect suspicious patterns. The savings from the theft alerts themselves were modest—$108 a week per restaurant. However, after installing the monitoring software, the revenue per restaurant increased by almost $3,000 a week, or about 7%.

The impact of the software, the researchers say, came not from firing workers engaged in theft, but mostly from their changed behavior. Knowing they were being monitored, the servers worked harder to satisfy customers, boost restaurant revenue and boosts tips for themselves. The same people who were stealing from their employers became “partners” with their employers instead.

This research brings to mind a remarkable study of people’s inclination to “feed the kitty” at an office coffee station that was run on the honor system. People who made themselves coffee or tea were supposed to put an appropriate amount of money for restocking supplies into a cup. There was a nature photograph hanging on the wall above the money cup, and in the study, the experimenters replaced that photo with a photo of a pair of eyes.

For several weeks, a week of “nature” alternated with a week of “eyes.” And it turned out that when people were being “watched” by those photographic eyes, contributions to the kitty about doubled. People behave better when they’re being watched than when they’re not.

In his article, Lohr points out that “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.”

Is the implication here that micro-surveillance is the management tool of the future? Not so fast.

Consider a contrasting example, reported by Elise Hu for NPR. Hu tells us that the hierarchical hassles of the modern workplace are starting to fade, with a cultural move toward flat or “bossless” offices. Hu describes a tech company, Menlo, in Ann Arbor, Michigan, where there are two co-founders and a CEO, but the team takes charge of budgeting, hiring, firing and making decisions on how to serve the company’s clients.

“If you look at a baseball team in the field, no one would say, ‘hey, who does the pitcher report to? who does the catcher report to?’ People who really understand baseball would say, well, they have a role to play but their real purpose is to win the game. To be on the field with each other and trust each other to know how to play,” says Rich Sheridan, who co-founded Menlo in 2002.

Sheridan says eliminating layers of management can lead to faster decision-making—and more important, motivated and empowered employees. At Menlo, the whole office, or sometimes subcommittees, decide who gets hired and who gets fired. Promotions, raises and budgeting are all decided by the team. The company’s emphasis on transparency extends to details like the budget, which is posted on the wall for everyone to see.

“[Tech] industries are just unstable, rapidly changing, and they are trying to harness creativity and innovation. So it is that speed of the technology environment that has prompted organizations to rethink the way they structure the organization,” says Stephen Courtright, a Texas A&M business professor.

Courtright says that “in a flat organization, moving up the chain of command is not the reward for performing well, because in a flat organization there’s not a big chain of command to climb up. Basically the reward in a flat organization is being able to work on new and challenging creative tasks.”

So which way should we go: increased surveillance or increased autonomy? The answer, I think, is that it depends. When your workforce is just in it for the money, as are their managers, then you can expect people to try to get as much as possible by doing as little as possible. Surveillance may be the way to go.

But if your workforce is committed to finding meaning and engagement in their work, and your entire organization has a mission to solve problems and improve lives, surveillance will surely be counterproductive. Not only will it inhibit flexibility and creativity, but it will suggest a lack of trust that will surely erode the spirit of the organization.

I bet I know what you’re thinking. The “knowledge class”—the “creative class”—have flat organizational structures that display trust and encourage autonomy. But for workers who are just putting in time for the paycheck, the more surveillance, the better. Sounds sensible, but it isn’t correct.

Many years ago I did research with management expert Amy Wrzesniewski, now at Yale, and other collaborators. In that research, we showed that among people doing the very same job, some regarded it as just a “job,” some regarded it as a “career,” with their eyes on advancement, and some regarded it as a “calling.”

Those whose work was a calling were always asking themselves what they could do better, and how they could help achieve the overall aims of the organization, whether or not it was a part of their job description. Same job, but very different orientation to it.

Amy went on to study people like hospital janitors who do “dirty work” and reside at the very bottom of the organizational hierarchy. Here, too, she found plenty of janitors who regarded their work as a calling. They did whatever they could to keep patients safe and comfortable and their families at ease. These people did many things in the course of a day that were not part of their job descriptions.

You can bet that with the kind of surveillance software now being implemented in restaurants, this “extra-curricular” activity would stop, and the hospitals in which they worked would be much the worse as a result.

So the quick solution to the problem of an unmotivated workforce may be surveillance. How long any surveillance will be effective will depend on the ingenuity of workers as they try to evade it. The slow solution is to restructure what you do so that the people who work for you want to do an excellent job. I think there are few work settings in which the slow route isn’t better in the long term than the fast one.

Does this mean I’m advocating flat organizations in which everyone is her own boss? By no means. I think most work requires supervision. But supervision is different from surveillance.

There are two different reasons to keep an eye on your employees. One is to make sure they are working hard—to motivate them. The other is to make sure they’re working smart—to correct their mistakes and mentor them. Wise, mentoring supervision is needed to turn motivated workers into smart, motivated workers. And flat organizations are probably not the best way to achieve this result.

So employees need oversight. Not too little, like the flat organization, and not too much, like the surveilled organization. A few years ago, Adam Grant and I published a paper called “Too Much of a Good Thing,” in which we argued that there are many situations and many traits of character where what is needed is a moderate amount—not to much and not too little. This is true of motivation, creativity, independence, team coordination, and even happiness.

What I’m suggesting is that it is also true of oversight. We don’t want complete autonomy in our organizations. And we also don’t want NSA-style surveillance. What we want is empathetic, mentoring supervision. And we want to create organizations in which our task as a manager is to make sure people are doing their jobs right, rather than having to make sure that they’re doing their jobs at all.

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