More Employee Monitoring Isn't Working for Small Businesses
12 min read
Apr 26, 2021

Small Businesses Are Investing More in Employee Monitoring—With Underwhelming Results

A new GetApp survey shows companies need to put the right goal in place and have complete transparency for employee monitoring to succeed.

Brian WestfallPrincipal Analyst

How would you feel about your employer watching your every move—knowing where you are, who you’re with, and what you’re doing? For many small business employees, they don’t have to imagine this scenario. They’re living it.

That’s according to a new GetApp survey where we learned that, alongside the many ways that small businesses have reinvented themselves during the COVID-19 pandemic, they’re also expanding their efforts to keep a watchful eye on their workforce behind the scenes.

Has this ramp up in monitoring led to desired benefits? And do these benefits outweigh the potential cost to workforce trust and morale? In this report, we’ll analyze GetApp’s “Employee Monitoring Survey” results from nearly 1,000 small business employees in the U.S. to find out. We’ll also offer advice to small business leaders on how they can thoughtfully approach employee monitoring and get the most out of employee monitoring software. (You can find our survey methodology at the bottom of this page.)

Key findings from GetApp's employee monitoring survey

Employee monitoring is on the rise at small businesses

In 2019, Gartner predicted that by the following year, 80% of companies would be monitoring employees using various tools and data sources. Though they couldn’t have predicted the pandemic coming around the corner, when it comes to small businesses, their estimate isn’t far off. 

Out of the 435 small business leaders we surveyed, more than two in three (69%) say their company uses some type of employee monitoring tool.

small businesses using employee monitoring tools

Here’s where it gets interesting. We know from past surveys that the COVID-19 pandemic forced small businesses to reduce budgets and scale back in a number of areas. But our data shows that employee monitoring is not one of those areas. In fact, small businesses have put more resources towards monitoring their employees over the course of the past year, not less.

Of the 69% of small business leaders at businesses that monitor employees today in our survey, 76% say their company has implemented at least one employee monitoring tool during the COVID-19 pandemic. Even if you include the 31% of companies from our sample that don’t monitor employees today, our data still suggests that a majority of all small businesses (53%) have invested in some form of employee monitoring technology over the past year.

In terms of where they’re focusing their efforts, small businesses have implemented monitoring tools most often in these five areas during the pandemic:

  1. Location monitoring tools to monitor where workers are at worksites or in work vehicles (41% of small businesses that monitor employees)

  2. Digital communication monitoring tools to monitor emails, chat messages, or video meetings (39%)

  3. Health and fitness monitoring tools to monitor employee physical health and activity levels through a wearable, such as a FitBit (39%)

  4. Surveillance monitoring tools to capture video footage of workers through a camera (38%)

  5. Tools to monitor active versus idle time on a computer, including mouse movements, keystrokes, or when workers have logged in and out (37%)

Top employee monitoring tools implemented by small businesses during the pandemic

Between contact tracing, social distancing requirements, and staying on top of newly remote employees who had to transition to working from home, the pandemic gave small businesses many reasons to implement more employee monitoring tools. But did these investments pay off? In the next sections, we’ll analyze our survey data to find out.

The takeaway for small businesses

If you want to implement an employee monitoring system at your small business, you’re certainly not alone. As we’ll show, however, your goal with employee monitoring, and the messaging and implementation around it, will ultimately determine if it’s successful or not.

Leaders say staff are aware of monitoring, but staff say otherwise

As small businesses pour more resources into employee monitoring, are workers being told that they’re being watched? The answer is somewhat complicated.

According to our small business leaders at companies that use monitoring tools, the answer is a definitive “yes.” 97% of leaders say workers are at least somewhat aware they’re being monitored.

How aware small business employees are of the use of monitoring technology

Ask small business staff below the leadership level, on the other hand, and a different story emerges. 

If, as leaders claim, leaders and staff are nearly equally aware of any employee tracking that’s taking place, they should report similar numbers of employee monitoring usage. But that’s not the case. Compared to 69% of small business leaders, only 24% of small business staff in our survey say their organization monitors employees.

Small businesses using employee monitoring tools (leaders vs. staff)

On top of that, of those staff that know they’re being monitored, only 69% say their manager or HR department explained their rights in regards to employee monitoring.

Does this mean small businesses are keeping employees in the dark on their monitoring activities, then lying about it? We don’t think so. More likely, small businesses are making staff “aware” of monitoring activities by burying it in the fine print of an employment contract or in the company handbook, and staff members simply aren’t paying enough attention.

To be fair, unless these small businesses operate in Connecticut or Delaware, they have no legal obligation to tell their workforce they’re using employee monitoring software. But if employees aren’t made overly aware they’re being monitored, then find out anyway, distrust and retaliation can follow, according to Gartner:

“It’s difficult if not impossible to keep things like this confidential within an organization. Explain to employees what you are doing and why. Without this explanation, they may assume the worst and object.”

Gartner, The Future of Employee Monitoring

Whether they’re using video surveillance on-premise, reading emails on company accounts, or tracking keystrokes, small businesses need to do a better job of informing employees about their monitoring activities.

The takeaway for small businesses

Whatever employee activity you're monitoring, be transparent about it with your workforce. Explain what you’re implementing, why you’re implementing it, and the data being collected with it. Better yet, polling workers before you implement monitoring software will help you get a pulse for how they would react to it.

Monitoring is intended to boost productivity, but it’s not working

When we asked small business leaders what their company’s primary reason is for monitoring employees, a common factor surfaced to the top: productivity. More than half (52%) of small business leaders at monitoring companies say that monitoring productivity is the goal with their employee monitoring software.

Primary reason for monitoring employees at small businesses

Does monitoring actually make employees more productive though? According to our survey results, it often doesn’t. In fact, it can have a detrimental effect.

A majority (53%) of small business staff that are monitored in our survey say employee monitoring has no impact on how hard they work. Furthermore, 27% say monitoring has no impact on how motivated they are to get work done, with 36% saying monitoring actually makes them less motivated.

Employee monitoring impact on small business staff productivity

The Gartner report “Getting Value From Employee Productivity Monitoring Technologies for Remote and Office-Based Workers” highlights some of the challenges with using software to monitor employee productivity (full research available to Gartner clients). 

One challenge is that the concept of “productivity” is highly context-specific. Though software can track simple metrics such as the number of sales closed, it can’t measure how productive more nonroutine tasks are. As a result, businesses often use a proxy, such as time spent on a task or task volume to measure employee productivity, which often doesn’t translate into real business impact. In other words, just because a meeting lasted longer doesn’t mean more got done.

There’s also the issue of how productivity data is used. Even if small business leaders have good intentions and say the data is being used to make employees more efficient, there is always the fear that it’s actually being used to weed out low performers. In organizations where decisions around promotions and layoffs appear unfair or unclear, these fears will only be heightened.

Ultimately, though productivity monitoring can reap benefits if done properly, the risks for many small businesses are very high.

The takeaway for small businesses

Employee monitoring software can be beneficial in the right circumstances: To improve security, or to prevent harassment, for example. When it comes to productivity, however, the path to success is narrow and full of potential pitfalls. Unless you can ensure it’s implemented ethically, and with a careful communication strategy, the benefits of productivity monitoring software do not outweigh the consequences.

Employee monitoring negatively impacts workforce stress, trust

As if underwhelming business results weren’t striking enough, our survey results show employee monitoring has other detrimental effects on workforce morale.

Compared to non-monitored employees at the staff level, monitored employees at small businesses are:

  • Nearly 50% less likely to say their manager completely trusts them (37% vs. 66%)

  • Three times more likely to feel like they’re being micromanaged (39% vs. 13%)

  • Five times more likely to feel a lot of pressure to work more hours than necessary (16% vs. 3%)

As a result, small business staff cite increased stress and a negative impact on morale among the top drawbacks of employee monitoring.

Top drawbacks of employee monitoring according to small business staff

As businesses contend with the growing problem of employee burnout, which has only worsened during the pandemic, the added efforts to keep close tabs on employees at the same time may be making the problem worse.

The takeaway for small businesses

Monitoring small businesses need to regularly check-in with employees to ensure it’s not severely affecting morale or stress. Picking a goal that demonstrably benefits employees also helps, as workers will be less likely to feel negatively impacted. Finally, if you have results that show employees are benefiting from monitoring, share that data with your workforce, as this can help to win them over.

All is not lost with employee monitoring, but small businesses need to be careful

Despite investing more in employee monitoring tools over the course of the COVID-19 pandemic, small businesses aren’t reaping the benefits they’re seeking. Adding insult to injury, workers aren’t totally aware they’re being monitored, and those that are aware are feeling added stress and a sense of distrust because of it.

If your small business is set on implementing an employee monitoring solution in the near future, you need to have a solid plan. Any carelessness or lack of foresight can do irreparable damage to your ability to attract and maintain an engaged workforce. With that in mind, here are some best practices for HR and small business leaders:

  • Learn how comfortable employees are with monitoring ahead of time: Survey workers to learn what types of monitoring they’re comfortable with, and how much you can use monitoring data. You may be surprised what employees are okay with. For example, two-thirds (67%) of small business staff that have monitoring software on a personal device approve of the practice.

  • Choose a monitoring goal that actually benefits workers: The path to added productivity with employee monitoring is a narrow one. Focus on a different goal that workers will be more likely to see the benefits of things such as catching mistakes before they escalate, bolstering business security, or ensuring staff aren’t overworking.

  • Be overly transparent: Hiding any monitoring activities from workers is guaranteed to backfire. Regularly remind workers about all the ways that they’re being monitored, the data you’re collecting, and the reason behind the monitoring.

  • Communicate results to employees: If workers see how monitoring is being used to create a better work environment or improve the employee experience, they’ll be more likely to approve of the practice.

Additional resources

For more tips on how to navigate tricky employee monitoring laws, check out our companion report on the subject.

If you’re interested in employee monitoring software, head here to compare top products, read reviews, and narrow down results to create a shortlist that fits your needs.

Survey methodology

GetApp’s Employee Monitoring Survey 2021 was conducted in January 2021. We surveyed 969 employees in the U.S. from businesses with two to 250 employees—534 below the managerial level (defined as “staff”) and 435 at the managerial level and above (defined as “leaders”). We worded the questions to ensure that each respondent fully understood the meaning and the topic at hand.

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