Employees are wary about it, but managers think it’s a good investment. Our latest survey explores the pros and cons of employee monitoring software for SMEs.

It’s natural for bosses to want to keep an eye on their employees. But with remote and hybrid work more popular today than before the COVID-19 pandemic started —and managers likely to be working from different locations to the teams they manage— monitoring staff can be a challenge. 

Employee monitoring software is emerging as a potentially useful technology. However, some firms are finding that the practice does more harm than good. On the one hand, monitoring tools can help managers understand how employees are performing and help staff track their attendance and tasks more easily. But on the other hand, it can make people feel overmanaged, and send a message that their bosses don’t trust them to get on with their work, leading to low morale —which in turn is bad news for managers.

We surveyed more than 1,000 people in the UK who work at small to midsize enterprises (SMEs) about employee monitoring. In a previous article, we examined data from around 900 employees (including middle managers). In this article, we focus on responses from nearly 200 top-level managers, business owners, and other employees who use monitoring software and see whether their views on these tools match up with their co-workers.

You can scroll down to the bottom of this article for a full methodology.

One-third of SMEs deployed employee monitoring software before COVID-19

The COVID-19 pandemic drove a major shift towards remote and hybrid working. A UK parliamentary report estimates that the proportion of the workforce working remotely (at least some of the time) doubled from around 17% in 2019 to 35% by late 2022. It is logical to assume, therefore, that digital tools to monitor remote workers and their devices took off during the pandemic. This is true to some degree, but our survey suggests that they were already widespread.

33% of managers said they rolled out employee monitoring software before COVID-19 restrictions were implemented, while 27% did so during the first six months of the pandemic. Around one-third again (32%) said they don’t use such software at all.

What do SMEs use employee monitoring software for?

Monitoring software is deployed in SMEs for a wide variety of reasons, according to owners and managers that use it. The most common use case is attendance tracking, including login and logout time, active/idle time, and sick days —which is the case at 43% of companies. 42% use it for time management (tracking projects, work calendars, and time spent on individual tasks). And 33% say they monitor employees’ computer use, such as the websites they visit and how they spend their time.

As well as varied applications for monitoring software, managers also see a range of benefits. The most common of these is improved business security (seen by 32% of those who use the tools), better visibility of high and low work performers (31%), and better oversight of the state of employee wellbeing (26%).

The wide variety of use cases and advantages —as well as the fact that responses were spread across the available options— indicates that employee monitoring software is applicable to many types of businesses and management scenarios.

Managers recognise the same privacy issues as employees

When asked about the negative aspects of deploying employee monitoring software, managers cited the same kinds of responses here as employees, which we explored in part 1. Bosses that use the software were asked to select up to three challenges they had encountered. The most common were:

• Invasion of personal privacy (28%)
• Increased stress for staff (26%)
• Negative impact on trust (26%).

These were also the top three complaints from employees.

It is clear that bosses understand employees’ objections to monitoring software, but they do seem to downplay the complexities. 64% of managers who use monitoring tools and whose employees are aware of it say that the majority of their employees have ‘no problem’ with the tools, while 35% say that opinions among their teams are mixed.

However, our own research indicates that employees (both monitored and unmonitored ones) think that monitoring software has a negative impact on their morale, motivation, and productivity. They do show different levels of comfort towards being monitored across different work activities, suggesting that would be OK with (or even in favour of) certain use cases.

Not all monitored employees know about it

The vast majority of managers who monitor their staff say that employees are made aware of the fact. 50% said staff have been trained and/or signed contracts, and 40% said that the company has sent written email communications and provides further information.

However, 8% of managers said that they have only mentioned the monitoring practices to ‘some employees’, and 3% said that their employees don’t know about it at all.

Depending on the situation, monitoring staff without their knowledge may be illegal. SMEs that do want to monitor should be able to justify the practice and inform the subjects of the monitoring, unless it is part of a special investigation, such as if an employer suspects an employee is breaking the law.

Managers agree that employee monitoring software makes business sense

As well as the ethical, legal, and human considerations of employee monitoring software, managers must also ask whether the investment makes business sense. 

Among managers from SMEs that use monitoring tools, 79% supported the initial decision to invest. Only 10% said they were against it (whether this was for financial, ethical, or other reasons), and 11% said they were not involved in the decision.

Respondents to our survey who are using monitoring tools seem overwhelmingly satisfied with their choices so far, and 79% say they will continue to invest in the software in the future.

Are there alternatives to employee monitoring software for SMEs?

If SMEs want to motivate their remote employees without the potentially overbearing deployment of monitoring software, there are other options to consider.

Gamification tools allow staff to earn points and prizes through their everyday work tasks. The employee plays a game that offers points, status, and rewards as they achieve the company’s objectives or improve their skills.

More than one-third of employees (36%) said that gamification would motivate them to meet company goals, but even more (47%) said it would have no effect.

Self monitoring software is another option. These tools allow workers to measure their progress at work and compile multiple self-tracking services into one centralised view. The idea is to allow employees to maximise their productivity and track their own performance.

Again, employees do not seem enthusiastic about this alternative form of monitoring. A plurality (46%) said it would have no effect on their motivation, while over one-third (34%) said it would make them feel less motivated.

Software alone does not seem to be a substitute for good management. If bosses can’t be in the same office as their teams, they need to look beyond technology and rely on their own interpersonal and leadership skills to motivate their staff.

In summary: employers must implement employee monitoring software carefully to avoid alienating staff

Managers that use employee monitoring software seem convinced that it is a worthwhile purchase. However, employee sentiment towards the tools (and practice in general) is broadly negative, especially in areas where employees feel it becomes a privacy concern.

If managers are thinking about deploying monitoring software, they must recognise the impact it can have on staff. They should pick their use cases carefully, and communicate openly about how and why certain activities are monitored. They should also listen to concerns from employees and be prepared to adapt their plans so that the software works for everyone’s benefit.