How AI is disrupting the ethos and competitiveness of companies

AI For Business


Since the middle of the pandemic, the rise of hybrid and remote work has accelerated the adoption and popularity of employee monitoring software. For employers, this makes sense, as companies want to ensure their employees are performing as expected, even when not in sight.

Employees, meanwhile, have a mixed reaction to the technology. Some see activity tracking as breeding distrust, while others see it as a worthwhile trade-off for more flexible work schedules. Where this trade-off begins to unravel is the fact that employees continue to be monitored even when they're in the office part-time or full-time. How does tracking impact data security, privacy, and company culture? Big impacts.

Employee trust and company culture go hand in hand. I recently sat down with Sridhar Vembu, CEO and co-founder of Zoho, a 27-year-old SaaS and technology provider whose company boasts, in Vembu's words, “the lowest turnover in the industry.” He defines Zoho's culture as one based on humility and contentment, two qualities that its post-IPO competitors no longer possess. Zoho does not spy on its employees or track potential customers, and it does not use cookies on any of its digital properties.

Last month I attended the company's analyst/media day and annual user conference, Zoholics, where Vembu described Zoho employees as “the rare breed of people who stay with a company for the long term so they can serve their customers for the long term.” In his keynote, Vembu explained why respecting and trusting employees isn't just an altruistic act by business leaders, it's also about the bottom line.

Vembu adds: “The modern axiom that 'you can't manage what you can't measure' is fundamentally flawed. Metrics are good for widgets, but the idea that metrics can be applied endlessly to improve human beings is destroying the spirit – the spirit of the organisation, the spirit of the team. If you keep your employees happy, your customers will be happy. If you want to prevent customer churn, you have to tackle employee churn first.”

To be clear, Zoho does not take a laissez-faire approach to data privacy and security, either internally or through their products to their customers. Zoho has a data security and privacy stack, including multi-factor authentication tools, password security, and a privacy-focused browser. These tools give businesses increased security for their own data, as well as that of their employees and customers, but without sacrificing privacy. Drawing a line between corporate security and employee privacy appears to have created trust within the organization and strengthened the overall culture and values.

Employee monitoring has nothing to do with data privacy or security

It's a concern for me, and for a growing number of CEOs and executives, that some vendors are marketing their remote worker tracking software as something other than what it sounds like. In a blog post titled “The Top 5 Cybersecurity Challenges (And How Employee Monitoring Software Can Address Them),” one monitoring solutions provider correctly points out that businesses are and should be concerned about data privacy and security. But nowhere in the nearly 1,500-word article is there an explanation of how the monitoring software addresses cybersecurity threats.

Without a doubt, companies today need to pay more attention to protecting the data of their customer, partner, and employee ecosystems. The problem is that employee monitoring software is ineffective and can often increase a company's vulnerability to attacks. To make matters worse, remote, hybrid, or office-based employees don't like being tracked, they question the correlation between tracking and security, and they start to lose trust in their employers. I believe trust differentiates companies, and a lack of trust can dilute company culture and the sense of purpose employees have.

Leaders recover from hard lessons of returning to the office

Of course, this puts business owners in a difficult position. Two statistics stand out in this Forbes article: first, the fact that “60% of businesses use monitoring software to track remote employees” and second, the fact that “73% of business owners believe remote workers pose a higher security risk.” These statistics suggest a troubling correlation between monitoring software adoption and business security concerns and needs.

In considering how to mitigate security risks, some companies are making the basic calculation that remote work is not safe, so working in the office must be very safe. Unfortunately, however, employees themselves are not buying it at all, resisting corporate efforts to lure or outright demand that they return to the office.

Employee Tracking and RTO Rebellion

Earlier this year, 5,000 employees sent a rebellion letter to SAP (SAP) management complaining that they felt “betrayed” by the company's RTO policy. But few companies have exploded as spectacularly as Dell (DELL). In May, as attendance in the office remained low despite the mandate for a three-day work week, the company began relying on tracking methods to determine who was following the rules and who needed to be issued literal warnings. “…some employees feel 'tracked like kindergarteners, fearful that their names will end up on lists,'” Business Insider wrote at the time. Then, when that effort failed, Dell escalated its tactics in June 2024, telling employees who worked remotely that they were no longer eligible for promotions. Half of its U.S. employees and a third of its international employees decided that telecommuting was still valuable and called out the company's bluff. A true disruptor of warning culture.

What if the options were slightly different – returning to the office and being considered for promotion, or staying at home and being actively monitored for activity? My suspicion is that nothing will change, but that's because the industry has not yet encountered an Orwellian situation. The tools are being adopted, but advances in AI are likely to make the situation more acute.

Insight's 2023 Employee Monitoring Software Market Report states that “the main reasons organizations deploy these tools are operational efficiency (40%), data security (30%), and regulatory compliance (25%).” Insight is a monitoring software vendor, but a look at the breakdown is pretty self-explanatory.

As part of data security, monitoring software can quickly alert management to employee misconduct. A quick alert is not enough if the misconduct is related to a phishing attack and the employee has already given a bad actor remote access to their device. These tools do not prevent potential security or privacy threats, but rather retroactively identify the source of the vulnerability.

Organizing compliance and governance issues

Governance leaders should be mindful that by implementing these solutions, companies are unwittingly or deceptively infringing on employee privacy in the name of increased security, for the true purpose of increased productivity through surveillance. Compliance, which Insight cites as a key driver for the adoption of monitoring software, becomes more difficult and laborious to maintain the more employee behavioral data is stored and managed on company servers.

This is especially true for vendors who use third-party technologies to optimize their products, which expose personal information to external servers. For example, one vendor describes their solution as “insider risk management and user activity monitoring powered by generative AI.” The more data companies collect on their employees and third-party tools, including generative AI, the more damaging a breach or attack can be. Improper storage or misuse of corporate data can put companies out of compliance, and monitoring software increases the likelihood of this happening.

There is a fierce debate about the validity and appropriateness of monitoring employees' keystrokes, URL history, and attendance during work hours, but that's a discussion for another day. At this point, it's important to reiterate that monitoring software is not a legitimate solution to data security or privacy. Believing it or misrepresenting it to your employees can damage your company's culture and the trust you have earned from your employees and the market. And in today's highly competitive global marketplace, where CEOs are struggling to establish and maintain their own culture and purpose, you need your employees' trust more than ever to stay competitive.



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