Calculating Productivity Losses

Get out those calculators. Now, take the number of workers in your company and multiply that by your average hourly wage. According to vendors of productivity monitoring software, that's how much you're losing in terms of productivity each week.

Websense Inc. features a cost-savings calculator on its Web site to tell visitors how much of a return they can expect if they install e-mail and Internet-monitoring software. The San Diego-based company, which offers software that employers can use to monitor and manage how their employees use the Internet, likes to toss around the figure of $63 billion. That's what it says U.S. businesses lose in productivity due to workers' personal e-mail and Internet use each year.

But that's probably not the case, says Andrew Schulman, chief researcher at The Privacy Foundation's Workplace Surveillance Project. "It's an astronomical figure," he says. If workers don't go online, they may well spend that hour at the water cooler, he says. Or, they may go out to the bank during work hours rather than checking their accounts online. "There's a long history of trying to get people not to dawdle or slack," he says.

But few will deny that the Internet has exacerbated the long-standing problem of falling productivity. Ninety percent of workers admit to surfing the Web at work and to spending 30% of their online time at work on recreational activities, according to Nancy Flynn, executive director of The ePolicy Institute in Columbus, Ohio, which last year conducted a study of online activity in the workplace with the American Management Association and U.S. News & World Report, both based in New York.

In one day alone -- the day Congress released the Starr Report on the investigation of President Bill Clinton's involvement with intern Monica Lewinsky -- U.S. businesses lost $500 million in productivity, says Flynn.

"You really don't want somebody spending four or six hours a day on the Web [doing personal business]," says John Gilbert, director of information systems at Eagle Creek Inc. in Vista, Calif. "The legal issues alone are enough to scare anyone," he added, referring to various liability risks, such as sexual harassment suits stemming from viewing online pornography in the workplace.

Eagle Creek started using Websense employee Internet management software more than three years ago, and Gilbert says he immediately saw a 10% to 15% increase in call volume and order entry in the company's call center. Gilbert says he told employees about the online-monitoring software from the start, explained why it was being used and told them exactly what is and isn't appropriate Internet use.

"It was very difficult for anyone in those meetings to argue with that," he says. "I think most people will take a look at that and say, yeah, it makes sense."

Gilbert can choose categories of Web sites, such as social or political activism, that he wants to block access to. Then, if he changes his mind, he can create exceptions so that certain sites can be accessed by workers. Recognizing that many workers put in long hours at the office and don't have much free time to run errands, the company gives workers access to shopping sites from 11:45 a.m. until 1 p.m. and reopens access at night, says Gilbert. He periodically reviews the logs to see if anyone is spending an inordinate amount of time online. If so, he'll speak with that person or with the person's manager.

Xerox Corp. makes it clear to workers that Web usage is filtered and that the Stamford, Conn.-based company blocks access to inappropriate sites, instant messaging tools and chat rooms, according to Xerox spokeswoman Kara Choquette. The impetus for Xerox's strict policy had more to do with security than anything else, but it has helped raise productivity, she says.

Web-monitoring software actually took off after several high-profile cases in the late 1990s, such as one in which Xerox fired more than 40 employees after learning that they spent more than eight hours a day on X-rated sites. Since then, companies have gotten serious.

More than 51% of the 1,627 large employers responding to the ePolicy survey last year said they have disciplined or terminated an employee for an e-policy violation. But while 62% of companies monitor online activity, fewer than 25% are educating or training their employees about it, says Flynn. The key to success, she says, is to devise a clearly spelled out online policy and explain it in detail to all workers, then affirm their understanding of it by having them sign a form. When workers are told they're being monitored ahead of time and the reasons for the monitoring are spelled out, they're often fine with it, said Flynn and Gilbert.

"When employees are upset by monitoring, it's because it kind of sneaks up on them," says Flynn.

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