UV8854

t
Dec. 19, 2023

os
HealthMet and Workplace Surveillance

rP
You are vice president of human resources at HealthMet, a company based in Cleveland, Ohio, that
processed health data for insurance companies to price their client’s life insurance policies. Your company
employed about 300 analysts who quickly processed data and medical records and a group of 30 experts who
evaluated the data you collected, researched new medical tests, and created data products to sell to insurance
companies.

yo
After arriving at the office early on a Friday morning, you had put on your smartwatch, checked your heart
rate, and started to review the results of a digital productivity monitoring software that HealthMet had put into
place three years ago, in 2019. Some employees were calling for its removal and others were requesting the data
for bonus payments—and you were unsure how to move forward.

The employee monitoring software, called Trackforce, utilized a variety of functions to monitor users’
workplace activity: keystroke tracking along with random real-time screenshots of employees’ computers,
op
recording Zoom sessions, monitoring websites visited, and checking email content. For example, if a company-
owned computer remained idle for long, the software would track that. Although it was implemented in late
2019, the software proved particularly useful when the COVID-19 pandemic forced most HealthMet
employees to work remotely, starting in March 2020. Most employees checked in with their supervisors
regularly, either through Zoom meetings or email, but several had been hard to reach or unavailable when
needed. The data tracked through the software produced an overall employee productivity score meant to assess
tC

who was doing what and when. The software helped identify employees who had generally been inactive and
unproductive.

Worried about invasion of privacy, potentially inaccurate productivity, and employee reaction once your
workforce learned about it, you had initially been skeptical about implementing the tracking software; however,
as time went on, you had realized that there were some unforeseen benefits to the monitoring, particularly as
the pandemic upended the workplace. It allowed you and the company leadership to gauge the productivity of
many of your employees and ascertain who was working most efficiently and diligently and who was not. With
No

this information in hand, the company had recently let go of employees whose productivity was chronically
low. In fairness, each employee had been given a chance to explain what factors had hampered their work and
three months to correct their performance. As a result, approximately half of those identified were able to
improve their performance and stay on board. Small successes like these helped make the productivity score a
vital part of the employees’ annual performance evaluations.
Do

This fictional case was prepared by Bidhan L. Parmar, Shannon G. Smith Bicentennial Associate Professor of Business Administration, and Jenny Mead,
Senior Researcher. It was written as a basis for class discussion rather than to illustrate effective or ineffective handling of an administrative situation.
Copyright  2023 by the University of Virginia Darden School Foundation, Charlottesville, VA. All rights reserved. To order copies, send an email to
sales@dardenbusinesspublishing.com. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by
any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of the Darden School Foundation. This publication is protected by copyright and
may not be uploaded in whole or part to any AI, large language model, or similar system, or to any related training database. Our goal is to publish materials of the highest
quality, so please submit any errata to editorial@dardenbusinesspublishing.com.

This document is authorized for educator review use only by Fatima Qaisar, Other (University not listed) until Sep 2024. Copying or posting is an infringement of copyright.
Permissions@hbsp.harvard.edu or 617.783.7860
 Page 2 UV8854

t
os
The decision you now faced was how to adjust the salaries of all your employees based on the productivity
detected by the monitoring system. There were loud groups within the organization with strong and polarized
opinions. Should you boost the salaries of those with the greatest productivity and decrease the salaries of those
with low output?

rP
HealthMet

HealthMet had provided health data for risk assessment to the life insurance industry since the early 1990s.
The company collected and processed data from field nurses who usually conducted screenings at clients’
homes and hundreds of testing labs across the country. They sent their reports to insurance companies, which
used the results to price insurance products. The innovation team at HealthMet was responsible for packaging
the data collected into products for insurance companies to purchase and had to be knowledgeable about the

yo
latest research, which could better predict health risks. To do this most effectively, many of the employees on
the innovation team were responsible for researching and updating their knowledge of medical science to keep
abreast of the latest medical developments pertinent to their areas of expertise.

Along with many of your colleagues, you had been attracted to HealthMet’s stated values of customer
service and dedication to health, trust, and access for those who could not traditionally get health insurance.
The company’s promotional materials touted its mission, which read, in part: “Dedicated people who
understand that behind every exam and laboratory result, there is a person making an important decision for
op
their family’s future.” In addition, HealthMet focused on efficiency, accurate reporting of data, and innovation.
Those cultural values were reflected in the workplace, a largely congenial atmosphere where your employees
worked well in small teams. Of course, it was not always smooth sailing—there were occasional problems and
conflicts in the different departments and between management and the workforce, many exacerbated by the
pandemic—but these issues did not interrupt the company’s overall mission and purpose.
tC

Trackforce Implementation

While HealthMet was not legally obligated to inform its employees about the monitoring, company
leadership had decided to be candid about implementing monitoring software. For the most part, the initial
reaction had been muted—all employees, distracted by COVID-19, had given their consent to the use of
Trackforce. But while employees were fully informed about these changes, you realize that many did not fully
No

understand what they had agreed to and had not paid attention to the fine print. As the implementation
proceeded, some of your employees became disgruntled. Several had pushed back against the program and
several others had threatened to leave.

Employee Monitoring

As of 2023, monitoring had become ubiquitous in many companies. In fact, you had read that 8 out of
10 of the largest US employers monitored their workforce in some way, whether through internet usage, email
or phone logs, or other metrics. With the ever-increasing power of data collection and analysis, companies took
Do

a more “quantitative” approach toward better human-resource management and increased efficiency. Amazon
was an early poster company for employee tracking. It was well-known for monitoring, second by second, every

This document is authorized for educator review use only by Fatima Qaisar, Other (University not listed) until Sep 2024. Copying or posting is an infringement of copyright.
Permissions@hbsp.harvard.edu or 617.783.7860
 Page 3 UV8854

t
os
move a warehouse worker made in a “shockingly precise system.” 1 This monitoring dramatically increased the
efficiency of Amazon’s workforce. United Parcel Service (UPS) and FedEx also famously tracked their drivers
via GPS, as did many trucking companies. But while lower-wage workers, such as those in factories and call
centers, were generally the first employees to be monitored, people in higher-income jobs were increasingly
subject to this scrutiny.

rP
Likewise, you had heard that people in the medical and health care industry were often subject to tracking:
nurses wore Fitbit-like devices that counted their steps and radiologists were judged on the number of scans
read compared to their peers. Even hospice workers, lawyers, and (ironically) accountants could now feel the
painful frustration that lower-paid workers had complained of for years.

The COVID-19 pandemic had seemed to justify this type of monitoring since employees were out of sight,
working remotely. Indeed, many employees seemed content with trading fewer required days in the office with

yo
increased digital monitoring. But even with much of your workforce returning to the office for a minimum of
three days a week, the days of simple physical monitoring—seeing people at their desks and in meetings—was
now a thing of the past. Instead, using technology to gauge workforce productivity was simpler, less time
intensive, and, you realized, here to stay in some form. Indeed, HealthMet leadership had decided to monitor
its employees remotely or in the office. See Exhibit 1 for study results of employee response to workplace
surveillance.
op
An Argument for Workplace Monitoring

Your team had debated the various reasons companies used software such as Trackforce. Studies you read
showed that this type of monitoring increased efficiency, encouraged better performance and output on
measured outcomes, and cut down on employee procrastination. With better data, employees were interested
to know whether current compensation levels were adequate or needed to be adjusted based on worker
tC

productivity. Your team argued that by using this information to adjust pay and bonuses, you would reward the
best workers and create a more meritocratic culture. If employees were going to buckle down and increase their
productivity, they should be rewarded for their efforts. Additionally, digital monitoring decreased the amount
of employee absence and tardiness. It also prevented theft in the workplace. Moreover, your data showed that
it increased the total amount of time employees worked. Before using the software, you had been aware that
many of your employees spent an unacceptable amount of time at work on social media, online shopping,
dating apps, and online games. Specifically, since implementing the software, you had seen the average time
No

analysts spent on reports drop; thus, they were processing more results. Unfortunately, error rates were also up
slightly.

Although you believed most of your employees were dedicated and focused, you knew there were outliers,
individuals who were not as productive or engaged in their work. In a particularly egregious example, one of
your employees had a side business while on company time. Trackforce had helped root out similar offenders
and either get them to correct course or to leave the company. You had heard from your peers that, despite
their reluctance to digitally monitor employees—a reluctance similar to your initial misgivings—installing the
software had led to a noticeable uptick in productivity across the board, saving the company millions in time
Do

theft, and also increasing revenues as more patient records were processed.

1 Michael Barbaro, “The Rise of Workplace Surveillance,” August 24, 2022, in The Daily, produced by Rikki Novetsky, Michael Simon Johnson, and

Mooj Zadie, podcast, 33:17, https://www.nytimes.com/2022/08/24/podcasts/the-daily/workplace-surveillance-productivity-tracking.html (accessed

This document is authorized for educator review use only by Fatima Qaisar, Other (University not listed) until Sep 2024. Copying or posting is an infringement of copyright.
Permissions@hbsp.harvard.edu or 617.783.7860
 Page 4 UV8854

t
os
An Argument Against

You knew many people considered this type of software an invasion of privacy. Some called it positively
dystopian. And you were aware, also, that this type of tracking did not always capture the valuable and essential
work being done, such as meetings with insurance executives, providing quality customer service, reading a
printed report or article, problem solving with or mentoring colleagues, or even simply thinking through a

rP
problem or issue creatively. As a result, you worried that the digital monitoring was missing a lot of important,
often immeasurable, work being performed. Additionally, some employees complained throughout the
company that the monitoring had stressed them out and negatively impacted their productivity. “I can’t even
let off steam or find relief by taking a walk,” one worker had complained to you. “I’m penalized for having to
take time for a sick child or ailing family member,” another had said. Some claimed they thought twice about
taking a bathroom break because it might affect their productivity scores. Some did not mind the monitoring
in general but objected to its granular nature, such as the fact that the software recorded every keystroke.

yo
You knew the software had changed your relationship with some of your direct reports, who seemed less
comfortable with you. Some admitted to feeling like a mere cog in the machinery, valued only for their
productivity and nothing else; others said they no longer trusted a company that would “spy on employees.”
Some complained that this micromanagement was “humiliating” and “demoralizing.”

Some members of your team worried that using the data for compensation would be premature. There
were too many uncertainties in the metrics (for example, they could be gamed with “mouse-jigglers”), and the
op
metrics didn’t capture different types of important work, like face-to-face conversations and brainstorming.
You could inadvertently encourage bad employee behavior and discourage risk taking and doing things outside
of the metrics. For example, to meet their time targets, analysts might not double-check their data entry or test
the reliability of their conclusions. You might have already squeezed all the available efficiency gains out of
using the software and might not see any additional benefits by tying compensation to the productivity score.
tC

Employee motivation also seemed to change. Some employees reported being more motivated by the
metrics, putting in extra effort to hit the numbers. In contrast, others found that the metrics made them feel
less in control of their work and thus reduced their motivation. Currently, employees were only allowed to see
their metrics, and only managers were authorized to see individual and aggregate metrics for their departments;
however, a growing number of employees were requesting access to department- and organization-level metrics
to benchmark their performance and set goals. Again, you were unsure if this data sharing would help or hurt
the organization.
No

Positive Feedback

Surprisingly, you had heard from a few employees who had welcomed the monitoring. They said it helped
them stay productive and focused, keeping them from performing extraneous or useless tasks. In short, they
welcomed being more efficient in their jobs. Some had claimed good habits—ignoring their cell phones and no
longer browsing the web—came from the knowledge that others were aware of their activities during work.
Others, particularly your female and underrepresented minority employees, appreciated the monitoring because
they thought it leveled the playing field at work. For example, several women had remarked that they were
Do

finally being judged totally on their work and productivity—not on whether they were schmoozing, golfing, or
drinking with their colleagues, a practice often employed by some of their male coworkers. See Exhibit 2 for
HealthMet employee breakdown by gender, age, and ethnicity.

This document is authorized for educator review use only by Fatima Qaisar, Other (University not listed) until Sep 2024. Copying or posting is an infringement of copyright.
Permissions@hbsp.harvard.edu or 617.783.7860
 Page 5 UV8854

t
os
Legality

Worried about the legality of employee surveillance, you had read up on the current laws. You learned that
in the United States, employers had the right to monitor how employees used their work computers, and no
federal law required employers to notify employees. But there were two primary restrictions on workplace
monitoring: the Electronic Communications Privacy Act of 1986 (ECPA) (18 USC Section 2511 et seq.) and

rP
“common-law protections against invasion of privacy.” 2 In addition, there were certain things employers could
and could not do. For example, you had read that companies could place microphones in their employees’
offices, but not in common areas such as the cafeteria, bathrooms, or locker rooms.

Employers were prohibited, through the ECPA, from intentionally intercepting an employee’s oral,
electronic, or wire communication. Still, there were exceptions, such as the “Business Purpose Exception” that
allowed monitoring of this communication “as long as it shows that it was done for legitimate business reasons,”

yo
such as monitoring client relationships, skills development, and promotions. 3 A second exception—the
“Consent Exception”—enabled employees to use monitoring apps to surveil their employees’ communications.
You had also consulted with HealthMet’s legal department, which had given the go-ahead to use the monitoring
software.

Ramifications
op
Despite the adverse consequences of monitoring employees, including the departure of several talented
workers and the icier nature of your relationships with some of your team members, there was no doubt that
the software had increased workplace productivity and efficiency and allowed the company to get rid of
employees who were not pulling their weight. Maybe this was a natural part of becoming a more efficient
organization. But would HealthMet be better off if its entire workforce was comfortable with and even
welcomed productivity monitoring? Now was the time to decide on the results of using the software, to either
tC

reward employees with high scores with pay raises or punish low scorers with pay cuts. The labor market was
competitive, so there was currently more demand for jobs than supply, meaning that you should be able to fill
positions quickly. Still, the market conditions could quickly turn the other way in the coming months. When an
employee left the company, it cost between six and nine months of that person’s salary to recruit and train a
replacement.

The team was debating several proposals. The first was to use the productivity scores to increase the pay
No

of top performers by 10% and reduce the pay of low performers by 10%. Based on your analysis, this would
cost you about $1.5 million annually, but it seemed likely that most of that could be recouped based on any
productivity gains. A second option was only to reduce the pay of low performers. This would save you around
$500,000 annually, but could be revenue neutral in the first two years if the turnover cost trended higher than
expectations. Finally, rewarding only the top performers would cost about $2 million annually and had the least
potential of recouping costs because more productivity gains from this group were less likely. However, if the
program motivated those at the middle or bottom of the performance curve, you could potentially cut that cost
in half. Of course, you could always choose not to use the productivity scores for compensation, in which case
the team estimated that turnover would cost you about $750,000 for two years. Your team cautioned that these
Do

2 “Managing Workplace Monitoring and Surveillance,” Society for Human Resource Management, https://www.shrm.org/resourcesandtools/tools-

and-
samples/toolkits/pages/workplaceprivacy.aspx#:~:text=The%20two%20main%20restrictions%20on,protections%20against%20invasion%20of%20p
rivacy (accessed Dec. 5, 2023).
3 “How Much Employee Monitoring Is Too Much?,” American Bar Association, January 2018,
https://www.americanbar.org/news/abanews/publications/youraba/2018/january-2018/how-much-employee-monitoring-is-too-much-
/#:~:text=The%20Electronic%20Communications%20Privacy%20Act,and%20electronic%20communication%20of%20employees (accessed Dec. 5,
2023).

This document is authorized for educator review use only by Fatima Qaisar, Other (University not listed) until Sep 2024. Copying or posting is an infringement of copyright.
Permissions@hbsp.harvard.edu or 617.783.7860
 Page 6 UV8854

t
os
numbers were a rough estimate based on past data and that the reality could be very different from the initial
projections.

You needed to consider all this as you crafted a recommendation on how to structure your bonus system
for executives and midlevel managers. For example, should people have access to their data or their
department’s data? What signals would you look for to know if your proposed system was beneficial?

rP
yo
op
tC
No
Do

This document is authorized for educator review use only by Fatima Qaisar, Other (University not listed) until Sep 2024. Copying or posting is an infringement of copyright.
Permissions@hbsp.harvard.edu or 617.783.7860
 Page 7 UV8854

t
os
Exhibit 1
HealthMet and Workplace Surveillance
Results from a 2022 Study about Workplace Surveillance

rP
yo
op
tC
No
Do

This document is authorized for educator review use only by Fatima Qaisar, Other (University not listed) until Sep 2024. Copying or posting is an infringement of copyright.
Permissions@hbsp.harvard.edu or 617.783.7860
 Page 8 UV8854

t
os
Exhibit 1 (continued)

Results from a 2022 Study about Workplace Surveillance

rP
yo
op
tC
No
Do

This document is authorized for educator review use only by Fatima Qaisar, Other (University not listed) until Sep 2024. Copying or posting is an infringement of copyright.
Permissions@hbsp.harvard.edu or 617.783.7860
 Page 9 UV8854

t
os
Exhibit 1 (continued)
Results from a 2022 Study about Workplace Surveillance

rP
yo
op
tC
No
Do

Data source: Jacques Buffett, “How Do Employees View Workplace Surveillance? [2022 Study],” Zety, August 24, 2023,
https://zety.com/blog/workplace-surveillance (accessed Dec. 5, 2023).

This document is authorized for educator review use only by Fatima Qaisar, Other (University not listed) until Sep 2024. Copying or posting is an infringement of copyright.
Permissions@hbsp.harvard.edu or 617.783.7860
 Page 10 UV8854

t
os
Exhibit 2
HealthMet and Workplace Surveillance
HealthMet Employee Breakdown by Gender, Age, and Ethnicity

rP
Female Employees: 59%
Female Executives: 24%
Employees who are minorities: 40%
Executives who are minorities: 21%
Ages 22–34: 56%

yo
Ages 35–44: 31%
Ages 45–65: 13%
Source: Created by author.
op
tC
No
Do

This document is authorized for educator review use only by Fatima Qaisar, Other (University not listed) until Sep 2024. Copying or posting is an infringement of copyright.
Permissions@hbsp.harvard.edu or 617.783.7860