Cleaning house: The impact of information technology monitoring on employee theft and productivity

This study explores the impact of technology-based employee monitoring on both misconduct and productivity in businesses. The research utilizes unique theft and sales data from 392 restaurants across five companies that implemented a theft monitoring information technology (IT) product. Using difference-in-differences models with staggered adoption dates, we estimate the effect of IT monitoring on theft and productivity. The findings reveal significant reductions in theft and increases in productivity, largely driven by changes in worker behavior rather than workforce turnover. We consider four potential mechanisms driving this productivity increase: economic and cognitive multitasking, motivation based on fairness, and perceived enhancement in general oversight. The observed productivity improvements offer substantial financial gains for both firms and employees through legitimate tip-based earnings. Our findings imply that employee misconduct isn’t only due to individual ethical or moral differences, but can also be shaped by managerial policies that can be beneficial to both the organization and its employees.