Employee Monitoring: Definition, Benefits, and Risks

Every employer wants to understand how work actually gets done.

How employees spend their time, what helps them stay productive, and where inefficiencies or risks might exist are questions that have shaped management decisions for decades.

Employee monitoring is one way organizations seek answers. At its core, employee monitoring refers to the practice of observing, tracking, or reviewing employee activity during the workday to improve performance, ensure security, and support operational efficiency.

In today’s workplace, this monitoring is often supported by employee monitoring software, alongside policies and management processes that define what should (and shouldn’t) be tracked. These tools are especially common in remote and hybrid environments, where visibility into work patterns is harder to achieve through traditional supervision alone.

But what exactly is employee monitoring, and how does it work?

What is employee monitoring? 

Simply put, employee monitoring is supervising and tracking what employees do during a workday.

Businesses can choose to monitor their employees to track performance, protect confidential information, avoid legal liability, or better understand business processes. They can do this through many different methods, often with the help of technology or software.

Employee monitoring isn’t a new practice. It's been around in one form or another since bosses and managers paced the first factory floors. For instance, Henry Ford clocked factory workers with a stopwatch and hired private investigators to go undercover to spy on the workforce before reporting to him.

In the modern world, employee monitoring technology has made the processes of monitoring and tracking employee performance more efficient and effective than ever. While managers can still "walk the floor," they can install sophisticated performance management software on any computer to track and analyze employee behavior. This is particularly effective for companies with a remote workforce.

There are different reasons why a company decides to use employee monitoring across all industries. Companies with sensitive data or valuable intellectual property may use it to ensure that employees don’t disclose important information. 

Retailers and restaurants can use it to track theft at the point of sale. For example, UPS famously uses employee monitoring software to save millions of dollars by monitoring the efficiency of its drivers. Whether employed or self-employed, anyone can track individual productivity throughout the workday.

Whatever the reason, employee monitoring works. It boosts productivity, reduces theft and security breaches, and increases revenue.

What are the types of employee monitoring? 

Before we dive into the use cases, we need to understand the different types and ways of employee monitoring. Here are some of the common types.

What are the advantages of using employee monitoring?

Employee monitoring has many applications and benefits when it comes to managing your workforce. Below are some of the major advantages.

Increased productivity

Employee monitoring through websites, applications, and time tracking provides valuable insights into the workday that help employers understand when and how employees perform their best work.

It gives performance benchmarks and data points that make coaching easier for increased productivity. For example, if a manager sees that their top salespeople use Salesforce 30% more than the rest of the sales team, they can use this information to install better habits.

With visible employee monitoring, the employees can also use this data for self-improvement. It gives them a tool to discover when they do their best and most focused work, or how long it takes for them to complete certain tasks, to schedule their days and weeks to be more effective.

Culture of accountability

Visible employee monitoring fosters a culture of accountability. Not only does it give employers confidence that their employees are getting the job done, but it also demonstrates a record of their work. Both sides of the table can be assured that the work is completed and recognized.

Accountability is increased when visible employee monitoring data can be accessed through a dashboard. When employees demonstrate that everyone contributes equally, it reinforces their desire to remain accountable for their own work.

Standardizing work-life balance

Burnout due to an unhealthy work-life balance can create a toxic environment, lead to absenteeism, or accelerate employee churn, all of which can devastate a workforce. Employee monitoring through time tracking can help avoid overworking and burnout. This especially applies in remote work environments where employees can find it difficult to unplug.

Time-tracking software lets managers and employees stay on top of daily workloads. In some cases, it can even notify managers of “red flags” or employees at risk of burnout due to consistently long hours or working on the weekends. This is a vital asset for protecting against high turnover and productivity loss.

Increased security

Security improves with any form of employee monitoring. Whether through software or surveillance, it gives employers a way to monitor potentially risky behaviors. The right employee monitoring strategy can accomplish everything from protecting the workforce and phishing emails to safeguarding intellectual property.

Opportunities for savings

The workday insights that some employee monitoring software delivers benefit from uncovering opportunities for organizations to save money.

Website, application, and time tracking give leaders a better understanding of which software and applications employees use or do not use. This presents an opportunity to audit subscriptions and eliminate wasted licenses, potentially saving thousands of dollars on unused tools.

What are the risks or downsides of employee monitoring? 

Employee monitoring offers many advantages, but it isn't immune to challenges and has some disadvantages. Some of these are discussed below.

Employee privacy concerns

Many employees perceive monitoring as an invasion of privacy, especially if it’s implemented without consent or clear communication. Even when legal, secretive tracking breeds distrust and disengagement.

How to mitigate:

• Communicate what data is collected and why
• Let employees access their own monitoring dashboards
• Involve HR in messaging to reinforce transparency 

Surveillance stress

One potential downside to implementing employee monitoring is that it could create additional stress for certain employees who prefer not to be monitored.

Whether they dislike employee monitoring because it makes them nervous that their work habits are under constant scrutiny or because they know they’re far from productive, employee monitoring inevitably stresses out some employees.

For those who just don't like it, employee monitoring takes a bit of getting used to. Those who oppose it because they don't live up to expectations must improve or face the consequences.

How to mitigate:

• Focus on outcomes, not hyperactivity
• Avoid setting unrealistic productivity baselines (100% activity is not healthy)
• Use monitoring to enable coaching, not control

Cultural and brand impact

Overly aggressive monitoring can damage internal culture and external reputation. Employees may see it as a sign of mistrust, and future candidates might see it as a red flag.

How to mitigate:

• Explain the business case behind monitoring tools
• Position monitoring as support for autonomy, not restriction
• Regularly check employee sentiment via surveys or feedback loops

Misinterpretation of data

Monitoring software collects digital signals, but without context, this data can be misleading. Low keystroke activity doesn’t always mean low productivity; it might mean deep focus or offline work.

How to mitigate:

• Combine activity tracking with performance metrics
• Train managers to interpret patterns, not punish anomalies
• Create space for qualitative input and manager discretion

Legal and regulatory risks

Laws vary widely by region. In the U.S., employers generally have broad rights to monitor company equipment. But in places like the EU, strict data protection regulations (e.g., GDPR) apply, requiring disclosure, consent, and privacy safeguards.

How to mitigate:

• Consult legal experts before implementing monitoring tools
  
• Get written employee consent where required
  
• Document all data usage, storage, and access policies

Is employee monitoring legal, and what laws should you know?

Beyond the advantages and disadvantages of employee monitoring, it’s essential to understand its legal implications. For the most part, employee monitoring is permitted in the United States.

Internationally, however, laws vary from country to country and are typically stricter. In Europe, for example, any employee monitoring policy must follow the General Data Protection Regulation (GDPR). 

This piece of legislation requires employers to inform employees about all data collection methods, obtain employee consent for the collection of personal data, and protect any data they collect. It applies to all organizations operating with the European Union (EU), including those outside it with employees working in the EU.

Regardless of where you are in the world, it’s wise to consult with professional legal counsel before building, implementing, and managing an employee monitoring policy.

State laws vs. national laws

Monitoring employees is an employer's right in the U.S. While some methods of employee monitoring require consent or disclosure, many of them don’t. The federal stance is that the practice is an employer’s right. There are some minor variances between state-specific laws, but most states allow employee monitoring in virtually every form.

Company computers vs. personal computers

Monitoring employees on company computers is legal, but there are often precise requirements for monitoring personal computers.

The Electronic Communications Privacy Act (ECPA) permits an employer to monitor all activities on a computer that is company property, but personal computers can be a different story. Since the use of personal devices comes with a “reasonable expectation of privacy,” employers are generally not legally allowed to monitor personal computers without notifying employees first. However, it's allowed with consent and an appropriate policy management framework in place.

Workday vs. non-work hours

Again, rules and regulations surrounding employee monitoring during work and non-work hours vary widely by location.

In most cases, no law is specifically tailored to the hours in which employee monitoring can occur, but this can change in the near future. In Portugal, for example, lawmakers recently made it illegal for employers to call, text, or email their employees after hours. As remote work continues to expand and new regulations emerge, the odds are that they’ll impact the new employee monitoring laws.

How organizations implement employee monitoring

Employee monitoring isn’t one-size-fits-all. Organizations need to choose the methods, tools, and processes that align with their workforce, industry, and goals, while respecting employee trust and legal boundaries.

Some companies monitor primarily for security or compliance. Others use monitoring to understand work patterns, support productivity, and improve performance. In either case, successful employee monitoring requires a clear strategy, not just technology.

Define productivity

Before implementing any form of employee monitoring, organizations must define what productivity means in their specific context. Without a shared understanding of which behaviors, outcomes, or patterns matter most, monitoring data can quickly become misleading or counterproductive.

Clear productivity definitions help set realistic expectations, guide performance discussions, and ensure employees understand how monitoring data will be used. Importantly, productivity should be measured by outcomes and impact, not constant activity.

Use insights to evaluate individuals and teams

Once you’ve set the appropriate expectations and implemented your employee monitoring strategy, use the software's insights to get a sense of how both teams and individuals work.

Use the data captured by your employee monitoring to measure performance relative to your definition of productivity. This is essential to set benchmarks, understand who’s performing well, and identify areas where employees can improve. In some cases, the insights you gather completely reshape how your company approaches work.

Coach to improve

Next, take these insights and evaluations and turn them into coaching points. Now that you have a complete view of employee work habits and productivity levels, help your team elevate.

Use your new understanding of how your top performers work as a guide to coach for better habits in underperformers. Leveraging data-backed productivity insights makes for a powerful coaching tool that helps everyone understand where they are and where they can go by changing a few specific behaviors.

Empower employees

Most importantly, acknowledge the evidence of high or improved productivity that the software brings by empowering your employees.

If the reason you’ve implemented employee monitoring is to increase productivity, and it’s successful, then celebrate it. Show your employees that you appreciate their hard work and growth by offering them flexibility and awarding autonomy. Productivity, especially when proven with data, is evidence of trustworthiness. Give your employees the trust they’ve earned.

How to pick the best employee monitoring software

Choosing the right employee monitoring software isn’t about finding the most powerful tool; it’s about selecting the one that aligns with your company’s values, workflows, compliance requirements, and culture. Whether you're managing a fully remote team or safeguarding sensitive data in a highly regulated industry, the right platform can unlock performance gains without compromising trust.

Start by defining your monitoring goals. Are you aiming to improve productivity, prevent security breaches, ensure time tracking accuracy, or optimize remote work performance? Each of these objectives may require different features, and prioritizing them will shape your shortlist. For example, a company focused on compliance may prioritize email tracking and data loss prevention, while a remote-first startup may look for app usage analytics and time zone-aware activity logs.

Next, consider the visibility and transparency of the tool. Does the platform allow employees to access their own performance data? Can you control who sees what? Tools that support ethical monitoring, with configurable privacy settings, opt-in visibility, and employee dashboards, will reduce resistance and support a healthier rollout.

Integration is another crucial factor. The best software should sync easily with your existing tech stack, whether that’s your HRIS, project management tools, or payroll systems. Seamless integration not only reduces administrative work but ensures that insights from monitoring can actually inform action, such as coaching conversations or policy adjustments.

You’ll also want to assess the platform’s data reporting capabilities. Basic activity logs are no longer enough. Look for systems that offer real-time dashboards, trend analysis, and customizable reports that can segment data by team, role, or location. These analytics turn raw activity into actionable insight, helping you coach effectively, allocate resources, and measure ROI.

Scalability matters, too. A tool that works well for a 10-person team may not scale to 500 employees across multiple departments and time zones. Check for admin controls, role-based access, and user grouping features that support structured growth.

And of course, never overlook legal and compliance readiness. Does the software support GDPR consent workflows? Can you anonymize or delete user data as needed? Can it generate audit trails for legal reviews? These aren’t nice-to-haves; they’re essential, especially if you operate globally.

Lastly, think beyond implementation. What does ongoing support look like? Are there training resources for managers and employees? Is there a knowledge base or dedicated success manager? Vendor reliability and support often matter more than the feature list once real-world rollout begins.

Employee monitoring software selection checklist

To simplify your selection process, use the checklist below to evaluate and compare platforms:

Frequently asked questions about employee monitoring

Got more questions? Get your answers here! 

1. Is employee monitoring legal?

Yes, in most regions, employee monitoring is legal, especially when using company-owned devices. However, regulations vary: U.S. laws are generally permissive, while countries under GDPR (like those in the EU) require employee consent, transparency, and data protection. Always consult legal counsel before implementing.

2. Do I need to tell employees they’re being monitored?

While it's not always legally required in the U.S., disclosing monitoring is highly recommended to build trust, avoid backlash, and comply with international laws like GDPR or CPRA. Transparency also improves adoption and accountability.

3. What features should I look for in monitoring software?

Key features include website and app tracking, time tracking, screenshots, keystroke logging (if legal), GPS tracking, email monitoring, dashboards, alerts, and integration with HR or project management tools. Choose features based on your goals — productivity, compliance, or security.

4. Can employee monitoring software track remote workers?

Yes. Most modern tools are built to support remote and hybrid teams. They track digital activity across devices, apps, and networks — often with adjustable settings to account for location, working hours, or device usage.

5. How can monitoring software improve productivity?

By tracking how employees spend their time, identifying focus patterns, and flagging inefficiencies, monitoring tools help teams understand and improve their work habits. Managers can also coach based on objective data rather than assumptions.

6. Will employee monitoring damage workplace culture?

It can — if implemented without transparency or used punitively. However, when framed around accountability and support (with access to their own data), monitoring can enhance fairness and performance culture.

7. Is it possible to monitor personal devices?

Only with employee consent and clear policy documentation. Monitoring personal laptops or phones comes with a high expectation of privacy, so tread carefully. Many companies limit monitoring to company-issued devices for this reason.

8. How much does employee monitoring software cost?

Prices vary based on features, user count, and contract terms. Entry-level tools may cost $5–$10 per user/month, while enterprise-grade platforms with compliance and analytics features can exceed $20–$30 per user/month.

9. How do I choose the best monitoring tool for my business?

Start by defining your goals (e.g., productivity, security, compliance). Look for tools that align with your tech stack, support transparency, offer scalable reporting, and comply with relevant laws. Use a checklist or step-by-step evaluation process to compare vendors.

10. What’s the future of employee monitoring?

Expect smarter AI-driven analytics, real-time burnout alerts, deeper HR integration, and evolving regulations. Ethical monitoring and employee empowerment will become as important as the tech itself.

Evolution never stops 

Employee monitoring might not be a new concept, but it has evolved dramatically over time. What was once as simple as looking around the factory floor now involves a complex system of technologies capable of monitoring employees in an office or around the world.

From CCTV and GPS to keystroke tracking and screenshotting, employers keeping track of employee work habits has changed how the working world views employee monitoring.

More than anything, these changes have brought new and valuable tools that improve the way we work. They can help increase productivity, drive a culture of accountability, make room for better work-life balance, improve security, and uncover opportunities for cost savings.

Expect the evolution of employee monitoring to continue well into the future. The remote work revolution we’re seeing today is only just getting started. As workers continue to push for the flexibility that remote work provides, more and more employers will adopt remote working environments to attract and retain top talent. In a world where the workforce becomes increasingly global, employee monitoring will be an essential part of nearly every business.

Data security demands a business's undivided attention, especially when monitoring day-to-day operations. Find out more about what data security means and how to protect yourself from potential threat actors.