ARUN RATH, HOST:
You may have noticed that the cash register in your favorite bar or restaurant is really a computer. So anytime a bartender comps you a drink or a waiter voids a check on that touch-screen, all that information is captured.
Now, employers are starting to mine all that data and finding they can identify some common scams. And it's not just curbing theft. It's helping the bottom line in surprising ways.
Lamar Pierce is an associated professor of strategy at Washington University's Olin Business School. He co-authored a recent report on this new type of monitoring of restaurant employees.
LAMAR PIERCE: If you monitor a theft or if you essentially put in safeguards to catch people who are stealing substantial amounts of money, then not surprisingly, this tends to disincentivize them or, you know, scare them off from stealing. So that shouldn't be surprising at all. But you don't just see a decrease in theft. You also see an increase in sales. And you also see an increase in customer service - that is as we measure in tip percentage.
RATH: So, yeah, as you said, you would expect to see theft go down with the monitoring, but the sales going up seems, if not weird, at least unexpected.
PIERCE: Well, and this is sort of part of the big debate that people tend to put around monitoring. And particularly monitoring of employees is, you know, quote, "is monitoring good or is monitoring bad?" And in reality, that is really the wrong question. The right question is really about what is the right level and type of monitoring and how should you communicate this to employees. And so in our case, what we think in general is that there are several things going on.
First, what's happening is essentially if people are making money by stealing and you cut that off. In this sense, they have to make that income up some other way. And in a restaurant, which involves a pay-for-performance system, which is, you know, tips, one way to do that is to sell more and to get higher tip percentages on what you sell. So that's certainly one part of what we think is going on.
On the second side, what we also think might be going on is that there's sort of a broader belief for perception by employees that there's more sort of managerial attention being applied to behavior within the workplace, and that this might, in itself, also motivate improved productivity.
RATH: Are you able to get a sense going through the data of why it is employees are lying, cheating or stealing in the first place?
PIERCE: So there are lots of reasons why people do this. I think one argument may be that, you know, these are not people who are fundamentally stealing out of the greed to have enough money to buy an extra sports car. Wage levels tend to be relatively low as it is. And so you can imagine sort of at that wage level, some of that marginal income might really matter. So that's one reason.
A lot of this variation has to do with, you know, one, whether or not they perceive other people are doing it and whether or not it's normatively accepted. The other thing that they often have told me anecdotally is that one of the primary drivers for them, in the absence of monitoring, is whether or not, you know, they feel respected and whether or not they feel management is treating them well.
RATH: Lamar, I know you said the debate here really shouldn't be about whether or not there is monitoring, but I know a lot of people are probably shouting at their radios and saying, yes, it is. This should be the debate. It's all or nothing. You should not be spying, would be the word, I think, people would use on your employees. What's your take on the ethics of that?
PIERCE: Well - so the first thing that I would say is that in the setting we're talking about, it's more equivalent to counting the till at the end of the day. But, you know, the reality of it is is that we as humans have tremendous opportunity to do great things, but we also have a lot of opportunity to go off the tracks and do the wrong thing. And the idea is not about we need to have everything that we do watched. But sometimes it's a little bit healthy just to have some safeguards in place just to remind us of what's the right behavior and what's the wrong behavior.
RATH: Lamar Pierce co-authored a recent report on electronic monitoring of restaurant employees. Lamar, thank you.
PIERCE: All right. Thank you so much for having me.
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