Knowing what the boss knows

22 Feb 2021

Thomas Hess, Business Information Systems Specialist, explores how managers and employees in modern companies can share the benefits of work-related data.

Open plan office

© IMAGO / Westend61

Imagine a company that knows exactly what every employee is doing at any given moment. It knows precisely how and where they do their work. It even knows what its people do outside work and who they spend time talking to. It knows literally everything about them. Dave Eggers’ 2013 novel The Circle portrays this scenario as a road to total surveillance of the whole of humanity. “The technological capabilities are in place,” notes Professor Thomas Hess, Director of LMU Munich’s Institute for Information Systems and New Media. Software firms, for example, can record exactly how long it takes employees to write how many lines of code and who they talk to how often about their projects. Theoretically, service companies can track precisely how long their employees talk on the phone to which customers, how many mails they process and how quickly they respond. Using image recognition tools borrowed from artificial intelligence, it would not even be difficult to analyze whether employees smile or look grim when dealing with customers.

“If what you have in mind is the traditional boss-and-employee model of leadership, the initial temptation is obviously to make available all the data you have about your staff,” Hess says. Since he also sees a number of dangers and pitfalls, however, the Business Systems Specialist is keen to find out how new technological tools can be deployed in a way that does not lead to the kind of nightmarish work environment and society envisioned in The Circle. At the same time, Hess is convinced that new ways of analyzing data will yield benefits all round: “Genuine win-win situations are now possible,” he affirms. How that goal can be achieved is what he and his colleagues in sociology and informatics are investigating in a pilot project at a large software company. True, data protection regulations sketch the general principles governing what employers are allowed to know about their people. Thomas Hess nevertheless points out that, especially when it comes to individual work performance, there are all kinds of ways to engage in ‘micro-management’. To put it bluntly: Boardrooms attempt to drill down into the finest details of their employees’ activities. Doing so, Hess believes, is a “fundamental error”. Why? Because the feeling of having your every move watched like a hawk both erodes people’s motivation and stifles their creativity, he explains. Moreover, merely accumulating masses of data about how staff work does not give a clearer insight into the right corporate strategy: Collecting ‘big data’ does not necessarily mean having access to truly valuable information.

That said, Hess is convinced that intelligent approaches to new data capture capabilities in a corporate context can indeed benefit both the company itself and the employees. For example, many compensation systems already include a bonus component. “But it is not unusual for at least part of annual bonuses to be handed out on the basis of personal likes and dislikes. If we looked more closely at what people actually do, we would be better able to determine who should receive how much in terms of annual bonuses,” Hess says. “That would be a way to achieve greater objectivity.”

The strain on employees, too, could be assessed more clearly. If it became clear that employees regularly overshoot certain time limits, for example, that could signal to management that a given department is short of capacity and needs to be stocked up. “Ultimately, we are also talking about occupational safety,” Hess concludes.

To keep employees from fearing total transparency at the workplace and instead help them grasp the benefits of greater visibility for their performance, Hess advocates what he calls ‘meta-transparency’ or ‘inverse transparency’. Management, he believes, should spell out to employees what information they can access about which activities and what they do with this information: “The boss should be able to see it, yes. But I, too, should be able to see whether the boss has looked at it.” Essentially, it is all about letting employees know exactly what their bosses find out about them when — and who knows what about them.”

Hess has no doubts that this inverse transparency fits in well with a modern understanding of management. In many cases, he argues, the issues have become so complex that new management philosophies are now an urgent imperative: “The traditional idea of one person leading the way and the others copying what they do doesn’t work anymore.”

Hess and his colleagues want to explore this approach as part of a project funded by Germany’s Federal Ministry of Education and Research. Their ‘practical laboratory’ approach works on the basis of three hypotheses: Micro-management to the nth degree is counterproductive. Using greater data transparency as a tool of management does not work if it goes against the will of employees. And technological solutions must ensure that data is not manipulated.

Not against the will of the employess

Headquartered in Darmstadt, Software AG is second only to SAP in this industry in Germany and has made itself available as a cooperation partner for practical laboratory work. The company was founded in 1969, and Hess sees it as ideally suited to researching the possible advantages of inverse transparency. With more than 4,700 people on its payroll, the software specialist is big enough to examine data capture from any and every angle. At the same time, a Works Council is firmly established as the employees’ representative body at Software AG – which is by no means the case across all IT companies. Hess has the impression that management and the employees’ representatives alike give equal backing to the research project, which is slated to run for an initial three-year period.

Employee surveys are the most important tool used to measure inverse transparency, flanked by an assessment of management appraisals. Experience shows that it was a smart idea to bring three scientific disciplines together for the research project — disciplines that do not otherwise have much to do with each other, as Hess reports. In his capacity as a Business Systems Specialist, the LMU Professor contributes his own entrepreneurial viewpoint. Colleagues in sociology and informatics enrich this perspective, for example in order to gain a clearer understanding of how personnel structures in the selected company affect the project and how to guarantee that transparency is indeed tamper-proof. “You can’t have situations where simple sleight of hand enables a manager to cover up their access to employee data,” as Hess puts it.

Hess stresses that this kind of collaboration is rare, adding that: “This is an integrated interdisciplinary approach — not just an additive one in which different disciplines merely work side by side.” He also sees another dimension to the project: “This is not just a descriptive approach: This really is science that aims to develop something new.” The ambitious experts involved are keen for their research to alter the world of work even during the project phase, he believes. The overriding objective is this: “Not simply to look for the best solution, but simultaneously to put that best solution to work in the real world.”

Hess expects the practical laboratory work to deliver more than just valuable insights for industries — such as software engineering and insurance — in which an exceptionally large number of workflows are documented that lend themselves to digital analytics. Regarding one current and hotly debated topic, he can also imagine generating impetus for the reconciliation of conflicting interests surrounding the use of personal data on the Internet. Thanks to the involvement of online service providers and representatives of consumer associations, a practical laboratory could investigate what it is genuinely worth to users to see their data protected. On another level, Hess also wants to formulate input for those who stake out the legal framework. One goal, he notes, is to go beyond anecdotal examples and give the politicians concerned ideas about what new legal norms would make sense and what impact they will have.

For Thomas Hess, research into inverse transparency genuinely breaks new ground: “We’re not just jumping on some bandwagon or reproducing studies others have already done. This work is new, it is right on the cutting edge. It is finding solutions to societal issues that no one has yet resolved. And that, I believe, marks a significant step forward.” Nikolaus Nützel

Professor Thomas Hess is Director of the Institute for Information Systems and New Media at LMU’s Munich School of Management. Born in 1967, he earned his doctorate at the University of St. Gallen and has written his Habilitation at the University of Göttingen. He lectured and conducted research at the Universities of Göttingen and Augsburg and at Nanyang University of Singapore before assuming his present professorship in Munich in 2001. Hess is a member of the board of the Bayerisches Forschungsinstitut für Digitale Transformation, BIDT (Bavarian Research Institute for Digital Transformation).

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