Oversurveillance: Less Surveillance for Better Corporate Governance and Reduced Financial Crime

Why have corporations come to rely so heavily on electronic surveillance in exercising corporate governance, and what do they hope to achieve through such surveillance? The most common reasons given by corporate managers tend to rest heavily on security, particularly on the prevention of theft, and on productivity. Corporate use of electronic surveillance for security tends to assume that increasing electronic surveillance will reduce corporate liabilities by disincentivizing the workers being watched from engaging in misconduct. Corporate use of electronic surveillance for productivity tends to assume that increasing electronic surveillance will increase worker productivity because workers being watched will produce more of what is in the interest of the corporation. The problem for corporate governance is that neither of these assumptions is true when corporations improperly use electronic surveillance. In fact, there appears to be good empirical evidence to suggest that, certainly in the context of financial crimes, the corporate misuse of electronic surveillance may, in fact, increase the levels of misconduct within a company, as well as damage the company’s best systems to prevent such misconduct. The real motivation for increasing electronic surveillance has even more serious consequences for the effectiveness of corporate governance and companies’ relationships with workers. Since the COVID-19 pandemic made working from home a necessity in many organizations and workers have largely been reluctant to return to the office, managers fear losing control. In their efforts to re-assert control, managers and their companies have gone too far. They are now misusing electronic surveillance to assert inappropriate levels of control over workers’ personal lives and reactions. There have been consequences to pay for corporations’ misuse of electronic surveillance. When managers shift the focus of surveillance to control of workers themselves, instead of merely the control of the corporation’s physical or related assets, the result is what the empirical evidence has been finding to be toxic. This chapter contributes to the literature by describing how basic surveillance tips into being toxic, and it labels this misuse as oversurveillance. Most importantly for corporations’ bottom lines and governance, oversurveillance of workers is corrosive to the ethical conduct upon which corporations’ most important systems of detecting and preventing misconduct depend. Corporations have been moving in the wrong direction toward oversurveillance, and, in fact, potentially increasing financial crime and misconduct. The chapter argues against this damaging approach, and for rethinking the misuse of electronic surveillance in corporate governance.