Is The Boss Watching?

Does Phyllis Rhodes have an Internet affliction? A mortgage salesperson from Summit, N.J., she freely admits to shopping for auction deals on eBay, sending her friends e-mail from her Hotmail account and perusing the latest nightlife listings on from her desk at work during the hours that, well, technically, she should be working. But Rhodes says the tempting screen sitting atop all of our desks these days doesn't affect her productivity. She insists she's a master multitasker, easily chatting to prospective customers on the phone while she browses the Web. And, she says, her company doesn't mind, since she puts up among the best quarterly sales numbers in the building. "Everybody is different," she says. "I really don't work that hard, but I work smart."

But there's a burgeoning industry that isn't so sure. Call it the Orwellian model of Web monitoring. The makers of the clinical-sounding "employee Internet management software" say that work habits like Rhodes's represent a new national epidemic: cyberslacking on the job. The software, made by such companies as Websense, SurfControl and SmartFilter, sits on corporate networks. After employees are notified of its presence, managers can monitor the hours that employees spend on the Web, log their specific online travels and even block access to porn and gambling sites. The software then generates a detailed report for the company's computer staff on how the Internet is being used. They can then decide to modify the software, for example, by placing a whole new category of sites off-limits if they believe employees are still spending too much time online.

Critics of the software argue that Web surfing is just another form of "undertime," the inevitable hours we spend each workday gossiping, getting coffee or talking on the phone to friends. But EIM software is now a $200 million business, according to International Data Corp. "The Internet is a great tool," says Andy Meyer, vice president of marketing at Websense, the industry sales leader. "But like any other tool, it needs rules and regulation."

The latest evidence for so-called Net abuse comes from the annual Websense survey, released last month and much publicized. (Internet addicts surf on work time, said online news site ZDNet. com.) According to the survey of 305 human-resource managers and 250 employees, workers spend an average of 8.3 hours a week--more than one entire workday--peeking at non-work-related sites. One of every four employees reports "feeling addicted to, or compulsive in" using, the Internet. The numbers suggest nearly twice the non-work-related usage as last year's survey, a trend that seems to be jolting the country's corporate elite. More than half of the Fortune 500, as well as roughly 17,000 companies, now run EIM software, including Cisco, McDonalds and Pepsi. (Many companies, such as NEWSWEEK, are loath to monitor employees.)

Websense has scores of clients who've tried to take on Net abuse. One is Gary Gomes, network-operations manager at the San Jose, Calif.-based Allegro, which makes routers for the telecom industry. "We had people on the night shift on the factory floor spending three hours each rotation surfing the Net," Gomes says, despite the fact that Allegro, like many companies, has written policies about use of the Internet on company time. The first installation of the software, which costs $15 per user per year, was configured to monitor only the computers on the factory floor. That limitation rendered the monitoring ineffective--workers were sneaking upstairs to office computers to get their Internet kicks. Today the problem is fixed: the bright yellow sign that says you are being logged appears on the screen when Allegro workers use any computer in the building to go online. As a result, usage is way down.

Allegro may represent a "success" story, but civil libertarians and even customers are raising questions about employee-monitoring software. Are bottom lines really suffering as the result of Web abuse? Does goofing off on the Net outweigh the productivity gains bestowed by economy-altering tools like e-mail? "The whole Internet productivity thing is a semi-myth," says Frank Gillman, the director of technology at the Allen Matkins law firm in Los Angeles, which uses Websense. "If you have an employee who wants to waste time, they're going to find a way to do it, whether on the Internet or anywhere else."

Gillman bought the software not because the firm's workers were slacking, but to keep employees from downloading viruses or calling up lascivious content that could be ground for a harassment lawsuit by a colleague. His advice for boosting productivity at his firm concerns caffeine instead of computers: start selling Starbucks Frappuccinos in the office, so employees don't head out en masse for their fix every afternoon.

Tom DeMarco, author of "Slack: Getting Past Burnout, Busywork, and the Myth of Total Efficiency," sees darker misconceptions behind the rise of Web-monitoring software. DeMarco coined the word "undertime" for the relaxing periods where we take a break from increasing workloads. He notes that in the early 1900s, the telephone--also a great undertime tool--was once viewed as a threat to productivity as well: workers were supposed to use it only to call the police. Software like Websense and SurfControl, he says, is the result of a flawed management philosophy that measures productivity by hours worked, rather than the quality of the products made. "We ought to be trying to build a healthy culture where people care about working together and feel like they are not being used," DeMarco says. "What could make you feel more used than to have the principal medium of the 21st century denied to you?"

Executives at Websense agree the Internet is a vital tool for workers, but say a range of variables--from preventing potential lawsuits to securing networks and yes, improving productivity--suggest the benefits of EIM software. Websense points to customers like the Truckee Meadows Water Authority, the administrator of northern Nevada's most important resource: water. Last year Anthony Hebert, Truckee Meadows' IT manager, conducted an internal study and found 50 percent of the company was accessing the Internet 75 percent of the time. (Hebert acknowledges the study did not account for the time Web browsers were simply left opened on screens.) After installing Websense on 200 company computers, two things happened. Many employees were furious and refused to talk to Hebert for months. But he did achieve the corporate goal: personal use of the Internet at the plant plummeted. With the rise of EIM software, that tradeoff--between efficiency and collegiality--is something more American companies will increasingly face.