Trouble with big brother: Counterproductive consequences of electronic monitoring through the erosion of leader‐member social exchange

Summary Changing workplace dynamics have led employers to increasingly adopt electronic monitoring technologies so supervisors can observe and ensure employee compliance and productivity—outcomes the monitoring literature has long supported. Yet, employee productivity depends on strong leader–member social exchange, and the relational consequences of electronic monitoring for supervisor and employee are not well understood. To help resolve this tension within the monitoring literature and add understanding in regard to the effects of electronic monitoring on employee productivity, we use social exchange theory to examine the implications of electronic monitoring for the supervisor–employee exchange relationship. We theorize that electronic monitoring facilitates (rather than inhibits) production deviance and inhibits (rather than facilitates) task performance by undermining the exchange of social benefits and, consequently, eroding leader–member social exchange. Yet, we also hypothesize that supervisors who give performance monitoring data back to employees in a developmental way (i.e., developmental feedback) compensate for the loss of certain social benefits, and, thereby, buffer the negative relational consequences of electronic monitoring. Across an experimental online study and a field study, we find converging support for our predictions and rule out alternative explanations. This research provides timely insights into how to effectively use electronic monitoring without promoting unintended consequences.