Trouble with Big Brother: Counterproductive Consequences of Monitoring through Erosion of LMX

Changing workplace dynamics have led employers to increasingly adopt electronic monitoring technologies so supervisors can observe and ensure employee productivity—an outcome the monitoring literature has long supported. Yet, employee engagement and success depend on strong leader-member exchange (LMX), and the relational consequences of electronic monitoring for supervisor and employee are surprisingly unknown. To help resolve tension within the monitoring literature and add understanding regarding the effects of electronic performance monitoring on employee productivity, we use social exchange theory to examine the implications of electronic monitoring for the supervisor-employee relationship. We theorize that employee electronic monitoring facilitates (rather than inhibits) production deviance and inhibits (rather than facilitates) task performance by eroding the leader-member exchange relationship between supervisor and employee. Acknowledging the potential for electronic monitoring data to be useful to employees, we further argue that supervisors can buffer the negative relational consequences of electronic monitoring by using monitoring data for developmental purposes (i.e., developmental feedback). 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 performance monitoring without promoting unintended consequences.