MPR: Waterbee Toy Company (A)

Waterbee Toy Company (A)
Should Monitoring Occur?
Copyright © 1998 by the University of St. Thomas, Minneapolis-St. Paul, Minnesota.

Should Monitoring Occur? | The Risk of Knowledge | Note on Privacy in the Workplace

On Thursday, April 17, 1998, Leila Muhammed, Human Resource (HR) Director for the electronics division of Waterbee Toys, sat in her office and contemplated the decision facing her. The division' s Head of Security had made a recommendation to monitor the employees' use of the Internet and Leila had to decide whether or not to support it at the next policy meeting.

Company and Industry Background
The Waterbee Toy Company opened its doors for business in 1906 as a manufacturer of wooden water-toys. The company had since grown into a three-division organization: plastics, music, and electronics. The plastics division made a full range of plastic toys: from water toys (such as ducks), to toy guns; and from dolls and action figures, to a variety of building blocks. The music division made low-priced musical instruments for children. Popular sales from this division included the xylophone, cymbals, and mini-drums.

The electronics segment was the newest and by far the fastest growing and most competitive in the toy industry. The threat of corporate espionage in the electronics division was constant, especially since the Christmas market, which could make-or-break the organization' s annual profit, was somewhat faddish.

For much of our history, we sold hardware. Today we still make hardware, but customers increasingly buy the knowledge behind it. So that' s how we really add value - embedding knowledge in software and services as well as products. (Source: Waterbee' s 1997 Annual Report)

Over the past three years, Waterbee had entered several emerging markets. Sales over that period had increased by about ten percent per year and staffing levels had decreased by almost fifty percent, to just over 50,000 full time employees. As a result, people had been spending more and more time in the office.

The Decision to Allow Personal Use
Leila thought back to a decision she had made the previous month. The electronics division had decided to follow corporate headquarters' lead and allow its employees personal use of e-mail and the Internet. Traditionally, the corporate policy (see Exhibit 1) was held to the letter and use was restricted to work-related purposes. However, with e-mail becoming a widespread and everyday form of communication, corporate headquarters made the decision to allow personal use on an informal basis.

Leila' s decision to follow corporate' s lead hadn' t been automatic. Based purely on her gut instinct, Leila felt that personal use of electronic mail and Internet access should be quite limited. This gut instinct was based on several considerations. Electronic mail and Internet access represented some cost to the employer and personal use equated to a utilization of company resources that was not work-related and therefore not profit-generating. In addition, while at work, employees should be focused on their jobs, she thought, not sending e-mail to their families and friends or surfing the 'net. Finally, The Waterbee Toy Company as provider of the service, owned some of the liability involved with its employees' use of electronic mail and the Internet. For example, if an employee sent offensive or threatening information or messages over the Internet, Waterbee, as provider of the service, might be held liable.

Nevertheless, Leila also thought there were many compelling reasons to allow informal use on a limited basis. Electronic mail had permeated society in the same way telephones had a hundred years ago. Asking an employee not to use e-mail for personal communication would have been akin to asking an employee not to use his or her desk telephone. In addition, electronic mail was a non-intrusive form of communication and would not be as disruptive to an employee' s job as a telephone call.

Moreover, Leila recognized that employees had been spending a lot more time at the office. This meant that employees had less time to deal with personal business. By allowing personal use of e-mail and the Internet during the workday, individuals were able to remain at their desks beyond regular working hours to complete Waterbee-related work.

Finally, Leila recognized that the individuals who had e-mail and Internet access at Waterbee were not hourly wage-earning employees, they were salaried employees who were paid to perform a certain job. Thus, it was somewhat irrelevant how these individuals chose to spend their time (for example, surfing the Internet for an hour in the middle of the day) provided their job was done in a satisfactory and timely manner.

Based on these considerations, the final decision to allow personal use of electronic mail and the Internet seemed sound to Leila. The choice to follow corporate headquarters' lead and to leave the permission informal rather than formalizing it was less obvious, but Leila had made that decision as well. Now the question of privacy had arisen and some of Leila' s old doubts resurfaced.

Privacy versus Security
Legally, there was no question. The log-in screen that all employees encountered before getting onto the Internet stated that privacy was not guaranteed and that Waterbee reserved the right to monitor computer use. By continuing use beyond that screen, the 2000 employees with Internet access implicitly consented to any monitoring.

Leila considered the argument that Security was making. The electronics division functioned in a highly competitive segment of the toy industry; one where corporate espionage was a constant threat and defending intellectual property before it got to the market was a challenge that was somewhat difficult to meet. With personal use being allowed, employees now had a much larger opportunity, intentionally or unintentionally, to reveal proprietary information.

On the other hand, respecting an employee' s privacy was very important for several reasons. On a social level, Leila didn' t want to create a corporate atmosphere of distrust. In addition, on a purely functional level, the monitoring of employees would reduce morale and detract from employee sense of autonomy, both of which would reduce productivity.

Leila put Security' s formal recommendation down and leaned back in her chair. She closed her eyes and thought through the options and potential outcomes once again. By the time Leila had opened her eyes, her decision had been made. She swiveled toward her computer and began to prepare for the policy meeting.

Exhibit 1 - Waterbee Toy Company (A): Waterbee's Policy

Corporate Policy and Practice

Subject: ELECTRONIC MAIL AND VOICE MAIL

POLICY

Electronic Mail and Voice Mail are resources provided to employees to enhance the performance and productivity of Waterbee. Electronic Mail EVERYONE groups are available to facilitate reaching all members of a group or department. It is Waterbee policy to prescribe the conditions for the use of these resources.

PRACTICE

1. Electronic Mail and Voice Mail are for the primary purpose of correspondence relating to business.

2. Electronic Mail and Voice Mail privacy (in accordance with Corporate Policy 105 Classification and Protection of Company Information) for employees shall be controlled, but not assured, by policies and facilities to protect against unauthorized access. Personal privacy is not assured. Access authorization techniques shall be in place.

3. Waterbee may monitor the use of Electronic Mail and Voice Mail system for system performance/utilization analysis.

4. Personnel who support or maintain computer systems for Electronic Mail and Voice Mail shall be considered to have limited operational access to employee Electronic Mail and Voice Mail files.

5. Waterbee retains an unlimited right of access to any Electronic Mail and Voice Mail data for investigation only with active participation of the Office of General Counsel and the Director of Corporate Security.

6. Misconduct on the part of employees associated with the use of Electronic Mail and Voice Mail shall be treated in accordance with The Code of Ethics and Business Conduct and the personnel policies of the relevant Waterbee location.

This case was prepared by Research Assistant Hassan Valji under the supervision of Kenneth E. Goodpaster, Koch Professor of Business Ethics, University of St. Thomas, as a basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. Names and locations are disguised. Copyright © 1998 by the University of St. Thomas, Minneapolis-St. Paul, Minnesota.

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