What is Employee Monitoring?

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Employee monitoring allows a business to track employee activities and monitor worker engagement with workplace related tasks. A business using employee monitoring on a computer can measure productivity, track attendance, ensure security and collect proof of hours worked.

Tools like modern employee monitoring software are a new implementation, but the practice itself has been around for a long time. In fact, the first timesheet was invented in 1888 (and would lead to the tech behemoth we know as IBM!). Now, we can track not just how much time people spend at work, but how productive they are, monitor internet usage, which applications they use most, what tasks they struggle with, when they work best, and more.

Thanks to modern technology, companies can monitor almost 100 percent of employee activity and communication, including:

Internet and app usage
Email
Computer screen recording
Phone use
Video/audio surveillance
GPS tracking by vehicle
Location tracking by access badge

This data transforms the decision-making process. You can determine everything from appropriate salary, rates, and product prices, to optimal team size, tool-kit, and work process. Not to mention, if there’s anything you should know about a specific employee (such as, Jane has gotten much less efficient in the past month, or Joe has really accelerated his work rate lately), you’ll know objectively—not intuitively.

Despite all these benefits, employee monitoring is a contentious topic. In this guide, we’ll share everything you need to know before implementing it.

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Chapter 1

Types of Employee Monitoring Systems

Employee monitoring comes in all shapes and sizes. Check out the most common forms (including some you might not expect).

Internet usage

Around two-thirds of businesses monitor their employees’ Internet use, so if you adopt this system, you’ll be in good company.

Obviously, it can be helpful to use an internet monitor to see which URLs your team members or freelancers open; for example, if they’re spending most of their time browsing online shopping sites, you can be reasonably certain they’re not doing their work.

But some jobs make this type of monitoring problematic. Say you’ve hired a social media manager—if you see she’s always visiting Facebook, Instagram, and Pinterest, that shouldn’t raise any red flags. But you’ll still have no idea whether she’s being productive.

With an app like Hubstaff, you can tie employee tasks or projects to their Internet time, which gives you a much better sense of what someone’s doing online.

URL-blocking also falls under this category. Many employers will restrict their employees from visiting websites with unquestionably inappropriate content (think: pornography), while others may allow certain “questionable” sites, like Twitter or YouTube, but only for a limited period of time.

Email

You might be surprised to learn 43% of employers monitor employee email. Not only can this help companies anticipate problems before they come up, but it can also be important when settling disputes. To give you an idea, a Massachusetts judge ruled an employer who’d gotten two sexual harassment claims was required to search his employees’ email.

Almost three-fourths of the companies that monitor email use software, while 40% have an individual open and review messages.

Phone

If you’ve ever dialed customer service and heard "This message may be recorded for quality assurance," you’ve been on the other end of an employee-monitored phone call.

Recording your staff’s interactions with clients, users, prospects, or suppliers is helpful for a variety of reasons. Say you look at the latest customer support statistics, and you notice two representatives are getting much higher scores than everyone else. If you can listen to their phone conversations from the past month, you can quickly figure out what they’re doing right so you can ask your other team members to do the same. On the flip side, if someone is getting really poor feedback, listening to his or her old calls will uncover the issue.

However, companies who are solely concerned about phone misuse—rather than quality control—only monitor which numbers employees are calling and how much time they’re spending on the phone.

Voicemail

Only 9% of companies monitor employee voicemails. In the past, before email and chat were so ubiquitous, leaving someone a voicemail was a pretty standard way to communicate. These days, the practice has almost disappeared: Less than one-tenth of the entire American population uses it.

Location

Tracking the location of mobile employees (whether by vehicle, smartphone, or both) has gone way up lately. According to the latest study, which was conducted in 2012, 62% of organizations that have "roaming" workforces keep records of their movement. That’s up from 30% in 2008. Although we don’t have exact numbers, the percentage has no doubt risen in even more in the past four years.

Other

Wait, there’s more? Yup. Any time you’re keeping track of employee activity, you’re conducting “employee monitoring.”

That applies to companies like Buffer, who give their team members activity trackers. Every Buffer hire receives a Jawbone UP wristband. Sleep, exercise, nutritional choices—the wristband tracks it all, and each individual’s results are open to the entire company. This counts as employee monitoring.

Deloitte, the famous consulting firm, recently conducted a pilot program in which each employee got a "smart" ID badge. These badges tracked how often they spoke in meetings, left their desks, and used effective body language. This counts as employee monitoring.

Japanese tech company Hitachi developed a similar badge-like device for tracking employee happiness, based on "distinct physical movements." With the data, Hitachi could figure out which internal teams were the happiest and why. This counts as employee monitoring.

As you can see, employee monitoring isn’t automatically invasive or Big-Brother-ish.

Chapter 2

The Pros of Employee Monitoring

Entrepreneurs, executives, and team leaders can reap a lot of rewards from employee monitoring software. Let’s dive into the most common benefits.

Less wasted time

The typical full-timer is paid for 8 hours of work each day—but he or she is wasting between 90 to 270 minutes. To see how much money this is costing you, let’s use an extremely simplified example.

Suppose you only have two employees. You’re paying both minimum wage, which in your state is $11 per hour. Every day, they together waste four hours: $44 down the drain. Using the standard 261-workday calendar, you’ll lose $11,484 per year. And that’s if you’ve only got two people on staff!

For a real-life example, look at Marissa Mayer’s 2013 decision to abolish Yahoo’s work-from-home option at Yahoo. Tracking how much time telecommuters spent on the company’s intranet revealed they were much less productive than their in-office peers.

With employee monitoring apps, you can completely eliminate this cash leak. For example, Hubstaff lets you pay people only for the time they’ve spent working—not a minute more or less.

Fewer errors

As this Chron article points out, having more insight into what your team members are doing lets you catch mistakes before they spiral out of control. Maybe you notice one of your employees has started working on a low-priority project, but you really need him to focus his efforts on a more timely or important task. You can shoot him a quick email or Slack message to say, “Hey! Can you please prioritize Project X over Project Y? We’re trying to ship by…”

Better employee insights

When a Dallas restaurant started using software to track each waiter’s activities, including their tickets, dishes, and drinks, management was primarily trying to tamp down employee theft.

However, the data also ended up revealing which waiters were the most productive. One of these waiters, Jim Sullivan, was rewarded with a management position when the chain opened up a new location.

Monitoring your employees doesn’t just identify the lowest performers—it also spotlights the highest performers (so you can promote them!)

Increased security

To see how employee monitoring makes your workplace safer, go back to the case in which tracking employee emails helped resolve a sexual harassment claim.

But that’s not the only way employee monitoring boosts security. It’s one of the best ways to make sure your field employees aren’t in danger; for example, "If an employee is supposed to be back at a certain time and nobody has heard from them," says Paul Randhawa, senior management analyst at Santa Clara Valley Water District in California, "we can look up on the GPS, see where they’re at and check up on their safety."

More transparency

Every manager struggles to keep their team in-sync; after all, ten heads are only better than two if every head is looking in the same direction. And as remote work becomes more and more common, the challenge of unifying a group of people has taken on a global dimension.

You might not’ve realized it, but employee monitoring can have a huge impact on your ability to connect everyone. If you’ve got access to data from each and every employee, you can get a high-level and granular view of what’s happening any time you want.

For example, if you know your graphic designer is taking longer than expected on an assignment, you can give the heads-up to your marketing freelancer, who can’t do her work until the graphic designer is done.

Better delegation

The better you understand each employee’s strengths and weaknesses, the better you can delegate. This blog post really drives home why successful delegation is mission-critical: it fosters collaboration, develops your employees, makes you more productive, increases team trust, and lets you focus on the bigger picture.

None of those benefits are realized if you’re assigning tasks to the wrong people. When you know who struggles with what (and conversely, who shines at what), you can hand out tasks appropriately. Sometimes, that means giving the assignment to the person who’s least equipped to handle it, so he can improve. Sometimes (when there’s a time-crunch or the project is really important), that means giving it to the person who can do it in her sleep. You won’t be able to make either decision without great data—which an employee monitoring tool can provide.

Less administrative work

Administrative work is the bane of your existence, right? It’s horribly ineffective to spend your time on paperwork and other mundane chores rather than the problems of your business.

With the right employee monitoring app, however, you can automate a large portion of your administrative duties. Since software like Hubstaff keeps track of employee time down to the payment, you don’t have to do payroll: Just set up automatic payments. Plus, since you can customize settings for each worker to factor in different currencies, rates, and schedules, you won’t have to worry about keeping track of the details for every person you hire.

Corey Ciocchetti, Associate Professor of Business Ethics and Legal Studies at the University of Denver, writes, "It is more efficient to monitor employee hours via software as opposed to on paper as it reduces hours inflation and human errors."

Ciochetti also notes that “attendance software can also quickly and correctly calculate pay and other legally mandated work provisions under the Fair Labor Standards Act, Family and Medical Leave Act and various state laws.”

Finally, apps like Hubstaff offer flexible reporting options. When you need to pay taxes or invoice a client, you can generate the right report instantly—no more hunting down random files or spending hours in Excel.

Chapter 3

The Cons of Employee Monitoring

Despite the many advantages, there are drawbacks to employee monitoring as well—many of which you can probably anticipate.

Effect on morale

It’s understandable why monitoring employees might cause those employees to think you don’t trust them. Unsurprisingly, this feeling of distrust and suspicion can harm the relationship between managers and their workers.

Back in 1995, an employee whose company installed a camera in the workplace said:

"I think it illustrates a lack of trust on the part of the employer of the employee, and I think this can only degenerate the relationship between the two."

Increased stress

The same employee also said being monitored was incredibly stressful. Unfortunately, many others have said the same. If you look at the situation from the employee’s perspective, knowing every second of their workday is somehow being tracked is definitely cause for anxiety.

Check out the best strategies for managing stress in the workplace.

Perceived lack of privacy

Even though the law supports the employer, many employees feel it’s unfair their actions are being monitored. As this article in the Online Journal of Applied Knowledge Management points out, "People, the employees, by nature generally tend to desire more freedom and less monitoring. Many people and organizations are against monitoring the activities of people in the workplace."

Higher turnover

According to Kate Bischoff, SHRM-SCP, a Minneapolis attorney and former HR director, the consequence of lower morale, higher stress, and less privacy is poor retention. Not only is higher turnover also bad for morale (thus amplifying the issue), but it’s costly, time-consuming, and inefficient to constantly replace employees.

Learn about employee retention strategies here.

Legal issues

So far, we haven’t talked about the legality of employee monitoring very much. Again and again, the courts have come down on the side of the employer—the employer has a legitimate stake in how employees spend their time, and people do not have a reasonable expectation of privacy when they’re at work. Nonetheless, it’s possible to overstep your boundaries when it comes to monitoring your employees. Ending up in hot water with the law is never good for business.

Weighing the pros and cons

What if you could get all the pros of employee monitoring, without any of the cons?

Good news: it’s totally possible. But before you learn how to design an employee monitoring system that your employees will actually like, you need to learn how to design a legal one.

Chapter 4

Legal Considerations

When it comes to employee monitoring, there are several things you should be aware of.

Effect on morale

When it comes to employee monitoring, there are several things you should be aware of.

First, there aren’t any federal laws in place that say private companies can’t monitor their employees. "For the most part, private employees have no right to privacy," Ciocchetti says.

Nonetheless, if you’re a private employer with a federal contract that includes record-keeping obligates, or you’re a public company, your employee monitoring rights are restricted.

Also, despite the lack of federal laws, many states have established their own laws. Before you implement a system, check your state’s laws or consult a lawyer.

Finally, if someone has consented to being monitored, it’s legal.

Computer activity

If you’re interested in monitoring anything your employee does digitally (email, Web surfing, application use, etc.), then you’ve got a well-established legal right to do so. "Courts have found that employers are generally free to read employee email messages, as long as there's a valid business purpose for doing so," says this NOLO post.

When you own the computers and the network your employees are using, you don’t even need to tell them you’re keeping or reading their messages. However, if they’re bringing their personal computers to the office or working from home, establishing an email policy that basically says, “We reserve the right to store and open all electronic communication sent during work hours or from your work email address.”

We’d argue you should always tell your employees what you’re tracking—and why—but we’ll get to that more in a bit.

Phone calls

On employer-owned phones, you can listen to what your employees are saying. However, it should be for quality control purposes; maybe you’re ensuring customers are getting helpful responses, or clients are being treated respectfully.

Although there aren’t any federal protections for phone calls, there are some state ones. In California, for example, employers must indicate they’re recording by playing a beep or recorded message.

Also, none of these rules apply to personal calls. If an employer is listening to a phone call and he or she realizes it’s not business-related, the employer must hang up immediately.

Location

It’s legal to track employee location, whether you’re relying on a mobile app like Hubstaff, with geofencing, or a GPS device in the car. But since there isn’t a lot of legal precedent, there are a couple measures you can take to stay on the safe side.

Step 1: Provide the tracking equipment. There’s always a lower expectation of privacy when an employee is using company property, rather than personal. So, if you’re going to track a person via smartphone, it’d be wise to pay for the phone.

Step 2: Ask for the employee’s consent. Once you’ve gotten approval from the person you’re monitoring, you don’t have to worry about legal issues: their “yes” supersedes the other concerns.

Step 3: Don’t monitor non-business activity. Employees do have a reasonable expectation of privacy when they’re off-the-clock, meaning you can’t track their location when they’re not working.

Chapter 5

How to Choose an Employee Monitoring System

You’ve clearly got a lot of options. To determine the best strategy for your business, there are multiple factors to consider.

The three big questions

Because employee monitoring can have negative effects when used incorrectly, it’s important to ask yourself three questions before you adopt any new system.

1. Will it help our business be more effective?
2. Will it help our business avoid liabilities?
3. Will it help our business with an internal investigation, or let us spot problems before they develop?

To show you how you’d use these criteria, let’s walk through a hypothetical scenario. Sarah is the CEO of a design agency. She’s based in New York City, but her five full-time employees work remotely. Sarah also regularly hires freelancers for one-time assignments.

While business is going well, Sarah suspects that some of the freelancers she’s worked with have overcharged her. In addition, she’s wondering if she should raise her rates—projects never seem to be finished by deadline.

So, Sarah starts looking at employee monitoring systems. She’s torn between two choices: a time-logging system, like Toggl, or a time and activity-tracking tool, like Hubstaff or Harvest.

She asks herself:

Will Toggl improve the business? Assuming no one abuses it, yes.Will it help me avoid liabilities? Probably not.
Will it help with internal investigations or issue prevention? No.
Then, she asks:
Will Hubstaff improve the business? Yes, and it’s set up to prevent abuse.
Will it help me avoid liabilities? Hubstaff makes payment accurate down to the second, so it helps you avoid financial battles.
Will it help with internal investigations or issue prevention? Yes, because if a problem crops up with an employee, whoever manages that person will know immediately.

As you can tell, this three-question framework will transform a seemingly tricky decision into a simple one.

The type of team

Of course, you’ll also want to account for the type of team you run. If your team is all within one office, then setting up a system that monitors their phone use is much more feasible than if they’re scattered throughout the world. If your employees are constantly traveling to meet clients, using a GPS tracking system is probably the best choice. If most or all of your employees receive an annual salary, rather than an hourly one, consider using an employee monitoring system that’s a little more flexible.

Flexibility

As career and management expert Alison Green often says, you shouldn’t treat all employees the same. If you’ve got a reliable, trustworthy, hard-working employee who consistently delivers stand-out work, you should give her much more autonomy and power than someone who’s flakey, disengaged, or uncommitted.

Along similar lines, you shouldn’t monitor every employee in the same way. For example, if you use a screen-monitoring software, you’d probably want to take frequent screenshots for the workers that haven’t proven themselves yet or have given you a reason to distrust them. However, you probably wouldn’t want to take any screenshots for the workers that are extremely dependable.

Hubstaff lets you set unique settings for each user on your team, but many employee monitoring tools don’t offer this flexibility.

And it might not be the individual software’s fault—it could be the nature of the system itself. Take video surveillance, which 16% of employers use to monitor employee performance. You can’t "turn off" the recording function for high performers. The same goes for email, phone, and voicemail tracking.

Current tool-kit

Lastly, before you sign on any dotted lines, take a look at the potential system’s integrations. Almost every tech tool these days has established connections to other tech tools. For example, if you use Gusto for payroll, you can integrate with Hubstaff so that the time your team tracks is automatically synced.

In other words, integrations let you effortlessly move data from one app to another—so time-consuming, repetitive tasks are automated, and none of your information gets stuck in one place.

Integrations are extremely powerful. That means when you’re picking out an employee monitoring tool or system, you should prioritize which integrations it has; if Option A integrates with some or many of the tools you currently use (or are planning on implementing), while Option B only integrates with one or none, Option A should be your first pick.

Chapter 6

How to introduce your employees to the system

Like we said, employee monitoring comes with its fair share of risks. Fortunately, following a couple of general guidelines will help you avoid every single one. In fact, you can even get your employees enthusiastic about using one of these systems.

Getting buy-in

You’re the boss, so you don’t need your team’s permission to start using a new system. But getting it will make your life way easier: Your employees will be much more likely to adopt a system they pre-approved, and you won’t suffer the dip in trust that many employee monitoring systems can cause.

So, how do you get buy-in? First, prepare a presentation for your workers. Maybe that’s a simple slide deck, or maybe you hold an all-hands Skype call. In any case, you should have a detailed explanation of how this system will improve the business, and more importantly, how it will help your workers.

It’s also a good idea to bring two or three different options to the table and ask your employees to vote. This way, they’ll feel like they’re choosing the system (rather than having it forced upon them). For example, you might say, "We’re looking at using Hubstaff or Time Doctor—take a look at each platform, and tell us which one you’d prefer."

Explaining the benefits

A convincing presentation will show your audience employee monitoring isn’t just good for you, it’s good for them as well.

Here are some ideas to get you started:

With a tool like Hubstaff, they’ll never be under-paid again.
They’ll also be paid automatically, without having to submit an invoice. (Hubstaff integrates with PayPal, Payoneer, QuickBooks, and more; many other software systems offer automatic payment as well)
They’ll get insights into their own work patterns, which’ll make them more productive.
They won’t have to turn in tedious daily or weekly reports.
They’ll get more autonomy— since managers will always be up-to-date, they won’t always be checking in.
They’ll have more efficient team members. It’s always frustrating to work with people who don’t pull their weight, and an employee monitoring system will completely eliminate that.
They’ll have extra motivation to focus: knowing you get paid for minutes worked, not just minutes at work, is a great incentive to stop procrastinating.
They’ll get more recognition. As in the case of Jim Sullivan, employee monitoring shows which team members are excelling.

Having a written policy

After your employees have signed off on a tool, it’s time to write out your official policy. Nathan Watson of the Indiana University School of Law says the vast majority of businesses that monitor employees provide notice to those employees.

Having a public policy shouldn’t be an issue if your employees voted for it; however, if you’re considering using a covert time tracking tool (that is, using a program secretly), you might reconsider. Not only is it the right thing to do, but it’ll help you avoid legal issues and allow your employees to get maximum benefit from the system.

There are several characteristics of a good policy. It should:

Be written in plain language, without any jargon or obfuscating terms
Cover each type of monitoring being used, how regularly the monitoring will take place, the kind of information being collected, what will be done with that information, and how long that information will be stored
Require each employee to acknowledge he or she has read it
Be distributed or published before the employee monitoring has taken place
Include any relevant legal provisions
Address what employees should do if they feel the policy is being violated, or if they have suggestions to improve it (We recommend setting up a Google Forms or Typeform survey so they can anonymously provide feedback)

The first feature—plain language—is especially important. If you hide behind legal mumbo-jumbo, your employees will feel like you’re trying to pull one over on them. If you find yourself using unnecessarily abstract or vague terms, rewrite the policy to make it more human.

Bad:

The Company has the capability to access, review, copy and delete any messages sent, received or stored on the email system. The Company reserves the right to access, review, copy D- 10 or delete all such messages for any purpose and to disclose them to any party (inside or outside the Company) it deems appropriate.

Good:

To make sure nothing sketchy is happening via email (which unfortunately is something we have to worry about), our company uses software that lets us open, read, copy, and delete any message that goes through the email system. (That means any message that an employee has sent, received, or saved on the system.) We can also share these emails with anyone (whether they work at this company or not). Of course, we’d need a good reason to do so—for example, if one of our employees shared a trade secret, we’d want to show the relevant message to our lawyer.

Driving adoption

Once you’ve gotten support from your team and created and handed out a written policy, you can move forward with implementation.

Let’s face it: change is hard, and it’s even harder when you’re trying to convince employees to willingly be monitored. Anything you can do to facilitate the transition is worth doing.

Hold training sessions

Are you using new software? Train your employees how to use it. Try to make the sessions fun and engaging. Maybe you’re running a co-located team, so take everyone out to dinner when you’re done. Or, your team is remote, so you promise Starbucks gift cards to the five team members who participate the most during the webinar.

Giving everyone a tutorial will show them how easy the app is to run, and it’ll definitely mitigate some of the resistance to adoption.

Check out these onboarding best practices.

Solicit feedback

Your employees will feel much more comfortable with the new system if you prove you’re open to comments and suggestions. As a matter of fact, you should go out of your way to get your workers’ feedback—having this level of transparency definitely counteracts any worries they may have that you don’t trust them or have their best interests in mind.

Luckily, you’ve got plenty of opportunities to ask individuals what they think:

When you’re onboarding them
When you (or their direct manager) meets with them for a check-in
When you’re having a company status meeting
When you’re having a normal conversation and the time feels right

Here’s a couple different ways to frame your questions:

(Name), I’d love to know your thoughts on the system we’ve set in place. If you were me, what would you change? Why?
How could we improve the system? What’s your biggest pain point?
Is there anything about the system that’s surprised you—both for better or for worse?
What do you least like about it? What do you most like?
Do you feel like this system benefits both the team’s operations and your own work?
How could I do a better job conveying why this system is important and even essential?

Listening to feedback

Once you’ve gotten employee feedback, it’s really important to respond with gratitude and composure—even if the person has said something you don’t agree with. Everyone will be watching to see how you react, so if you don’t get defensive, you’ll win their trust and confidence. Instead, ask for an alternative.

Let’s say a freelancer says he doesn’t like having his productivity level quantified, since it makes him feel anxious.

You could respond, "Okay, I definitely understand that. Do you have any suggestions on how we can keep track of how much work you’re doing, so we can pay you accurately?"

Not only does this answer show you’re open-minded, but you’re getting the employee to participate in the process and see things from your perspective. And hey, if he has a different, better idea, then everyone wins!

When employees say they like an aspect of the system (for example, Hubstaff’s team members love the autonomy the software provides), thank them for their feedback and ask if there’s any way you could make that benefit even more visible.

For example, you might reply, “That’s so great to hear—actually, one of the reasons we started using this program was to give everyone more freedom in their day-to-day work. Just out of curiosity, is there any way we could increase autonomy even more?”

With this approach, you’ll be able to show even the least enthusiastic employees that employee monitoring helps everyone succeed.

Final Thoughts

Now, you know the various types of employee monitoring, its pros and cons, which type to use within your organization, how to stay within the law, what to consider about specific software, and how to get your workers on-board.

We hope you’re as excited as we are—not only will a good employee monitoring system save you an incredible amount of money in regained productivity, but it’ll also dramatically improve your team’s work dynamic, show you who deserves a raise or promotion, and free up the time you normally spend on administrative tasks for more move-the-needle projects.

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Chapter 7

Employee Monitoring Resources

About Employee Monitoring
Different types of employee monitoring options along with the associated benefits and issues.
Wikipedia

Why Your Business Needs Employee Monitoring Software
More information on why your business needs employee monitoring software.
Hubstaff Blog

The Visual Guide to Employee Monitoring
Check out this infographic the shows everything you need to know about employee monitoring.
Hubstaff

Employee Monitoring and Privacy
Research into employee monitoring systems and privacy in the workplace.
S.A.M. Advanced Management Journal

Reactions to Employee Performance Monitoring
See how employee monitoring affects employees and different reactions to it.
ResearchGate

The Top 5 Employee Monitoring Software Solutions
A list of the top 5 employee monitoring software solutions and why you should use them.
Hubstaff Blog

Employee Internet Usage Monitoring
A study on the effects of monitoring employees' internet usage.
Andrew Urbaczewski and Leonard M. Jessup

How Self-Tracking Can Benefit Business
How tracking not only helps gauge employee productivity, but also if workers are happy.
Inc.

Should You Use Employee Monitoring Software?
There are pros and cons to employee monitoring software. Do the benefits outweigh the drawbacks?
Hubstaff Blog

What Most Employers Aren't Considering About Employee Monitoring
Have you ruled out employee monitoring? Read here to see how to benefit from it in your business.
Hubstaff Blog

Choosing Remote Working Monitoring Software
Check out these eight critical tips on choosing remote working monitoring software in your business.
Hubstaff Blog