Working From Home or Shirking From Home?

 In class, we recently talked about the principal-agent problem, which involves the misalignment of incentives/preferences in which the incentives of an agent do not perfectly align with those of the principal. This can lead to shirking, which occurs when an agent does not act in accordance with the principal's wishes. In class, we talked about this in the context of government in which the representative is the agent and the voter is the principal. However, this misalignment of incentives exists in many scenarios, especially in the workplace. Workers, or agents, have an incentive to not work as hard as their manager may like. In other words, they have the incentive to shirk. There are several ways to control shirking, for instance by defining desired output well, monitoring the agent's behavior, completing frequent performance reviews, and securing other alternatives. 

Our discussion of shirking got me thinking about the pandemic and its effect on the frequency of working from home. According to a study by the US Bureau of Labor Statistics, 1/3 of workplaces increased telework for some or all of their employees during the COVID-19 pandemic. Working from home makes it much harder for principals to monitor their agent's behavior, so what effect might the pandemic have had in increasing shirking by agents, and what can employers do about it? Well, it seems that many employers anticipated this, so they moved toward trying to find ways to monitor their workers from home to avoid shirking. PwC was one such company that has come under scrutiny for their development of a facial recognition technology that logs when employees are absent from their computers during the work day. It requires employees to provide a written reason for why they are absent from their computers, even if it is just to use the bathroom. Critics of this development say that it is a huge intrusion of privacy which damages trust and negatively impacts worker morale. However, the company says that it is designed to help financial institutions meet their compliance obligations where workers would normally be highly monitored for security purposes on trading floors. Though PwC may have gone too far in their efforts to control shirking, what is certain is that companies will have to find new ways to monitor the behavior of their employees in order to control shirking as workers continue to work from home due to the pandemic.