November 2000

The Internet: Business Tool or Toy?

By Linda M. Parsons

During the past decade, Internet use has grown across the globe at an increasing rate each year. The Corporation for National Research Initiatives predicts that, within a generation, Internet household penetration in the United States will approach that of the telephone, about 90% (“Life on the Internet: Next Stop the Future” index.html). Additionally, accountants are heavy Internet users: A recent Accounting Today marketplace survey estimated that 79% of practitioners use the Internet to some degree (42% daily, and 29% at least five hours per week).

Many individuals receive their first exposure to the Internet in the workplace. As the information and services available online continue to multiply, the Internet already appears to be a necessity for many companies and their personnel. However, the Internet’s record is incomplete without consideration of its abuses.

Before purchasing and implementing an information technology (IT) system, management should weigh the costs against the expected benefits. Will employees perceive the Internet as a toy or a tool?

The Study

The accounting departments of two companies were specifically selected for the purposes of this study. Company A grants Internet access to all employees, whereas Company B provides access only to certain individuals deemed to have a legitimate need (accountants in the financial reporting and budgeting areas).

Interviews were conducted with all of the 19 Internet users from both accounting departments, including the department managers and information system (IS) directors. Questions were open-ended, and interviewees were promised that their responses would be kept confidential.

Myth vs. Reality

Information obtained from department managers and IS directors was used to identify the expectations and perceptions of management regarding employee Internet use. This information was then compared with the perceptions and actual usage of the employees. In several instances, employee observations differed from either management expectations or views expressed in the popular press.

Myth: Internet access is not expensive, so a cost-benefit analysis is unnecessary. The cash outlay for Internet access is quite small, approximately $1,500 per month. The cost of providing Internet access to all current employees equals that of providing it to only a select few. Management at both companies agreed that no formal cost-benefit analysis was necessary.

Reality: The initial cash outlay is not significant, but hidden costs could exist. Hidden costs to the employer can stem from 1) employee monitoring, 2) legal liability resulting from Internet-related sexual harassment claims, and 3) exposure to cyber-crime.

Company A’s IS director monitors employee Internet use; Company B’s IS director does not, but would begin to do so if abuse was reported. The cost of employee monitoring has not been quantified or considered in management’s estimates of the total cost of Internet access.

Although neither company has experienced inappropriate Internet use by an employee, the potential for legal liability exists. According to the Equal Employment Opportunity Commission, the number of sexual harassment claims it processed in 1998 was 48% higher than the number processed in 1992. The monetary benefits awarded, which exclude amounts awarded through litigation, increased by 170% during that same period. An increasing number of these cases involved claims of sexual harassment resulting from inappropriate Internet sites or e-mail messages. This potential liability was included by neither of the IS directors in their assessments of total Internet costs.

Both companies had taken security precautions to deter unauthorized users and computer viruses, but the cost of implementing and updating these measures was not specifically considered when management was asked to estimate the total cost of providing Internet access. Recent high-profile computer virus outbreaks indicate that the costs of computer crime can be significant.

Myth: Employee Internet access benefits the company. Management reported that a “wealth of information” can be obtained quickly and easily from the Internet. Even employees that reported no current business use consider the Internet a standard tool of today’s business world.

“If they [the company] didn’t have it, I would have thought they were behind the times,” said one employee, who could not name a single instance in which she had used the Internet in her current job (though she had used it more extensively in her prior company). “I probably wouldn’t have accepted a job from them.” Over 76% of the accountants interviewed believe the Internet has positively impacted their jobs.

Reality: Internet access benefits both companies and employees. Approximately 80% of the accounting personnel at Company A and over 55% of individuals with Internet access at Company B reported that they use the Internet regularly for business purposes. The benefits to the companies of providing Internet access, as perceived by the employees, include increases in employee efficiency and effectiveness, cost savings, and provision of a low-cost employee benefit to certain employees.

Enhanced efficiency results from easier and quicker access to information such as stock prices, accounting data, and currency exchange rates. This information, previously obtained from newspapers or annual reports, took much longer to collect. Improved effectiveness is achieved because companies and stock exchanges often provide summary data that previously employees either prepared themselves or did not use. Cost savings are realized when companies cancel subscriptions in favor of free access to the desired information online. Several employees stated that companies also save money because of a reduced reliance on CPAs for new accounting and reporting information.

The Internet assists in employee recruiting, retention, and morale. Companies A and B both provide an unintentional employee benefit: Fifty-three percent of employees said they perceive Internet access as a perk. Some employees actually reduced personal expenditures for residential Internet access or newspaper subscriptions because they had Internet access at work.

Myth: The Internet is easy to use; no training is necessary. All of the IS directors and accounting managers and 87% of the employees said the Internet was easy to use. A large majority of the employees did not want or perceive the need for training.

Reality: Training would benefit certain users. Training personnel to use any new IT system is important. When the Internet was first introduced at Company A, all employees were given a brief demonstration on using a browser. Employees hired since have received Internet access but no training. At Company B, employees are given Internet access and the necessary software upon approved request, but no training is provided. In both companies, the IS department is available for questions.

All of the users at Company B now claim the Internet is easy to use. However, two originally found it difficult. Without training, these employees are not realizing the maximum benefit of the Internet.

Two individuals at Company A reported that they perceive the Internet as difficult to use; neither has ever used the Internet, for business or personal reasons. Two others have used the Internet only a few times and are not comfortable searching for information.

Myth: Employees will use the Internet for nonbusiness purposes, decreasing productivity. One concern of employers considering providing Internet access is that employees will waste time viewing sites of personal interest.

Reality: Personal use of the Internet by employees does not necessarily reduce productivity— employees can actually “waste” time more efficiently. Every Internet user in the study acknowledged having used the Internet for personal reasons, but no evidence of abuse was apparent. Personal use averaged between 10 minutes and one hour daily, most often during lunchtime. Many of the accountants (all of whom were salaried personnel) worked overtime on a regular basis and were, therefore, already dedicating more than the minimum 40 hours per week to their job duties.

Personal use of the Internet included reading news and weather reports, looking at sports scores, shopping, obtaining information on personal investments, banking, making travel arrangements, retrieving movie schedules, and reading the local lottery results. The majority of employees maintained that prior to gaining Internet access they engaged in these same personal activities during working hours, some of which were time-consuming and required that the employee be away from the office.

Both IS directors reported that no serious abuse of the Internet or e-mail had come to their attention. One director asserted that employees tend to use the Internet for personal use extensively at first, but eventually tire of it as entertainment and begin to think of it as a tool. Both accounting managers maintained that any loss of productivity would be readily apparent to supervisors, and neither believed that abuse exists.

Myth: An Internet use policy serves as a deterrent to employee abuse. Both companies had written policies in place. Neither policy expressly prohibited personal use of the Internet or e-mail, but both prohibited excessive nonbusiness use. One policy forbade harassing another person, while the other disallowed the transmission of pornographic or obscene materials (without defining them). Both policies specifically addressed the consequences of violating the guidelines: disciplinary action up to and including termination.

Company A provides the Internet policy upon employment and requires that employees sign a form stating that they have read and agree to abide by the rules. Company B requires that all employees granted Internet access sign a statement agreeing to the regulations. Both companies post their policy on their intranet.

Reality: Employees are not aware that an Internet policy exists or do not know the details of the policy. Each employee was asked if a formal, written policy regarding appropriate Internet use existed. Over 70% replied either that no written policy exists or that they had not seen it.

Employees that affirmed having seen the formal written policy were asked to explain it. Their descriptions ranged from a belief that personal use was disallowed to a policy that prohibited downloading files from the Internet. None of the descriptions were correct or complete.

A written policy governing Internet use by employees is important for management to avoid legal liability for violations of the policy; however, in order to maximize its deterrence of abuse, employees must know the substance of the policy. A large majority of the employees intuitively knew what constitutes abuse but could not recite specific policy guidelines.

Myth: Monitoring employee Internet use serves as a deterrent to employee abuse. Mark Nacinovich, author of “Web Waste: When Employees Surf the Net,” claims that employee Internet use must be monitored in order to deter abuse.

Reality: Employees are not aware whether monitoring of Internet usage occurs. Company A’s IS director receives a printout each month of all the Internet sites visited by employees. He reviews the top 10 users for potential abuse. Additionally, Company A has installed blocking software that prohibits access to sexually explicit sites and reports each attempt to access such sites. Employee e-mail is not monitored. The IS director reported no real problems to date and believes that employees know they are monitored. Company A’s accounting manager has chosen not to receive reports on Internet use by the accounting staff because “they are big boys and girls,” and also because he has noted no alarming instances of low productivity.

Company B does not currently monitor employee Internet use. The IS director was not aware of any abuses and asserted, “We don’t want to be Big Brother.” Company B’s accounting manager discussed the need to monitor use with her employees and decided it would not be useful, believing that productivity problems would be immediately apparent.

Ninety-three percent of employees reported that their Internet use is not monitored or were unsure whether such monitoring occurs. In spite of the employees’ belief that their Internet use at work is private, no real instances of abuse were perceived by management. Therefore, regular monitoring of employee Internet use appears unnecessary.

Linda M. Parsons, CPA, is a teaching fellow and doctoral candidate in the department of accountancy and taxation at the University of Houston. The author gratefully acknowledges the help of colleague Valrie Chambers, PhD, CPA, and would also like to thank the employees at both companies for their participation in the study.

Paul A. Pacter, Phd, CPA

Deloitte Touche Tohmatsu

Eyal Feiler, CPA

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