Here’s a common paranoid fantasy now playing at a company near you. Imagine you’re a manager (not a hard task, for many of us). You’ve got a passel of employees. You shower them with regular paychecks, fast Internet access, even embossed business cards with their names prominently displayed right below the corporate logo. All you ask in return is a solid day’s work at the office. And you’re not getting it. Turns out these loafers just fritter away their workday hours shopping online, emailing friends, playing games, and even viewing porn sites. Instead of honest labor, you’re getting reduced productivity, a drain on network resources, possibly even legal liability (what happens if someone takes offense at questionable material another employee might download and display on his monitor?).

So you do what any angry, betrayed Big Brother would do in that situation. You purchase a piece of software that monitors your employees' every keystroke and saves that information for later perusal. You’re not alone in your actions. According to International Data Corp., companies shelled out $53 million last year on employee surveillance software alone. Plenty of these companies don't even tell their employees they’re being monitored…at least until the culprits are caught red-handed and fired for inappropriate Internet usage.

To some extent, these Orwellian employers have a point. According to every metric available, daytime Internet use (generally work-time surfing), is skyrocketing. And plenty of that usage is of a personal nature, with workaday Netizens pricing Peruvian pottery on EBay, shorting biotech shares at E-Trade, and ogling Jennifer Lopez’s Oscar outfit at E Online. Which leads to a simple question: With so much workplace slackery, why isn't productivity dropping?

In fact, in the US at least, workplace productivity just keeps climbing. The Department of Labor reported a 3.1 % jump in productivity last year, after bumps of 2.2% and 2.8% for 1997 and 1998, respectively. It's probably no coincidence that Internet use has mirrored this great surge. Just take a look at 1999's Managing Workplace Technology survey, where roughly half the respondents pointed to the Web as a source of increased productivity.

Savvy employers could draw a conclusion from these data: that monitoring Web activity is counterproductive.

Consider the recent Stanford Institute for the Quantitative Study of Society, which found that among regular Internet users who hold a job, "the Internet has increased the time they spend working at home without cutting back at the office" for at least a quarter of them. Apparently work and personal life are growing ever more intertwined for many of us. I routinely order groceries online during work hours (sometimes even while sitting in on a less-than-scintillating conference call). Fast Internet access at work lets me handle plenty of routine household tasks—ordering movie tickets, checking airfares--that would otherwise take me a lot longer to accomplish at home, or might even force me to miss time from work. Those hours I save generally get plowed right back into work, which translates into increased productivity.

Anyway, let’s be honest: Only robots can be productive 100 percent of the time. Humans need downtime to process events and replenish their creative juices. In the past, we had water-cooler conversations, the three-martini lunch, the aimless contemplation of one’s navel. Now workers of America have Unreal Tournament[check], Erin Brockovitch movie trailers, and the Dancing Hamster page. Smart employers will chalk it up to the cost of doing business, and move on. At least employees are in the office and staying current with technology—making them valuable assets in an information economy.

Besides, the best bosses manage according to results, not according to perceived activities. They set realistic goals; provide help, tools, and advice; establish checkpoints to monitor progress; and make any performance assessments based on the finished product. This approach becomes even more critical with the upsurge in telecommuting, remote offices, and other novel job arrangements. You simply can’t hover over your employees’ desks anymore. Instead, treat your staff like adults and establish appropriate metrics to judge their performance. Some employees may disappoint you, but no decent manager should depend on a Web usage log to indicate there’s a problem.

Freedom to use the Net at work is also a perk that can improve staff retention. Few companies lack Web access these days, but those that fetter their employees’ access—or routinely demonstrate a lack of trust--will increasingly find it hard to attract and keep top talent. Today’s e-savvy employees are rightfully sensitive to invasions of privacy, whether from the government, telemarketers, or their bosses. Monitoring employees is a great way to drive away the best and brightest among them.

I’m not suggesting companies shouldn’t have a Web use policy. Or that firms shouldn’t feel free to use blocking software to prevent access to content—pornography or "hate" sites, say--that don’t meet company standards. Companies just need to articulate and publicize their policies to the staff. Furthermore, they should be willing to enforce those policies, just as they would have enforced a company policy before the Internet came along.

True, a just-say-no policy toward computer surveillance might allow some employees to waste time and valuable bandwidth on frivolous daytime pursuits. But in the long run, playing espionage games on workers can only inspire mistrust and resentment--and that's the real productivity killer.