People would make the connection with being tagged like a criminal." She suggests a pager system instead "Then staff can make a choice of whether or not to respond. It can track them down but hasn't invaded their privacy."The badges are being tested out in a handful of local companies, including the Cambridge University computer laboratory, which uses more than 200 badges and 300 receptors. Chris Hadley, computer officer, was fully conscious of the implications when it was first introduced."A number of people, including myself, had reservations at first Privacy issues have been thought about," he says. "Which is why inaccuracy has been built in from the word go - the badges aren't that powerful and none of the information they give out is held for any length of time. Also, wearing them is completely voluntary."Yet David Boughey, a sales employee at On Line Media, another Cambridge company testing the badges, admits they have enormous potential "They could certainly be used to survey people's efficiency. At the moment we don't hold that sort of informalion because it's of no interest to us," he says."But it could be available it we wanted it.

"If you want to get in touch with other people in the building why not install a public address system? What starts out as a basic objective to keep an eye on staff becomes more and more sophisticated."Sue Cartwright, a lecturer in organisational psychology at the School of Management Umist, says such devices could seriously damage staff morale and levels of trust "I imagine it would be very much resented. "If you leave, the machine will "lock down" so no one else can use it."Mr Rennison talks of friendlier uses. You could, say, walk up to a drinks machine, and it would provide a coffee with two sugars, because the badge knows your preferences Too bad if you change your tastes. For the price of installing this state-of-the-art system, about pounds 2,500 for six badges and six sensors, it's probably cheaper to keep the right change handy.Chris Proctor of the Communications Workers Union (CWU) believes that, coffee machines aside, such equipment will become increasingly intrusive "It's an electronic ball and chain," he says. "When you walk into a room the computer you use automatically powers up with your own interface and documents," he explains.

Peter Rennison, an Olivetti spokesman, argues that it has been developed for less sinister reasons. "It's so easy to track somebody down if there's a phone call for them.""Rather than running down a corridor after them, you can tell from the computer screen where they are and put the call straight through." The badge also interacts with the wearer's computer. Each computer "knows" where an employee is at any time, and can flash up a table of information: Name - Mr Jones; Position. - Accounts; Last Seen -Yesterday; Status - Alone.Olivetti says it was responding to a demand for "the provision of location information about individuals" In simple terms, time thieves beware.

lt is picked up by infra-red detectors linked to computers, which can be planted throughout a building - including toilets. Potentially, the information can be used to draw certain conclusions about an employee's constructive use of work time. Staff can also be monitored at their computers if they log on with card keys.Although America may be one step ahead on the paranoia front, British companies look likely to follow, in technological terms at least. Much closer to home, Olivetti Research Laboratory in Cambridge has developed the Active Badge system - now on the market.About 2ins square, the badge is powered by a lithium battery and emits an infra-red signal every 10 seconds.

Once installed, certain computer networks can check on typing speed as well as error rate and the time it takes an employee to complete a task.Another popular gizmo on show was the digital smart-card key designed to remember which doors - canteen, toilet or exit - staff swipe it through and how frequently. Recent statistics to fuel corporate paranoia indicate that up to $25bn (pounds 15.6bn) is lost annually to staff theft, rising to $170bn if "time thieving" is included. The only solution, argues management, is to keep close tabs on the potential enemy within. Consequently, sales of sophisticated surveillance equipment are soaring. Judging by the range of technology at a recent industrial security convention in Virginia, the art of "personal tracking" has achieved military precision.Time thieves should, however, soon become extinct with the widespread use of such Draconian deterrents as keystroke monitoring.