New emotion-sensing technologies can help employees make better decisions, improve concentration, and adopt healthier and more productive work styles. But companies must address important privacy issues.

As companies search for new ways to improve performance, some executives have begun paying attention to developments in emotion-sensing technologies (ESTs) and software fueled by artificial emotional intelligence. Although we are still in the early days, research shows that these technologies, which read such things as eye movements, facial expressions, and skin conductance, can help employees make better decisions, improve concentration, and alleviate stress. While important privacy issues need to be addressed, the opportunities are significant.

Consider the technology developed by Koninklijke Philips Electronics N.V. and ABN AMRO Bank N.V., both based in Amsterdam, to reduce trading risk in financial markets. Research has shown that traders in heightened emotional states will overpay for assets and downplay risk, a condition known as “auction fever” or “bidding frenzy.” To address this problem, the companies jointly developed a tool called the Rationalizer that has two components: a bracelet attached to the trader’s wrist that measures emotions via electrodermal activity (similar to the way a lie detector works) and a display showing the strength of the person’s emotions using light patterns and colors. Researchers have found that when users become aware of their heightened emotional states, they are more likely to rethink their decisions. In addition to helping individuals improve performance, the aggregated data from such settings can help managers understand how internal and external environmental factors influence the risks taken by groups.

Individuals are also more prone to make mistakes when they are not paying enough attention. Although multitasking has become standard in many jobs, there are some activities, such as air-traffic control and fast-paced buying and selling, where maintaining one’s undivided attention is critical. In a high-profile foul-up in 2005, a trader working for Mizuho Securities Co. in Tokyo intended to sell a single share of a stock it owned for about 610,000 yen (which was approximately $5,000). By mistake, he placed an order to sell 610,000 shares for one yen. The company was unable to cancel the sell order, leading to an estimated loss of $224 million.

Although such egregious blunders are rare, the story speaks to how important it is to hold the attention of employees involved in high-stakes activities. ESTs can help people improve their focus, often with relatively minimal technological investment.