Compiled By Michael A. Verespej Workplace surveillance is the top privacy issue in U.S. society today, says the 7-month-old Privacy Foundation, a nonprofit research organization based at the University of Denver. The foundation recently ranked electronic monitoring No. 1 in its top-10 list of privacy matters that troubled Americans in the past year. "The rise of the Internet has sent a flood tide of privacy concerns through business and society," says Executive Director Stephen Keating, pointing to an American Management Assn. research study which indicates that two-thirds of U.S. companies do in-house electronic surveillance and 27% monitor employees' e-mails. But Keating says some of that may backfire. "Employers may be rightly concerned about security and productivity issues or legal liability arising from e-mailed sexual banter," says Keating. "But [it] will undoubtedly affect morale [and] employee recruitment and retention." That's why he predicts that manufacturers -- particularly those in need of highly skilled, high-tech workers -- will begin to tout "spy-free" workplaces as a fringe benefit.