Digital trace data—the behavioral footprints generated through employees’ interactions with digital tools—has reshaped the study of organizational behavior. This paper explores how digital trace data (DTD) is collected, processed, interpreted, and operationalized to understand employee performance, collaboration networks, productivity, motivation, and organizational culture. While DTD provides unprecedented insights for managers and researchers, it also raises concerns around privacy, surveillance, ethical boundaries, and algorithmic bias. This article develops a conceptual framework integrating DTD with organizational behavior theories and provides practical implications for strategic decision-making. Recommendations for responsible governance and ethical safeguards are also proposed.