This is one more example of terrible management. Mistrust, too much control and micromanagement are totalitarian ways of push management that do not work with thinking and creative working force. Unless what you do is already known pattern coding and repetitive work, which does not include the left or right side of the brain, the above approach may work. Maybe in movies, you can put a gun to a hacker's head and say you have 1 minute to crack this, but in reality, that does not work. Solving problems takes time, and art-wise, to get inspiration, it takes even more time. "Slacking" time is necessary to produce a good solution...

So, you give a difficult problem to your employee, he gets stressed it is difficult, but now he needs to pretend to be busy to satisfy boss, he is even more stressed as he does not have time to think about solving the problem, but he needs to think about being busy... I can see people spiraling into mental health problems.

I just remembered, at the beginning of my career, one of my coworkers got a request from a client: we need something, we need it urgently, so make it and make it interesting by tomorrow noon.