Why company keeps a person under observation?

Negative: Cause they want to scrutinise the person. Might have an evil motive behind it like targeted specifically for the person. Want a reason to screw over the dude.

Positive: A great opportunity is coming and the organisation wants to ensure you will live up to the role. Ensure you are worth the huge position. Also to see if you will get a great bonus.

The simple reason is that they don't need that employee anymore and are just trying to find a little mistake from his/her end so that they can easily fire him/her