This sounds terrible! I really hope these kinds of environments disappear and all those supervisors of that kind will learn that headphones are the opposite of a distraction.
The problem is that many non-tech corporations want the benefits of better technology, especially in areas like web/cloud services, but have little idea on how to achieve it. They tend to stick with what they know, usually something like a blend of autocracy and seagull management. They'll tend to treat outside consultants like gods and their tech employees like garbage.
That, unfortunately, is what it's like for many of us who work in "old school" corporations. Sometimes you can get little pockets where people understand but, sooner or later, a seagull is going to fly in and poop all over everything.
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We strive for transparency and don't collect excess data.