Firing employees for simulated keyboard activity highlights the dangers of perverse incentives

NEW: Listen to a podcast version of this article! ??

A few weeks ago, a story made the rounds about Wells Fargo firing more than a dozen employees whom the company accused of pretending to work by faking computer keyboard activity. Bloomberg broke the story after reading some obscure Wells Fargo regulatory disclosures, though not many details are publicly known. (One commenter on The Register’s site wrote that in response to requests for further information, Wells Fargo replied with jkljkljkljkljkljkljkljkljkljkljkljkljkl.)

Wells Fargo said the employees were, “discharged after review of allegations involving simulation of keyboard activity creating the impression of active work," and that “Wells Fargo holds employees to the highest standards and does not tolerate unethical behavior.” (The internet is hard eye-rolling that last part after years of scandals from the company, but that’s not the point of my article today.)

Instead, I want to use this story to highlight a complexity that’s rapidly emerging in the workplace: What are employees actually paid for in the era of AI and automation, and how do those compensation structures go haywire?

The logical inconsistency of the public story

Because many details of this Wells Fargo story are not known, the internet has been speculating wildly about what really happened. For example, many random internet commenters wrote that this shows why managers fear remote work, and why companies are trying to get employees back in the office. But none of the stories about this Wells Fargo incident mention whether these employees were onsite or remote.

There's a logical inconsistency around why these employees were dismissed when thinking about it based only on the high-level information available. And while digging deeper isn't possible since we don't have all the details, it's still a useful thought exercise which provides the perfect backdrop to discuss the complicated issues that are starting to arise in workplaces all over the world.

So, let's step through some hypothetical scenarios about what might have happened and why these employees were fired.

Scenario 1: Employees were not completing their work

In this scenario, I imagine that instead of doing their actual work, these employees used a keyboard simulator to make it seem like they were working. But since the keyboard simulator was not a real human, the employees didn’t get their work done.

It's possible that some type of activity monitoring system was fooled, causing the employees’ “attendance” or “time spent at the computer” to look good. But because they weren’t finishing their work, they still got fired.

In this scenario, the cause of dismissal was non-performance, not keyboard simulation. (In fact if this was the actual scenario, then why would Wells Fargo even mention the keyboard simulation?) So my guess is this was not the real scenario.

Scenario 2: Employees were successfully completing their work

In this scenario, I imagine that the employees were able to get their work done, so they were not directly fired for performance-related issues. This begs the question, “If the employees were able to get their work done, then why were they even using the keyboard simulator?”

I could think of a couple of reasons for using the keyboard simulator:

• Scenario 2A: The keyboard simulation was used to make it look like they were working slower/longer than they were.
• Scenario 2B: The keyboard simulation was used to successfully complete their work.
• Scenario 2C: The keyboard simulation didn't impact their work, but was a security policy violation.

Scenario 2A: The keyboard simulation was used for sandbagging

In this scenario, the employees were successfully getting their work done, but some other workplace pressure led them to simulate additional keyboard activity. I can imagine a few plausible reasons for this. Maybe there was a culture of overworking, and even though these employees were able to complete the work tasks asked of them, they felt they needed to appear to be working longer than they were. Maybe the keyboard simulators prevented their devices from sleeping and kept their status in Teams as active even though they'd left for the day.

Or, instead of faking the keyboard activity to work "extra" hours, maybe they used it to fake daytime working hours? Maybe these employees were able to do their actual jobs in half the time as others, and rather than taking on more work, or working slower so as not to be assigned more work, they just worked at their normal speed and then implemented the keyboard simulator to make it appear they were still working when in reality they were done.

If either of these cases were true, then the dismissals weren't really about the keyboard simulation. If Wells Fargo didn’t like that the employees misrepresented their working hours, then the reason they were fired was for misrepresenting working hours, not for faking keyboard activity.

Scenario 2B: The keyboard simulation was used to successfully complete their work

We also have to consider the scenario that the keyboard simulation was more than just a random clicker to keep their screens awake. What if, instead, these employees actually automated enough to get real work done? For example, maybe they had very simple and repetitive tasks which they were able to automate via something like AutoIt, Open Interpreter, or any one of the dozens of AI-powered RPA (Robotic Process Automation) tools which are now marketed directly towards employees.

I could see a scenario where they were technically fired for lying to their employer about how much time they spent working, but wow, if these employees were able to automate a large chunk of their own job, I would hope the company would figure out a way to offer them the opportunity to help automate more tasks for other employees. So I wouldn't think this was the real reason.

Scenario 2C: Security policy violation

Maybe the issue was as simple as Wells Fargo didn't like that the employees installed unauthorized software, and they were fired for that. This also seems implausible, since if the company was so serious about people not installing unauthorized apps then there are ways they can prevent that. And besides, if this is what the employees were fired for, the reason would be "security policy violation", not "faking keyboard activity."

Broader implications for the future of work

While it's fun to speculate about the details of what really happened at Wells Fargo, you can see that you don't need to know the details to raise a bunch of really interesting questions that companies are going to need to address pretty soon. Each of the plausible scenario & response pairs outlined above is some version of this:

What employees thought they were being paid for, and what companies thought they were paying employees for, were not aligned.

This is something that has always been fuzzy in knowledge worker / office jobs. Most of us think we’re paid for “40 hours of work per work” or some similar thing. But what is “work?” Sitting at your desk for 40 hours a week? “Doing emails” for 40 hours a week? Anyone can find mindless busywork to do, but most jobs measure some type of quantitative work output produced by an employee.

The problem is the way that output is measured is becoming easier to create with AI.

Imagine that my job is to write three marketing briefs per work, which might take 24 hours total. (The other 16 hours a week are general office overhead—team meetings, forced fun, etc.) But if I can use ChatGPT to cut the time to write a marketing brief from 8 hours to 4 hours, now I have an “extra” 12 hours per week.

So what should I do with that?

What would you do with that?

I mean, before ChatGPT (e.g. last week), I was reliably paid my salary to crank out three marketing briefs per week. So if I can use ChatGPT’s help to now generate 6 per week, shouldn’t I get something like double the pay?

But what if my company doesn’t see it that way, and they want to pay me the same amount now that I'm creating 6 briefs per week instead of 3? Do I just go back to doing 3, and find some other way to fill those extra 12 hours per week? What if the company tracks how much time I spend on my computer? Should I work artificially slower? Should I download keyboard simulation utility that keeps my Teams online status green while I’m playing golf?

And now imagine that every employee in the company is struggling with their own version of this? Suddenly how a company responds to this is a really big deal. Ignore it and you'll have chaos as your traditional metrics and incentive structure—whatever it is—becomes a perverse incentive structure. Punish it and your best employees will leave. The only viable option is to embrace it.

Sidebar: How a company embraces employee automation is largely driven by the company's current business constraints. e.g. If every employee doubling their output means the company can double its revenue, then the company will embrace it. But if the company cannot grow or otherwise benefit from doubling employee output (e.g. maybe a fixed total market or other gating externalities), then the result of doubling employee output will be cutting 50% of the employees. In those cases, the employees might realize this first and revolt or not embrace technology. Which is fine, as long as the company doesn't have a competitor who does...

The danger of perverse incentives

There are so many issues to consider here—certainly more than we can cover in a single article. But what we've seen from the hypothetical Wells Fargo situation is that in a workplace with increased AI and automation, the traditional measures of productivity and work are breaking down.

Traditional incentive structures honed over decades become perverse incentives almost overnight once AI is added to the mix. When existing metrics (e.g. number of marketing guides written) no longer align to the relative level of effort needed to create them, a business can quickly find itself with incentives that incentivize the wrong thing. We saw this in all the potential Wells Fargo scenarios: focusing on keyboard activity instead of actual work output, encouraging employees to appear busy rather than being actually productive, and/or discouraging efficiency and innovation in work processes.

The danger of perverse incentives is not new. Everyone's heard anecdotes of IT admins who replaced their own jobs with shell scripts and now just watch Netflix all day. But AI is an accelerant to all this. The explosion of AI-powered tools means that even “regular” non-technical employees can start automating parts of their jobs, and the flexibility and “intelligence” in these tools allow them to be used in scenarios that were not possible to automate just a few years ago. And of course, the constant technological progress in the AI space means the tools will continue to grow in power and handle ever more complex tasks.

Conclusion

The Wells Fargo story highlights a growing disconnect with how knowledge work is valued today. Even if AI wasn’t involved in this actual story, its emergence and ease of use means stories like this will become more popular. The traditional ways companies track and incent employees are quickly becoming outdated.

Companies need to stay in front of this. It’s important to reevaluate what employees are truly measured for and to update existing metrics so they measure meaningful output rather than activity. Companies also need to figure out how they can encourage innovation and efficiency, rather than punishing it or forcing employees to hide it or use it for sandbagging.

The rapid pace of AI progress means that companies need to continuously adapt and update their thinking and approaches. Aligning the company’s and employees’ goals will be more important than ever. The companies who figure this out will become supercharged by AI. Those who don’t will be killed by it.