WorldatWork’s Workspan Daily published a piece this month with a deceptively simple premise: the annual incentive plan is named for a job it mostly doesn’t do (WorldatWork, “What Is Your Annual Incentive Plan Trying to Accomplish?”). Hold a typical annual bonus up to the standard of a real incentive — a close, legible deal where a specific action produces a specific reward and you can feel the link between them — and it falls short. A 10% target on a salary, earned across twelve months, then paid two or three months later through a funding modifier the employee can’t personally move and a rating distribution they don’t control, isn’t a deal. It’s a reasonable expectation with variance attached. And, the piece argues, that’s fine — because the plan is quietly doing other valuable work: making performance differences legible, signaling what the organization cares about, aligning people around a shared number, holding people through the first quarter, and buying competitiveness on a variable cost. So name that real job, design for it, and stop grading the plan on a behavior-change standard it was never built to meet.

The first half of that is one of the most useful things anyone has written about bonus plans this year, and we’d tell every Total Rewards leader to steal it. The second half is where we part ways.

Here’s what we think this means for HR and Total Rewards leaders designing variable comp programs. Naming what your plan actually does is exactly the right first move — most plans are graded against the wrong test, and the honesty is overdue. But “so accept that it can’t be an incentive” is a conclusion about your current design, not a law of nature. The reasons the piece gives for why the typical plan doesn’t change behavior — the funding modifier nobody can move, the enterprise metric no individual touches, the rating employees can’t see coming — aren’t fixed features of annual bonuses. They’re design choices. And they’re the exact choices worth unwinding. You don’t have to pick between an honest differentiation instrument and a real incentive. A well-designed plan is both.

1. Run the inventory first. We agree completely — this is the right place to start. The single most clarifying exercise a comp team can do is write down what the annual plan is actually accomplishing, not what the plan document claims. If the honest answer is “it differentiates and it retains,” that’s a legitimate answer, and pretending otherwise is where design energy goes to die. So do this. Just don’t mistake the diagnosis for the cure. Naming the job tells you the plan isn’t a behavior-changer today. It doesn’t tell you the plan can’t be one.

2. “It can’t change behavior” is usually a verdict on the design, not on annual bonuses. In our experience, the plans that fail to move behavior almost always share three traits — and they’re the same three the article names in passing. The payout runs through a funding modifier employees can’t influence. It hangs on a single enterprise metric no one person moves. And it resolves through a rating the employee doesn’t control and can’t predict. None of those is inherent to a twelve-month timeline. Each is a knob you can turn. When people say an annual plan “just can’t” be an incentive, what’s usually true is that this annual plan wasn’t designed to be one.

3. Line of sight is engineered, not inherited. The piece offers a sharp closing move: where a genuine line of sight already exists, carve those people out and give them a true incentive — measure less, pay more often. Right instinct, too narrow. It treats line of sight as a rare natural resource that a lucky few possess and everyone else lacks. In our experience, line of sight is manufactured. Pick a metric the role can actually influence, weight it heavily enough to matter, and tell the employee in advance how it converts to dollars. That’s available to far more of the workforce than most plans assume. The carve-out shouldn’t be a small VIP section of the org chart. It should be a design principle you extend as far as the metrics will honestly reach.

4. Differentiation and incentive aren’t a trade-off — transparency is what collapses them into one move. The article frames “being seen” and “changing behavior” as separate jobs a plan does. They only look separate when the plan is opaque. When an employee can see what they were measured on, how they scored, and why the payout landed where it did, the same plan differentiates and points forward. The recognition moment the piece rightly prizes — the once-a-year acknowledgment that your contribution was different from your colleague’s — gets far more powerful when the employee also understands what to do to earn it again. Opacity is the thing that splits one plan into “recognition over here, incentive over there.” Close the visibility gap and it’s a single instrument.

5. Complexity is the symptom. Unclear purpose is half the disease; missing line of sight is the other half. The piece is right that goal confusion shows up as complexity — five metrics, two modifiers, and a payout curve nobody can explain in a hallway. We’d add a second source. Complexity also piles up when a plan tries to manufacture the feeling of an incentive without giving anyone real line of sight. You bolt on metrics to look rigorous precisely because no single metric is one the employee can move. Fix the line of sight and a lot of that complexity loses its reason to exist. Fewer measures, better chosen, paid against a target people understood going in.

6. Shorten the distance between the work and the reward wherever you can. The article’s aside about paying the line-of-sight population more often is worth generalizing. The lag between action and payout is one of the biggest reasons an annual plan feels like an expectation instead of a deal. You can’t always compress twelve months into a quarter — but you can tell people where they stand more often than most plans do. Even on an unchanged annual cycle, a mid-year read that shows employees their trajectory turns a black box into a scoreboard, and a scoreboard is something people play toward.

The piece ends by telling you to design for what your plan is. We’d end by telling you to design for what it could be. Yes — run the inventory, name the real job, and stop pretending a plan built without line of sight will suddenly start changing behavior on its own. But don’t file “it’s not really an incentive” under settled fact. For most plans, that sentence isn’t a law of physics. It’s a description of four choices — the modifier, the enterprise-only metric, the invisible rating, and the twelve-month lag — every one of which can be remade. Remake them, and the plan keeps doing the differentiation and retention work it already does well. It just finally starts doing the one job it’s named for, too.

If you’re looking for tools to simplify how you manage and administer bonuses — so the plan you’ve named honestly is also one your employees can actually see and move — let’s talk.