A year ago this week, the team at Tom Miller’s VisionLink Advisory Group published an essay arguing that companies facing economic uncertainty should stop reacting to their compensation programs and start managing them the way a good investor manages a portfolio. The piece — “Is Incentive Compensation Viable in an Uncertain Economy? (Part Two)” — proposes a specific move: don’t freeze bonuses, don’t cut salaries, and don’t default to across-the-board austerity. Instead, rebalance the compensation mix. Shift some weight from cash and annual bonus into longer-horizon incentives, reduce immediate cash exposure without reducing total perceived compensation, and let a nine-component compensation philosophy statement serve as the governing document behind the rebalance.
It’s a disciplined argument, and it’s the right instinct. Twelve months later, with a new round of economic uncertainty sitting on HR leaders’ desks, it’s worth taking seriously.
Here’s what we’d add, from the seat of the HR and Total Rewards leader who actually has to run the redesign.
The rebalance is a mix decision. It is not a plan.
When you rebalance a compensation portfolio, you are making a decision about weights. Less here, more there. That is a legitimate and sometimes necessary move. But the decision an employee responds to every day is not a decision about weights. It’s a decision about what their bonus is measured on, how much of it they can actually affect, and whether they can describe the plan without pulling up a PDF.
Rebalancing leaves that decision untouched. You can shift twenty percent of the annual bonus pool into a three-year incentive and the employee will still be looking at the same metric, on the same timeline, with the same level of clarity about how their own work connects to it. If that metric was too vague to move behavior before the rebalance, it will still be too vague after.
In our experience, most bonus programs that feel brittle are not brittle because the mix is wrong. They are brittle because the employee cannot draw a straight line from what they do on Tuesday to what they get paid in March. The rebalance doesn’t fix that. The plan design does.
Transparency is the prerequisite, not the afterthought.
A rebalanced compensation portfolio has to be communicated, and here is where we consistently see the instinct break down in practice. A company decides to reduce cash exposure and increase long-term incentives. Leadership understands the reasoning. Finance understands the reasoning. The board understands the reasoning. The employee sees a smaller bonus line and reads it as a cut.
This is not a communication failure. It’s a design failure that shows up at the moment of communication. If the compensation philosophy statement lives in a binder and the new mix lives in a spreadsheet only the comp team has opened, the workforce has no way to interpret what just happened except as austerity.
Transparency cannot be bolted on at the end of a rebalance. It has to be built into the mechanism. The employee needs to be able to see — in the same place they see their pay — what the new mix is, what it’s measured on, what they have already earned against each piece, and what the philosophy behind the shift actually is. Our Total Rewards Statements product exists precisely because this is the step where most rebalances fail. The weights moved. The explanation didn’t.
Three questions to run before you rebalance.
If the rebalance is the right instinct and the prerequisites are transparency and plan clarity, here are three questions we’d put on the table before the first spreadsheet gets built.
1. Can an employee describe the new mix in one sentence? Not the reasoning behind it. Not the philosophy statement. Just the mix itself. “Forty percent base, thirty percent annual bonus, thirty percent long-term incentive, measured on these three things.” If the answer requires a deck or a one-on-one, the mix is too complicated to do the work you need it to do. Simplify before you rebalance, not after.
2. Does the new mix still let the employee affect the outcome on a timeline they can feel? This is the one that gets glossed over in every rebalance conversation we see. Long-term incentives are powerful, but they are powerful at a horizon most non-executive employees cannot emotionally hold onto. A frontline manager whose variable pay gets pushed from a one-year bonus to a three-year plan may have the same total perceived compensation on paper and a meaningfully weaker connection to performance in reality. The rebalance works for the CFO. It may not work for the shift supervisor. Design with both in mind.
3. Can your current system administer the new mix without manual workarounds? This is the unglamorous question and it’s the one that kills more rebalances than the first two combined. A new compensation mix that requires a monthly reconciliation in a spreadsheet, a new set of off-cycle calculations, and a handful of exceptions emailed to payroll is not a rebalance. It’s a debt. A year in, the plan will drift back toward whatever the administration system can actually handle, which is usually the plan you were trying to rebalance away from.
What rebalancing can and can’t do if long-term incentives aren’t on the table.
A note for the reader who is not sitting on an equity plan. The VisionLink framing leans on shifting weight into long-term incentives as the pressure-release valve, and that’s a large-company move. If you are running compensation for a mid-market business, a non-profit, or a private company without an equity program, you do not have that lever.
The logic still applies. You still have a portfolio. You just have to rebalance within a narrower range — say, from a formulaic annual bonus toward a discretionary pool with tighter criteria, or from a single cash bonus toward a two-part bonus with a retention component, or from a bonus funded by a single metric toward one funded by a small basket of metrics that are harder to game. The move is smaller. The discipline is the same.
The two questions that survive the translation are the ones we keep coming back to. Can the employee see the mix? Can they affect the outcome? If the answer to either is no, you haven’t rebalanced. You’ve reshuffled.
The instrument behind the philosophy
VisionLink is right that the rebalance is the right instinct, and right that a compensation philosophy statement is the governing document behind it. A philosophy statement tells you what the plan is supposed to do. It does not, by itself, do it.
The instrument that turns the philosophy into a bonus program your people can actually read is the platform HR uses to administer the new mix. That platform decides whether the rebalance stays a rebalance or quietly drifts back into whatever the old system could handle. It decides whether the new weights show up in the employee’s view of their own compensation, or only in the comp team’s ledger. It decides whether the three questions above can be answered in the affirmative a year from now, when the next economic shock arrives and someone proposes the next rebalance.
If you’re rethinking your bonus mix this year and looking for tools to simplify how you design, administer, and communicate the new plan, our Incentive Compensation Platform is built for exactly this job. The rebalance is the right instinct. We build the instrument that makes it work.