Recurring Discretion Is a Contradiction
The spark
I was listening to Gary Vaynerchuk on The GaryVee Audio Experience, an October 2025 episode about wasting time on people who will never buy from you.
He made a comment about bonus structures that stuck with me. His framing was intentionally sharp, but the useful part was underneath the rhetoric: employees often factor the maximum possible bonus into their lives. Once they do, the bonus is no longer experienced as upside. It becomes expected compensation.
That is a quietly dangerous design problem.
The mechanism
A discretionary bonus is supposed to create generosity, upside, and shared success. But if it repeats often enough, especially at similar levels, it changes category in practice. It moves from extra to baseline.
That shift is not irrational. People budget around patterns. If a company pays a mid-year or year-end bonus every year, the pattern becomes part of how people plan. Car payments, Christmas spending, vacations, savings goals, debt payoff, household budgets, all of it starts to absorb the expected number.
Then the next time the bonus is smaller, the employee does not experience it as less extra. They experience it as loss.
The employer is still operating in the language of discretion. The employee is operating from a different baseline. Both sides can be reasonable inside their own frame and still end up frustrated with each other.
The contradiction
That is the trap in recurring discretionary bonuses.
Recurring says, "You can expect this."
Discretionary says, "You cannot count on this."
Those two messages do not fit together for long. The more consistently the company pays it, the less believable the discretion becomes. The more the company emphasizes discretion, the less stable the employee's planning feels.
The structure carries the emotional expectation of salary, the variability of profit sharing, and the disappointment risk of a pay cut.
That does not make bonuses bad. It means the category has to be honest.
The design question
I think there are only a few clean categories. Salary is stable, promised, and budgetable. A formula bonus is measurable upside tied to company or individual performance. Profit sharing has an explicit funding pool and clear business logic. A spot reward is rare, genuinely discretionary recognition that is not repeated predictably enough to become baseline.
The dangerous version is the hybrid: a recurring discretionary bonus. It asks employees to treat the money as uncertain while training them, year after year, to expect it.
Maybe the better question is not whether to pay bonuses. It is whether the bonus structure tells the truth about itself.
What is guaranteed? What is variable? What has to happen for the variable piece to exist? If the company cannot say that plainly, the structure is not a compensation strategy. It is an annual expectation problem waiting for a hard year.
What's open
I am still not sure where the line is.
If a bonus is formula-based, it can become too mechanical and lose the feeling of generosity.
If it is fully discretionary, it may feel arbitrary.
If it is folded into salary, the company gives up flexibility and employees may forget the original upside ever existed.
But the recurring discretionary middle may be the least honest version of all. It gives the company the comfort of flexibility and gives the employee the psychological shape of a promise.
That is the contradiction.