Employee communication with phantom stocks

Phantom stocks can provide a useful vehicle for communication, by helping employees understand the connection between what they do and the value of their company.

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However, phantom stocks can be equally useful for getting feedback from employees. That can be communication from employees, management 'reading' the response of employees, or both.

First, though, a brief recap of phantom stocks. Think of them as a device for rewarding employees and managers for the growth of a company. Unlike real stocks, which trade on stock markets, the value of phantom stocks is based on pre-set criteria developed by management. And, their value normally goes up as the company's value increases. Think of them as a sophisticated bonus system.

How can we use phantom stocks as a tool for feedback? Let's consider some possibilities.

First, before implementing a phantom stock plan, you would announce it to employees and invite their questions and comments. And in their responses you would look for an understanding of how companies create value for shareholders.

Do they know your company exists to create a return for the people who own it, whether through shares or proprietorship, and that everything else is secondary, including the creation of jobs?

Second, and this extends our first point, do employees know how their individual jobs add or create value? I would confidently wager that in many organizations they do not.

And why not take this a step further, by inviting employees, whether directly or through representatives, to help set the criteria for valuation of the phantom shares? This should help you find out how employees think value can be added, and they probably have some good ideas.

Third, once a plan goes into operation, you can look at the effect on staff turnover. Obviously, if turnover remains at the same level or increases, employees don't see the value, or the prospective value, in staying with your company. That, too, should send an important message to you.

Fourth, you might ask: Does the phantom stock plan have equal effects in all locations? If yours is a large, decentralized organization you'll no doubt see varying responses to a phantom stock plan. Those reactions will highlight where you need to focus your communication efforts.

Fifth, and after implementation, has it affected the priorities and focus among managers and employees? Is there a new emphasis on doing things that create value and doing those things the right way? Or, do employees continue to do what they've done in the past, regardless of the effect on company value?

Communication can be considered the lubricant that makes modern organizations work smoothly. Phantom stocks provide a number of interesting communication opportunities, both to and from employees.

And, consistently getting good information from employees will, in itself, help you add value to your company or organization.

Summary: Phantom stocks can communicate management's need to create value, and they can provide feedback that helps us understand employee perspectives on creating value.

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Next, read 10 Reasons to Market with Postcards, go to the workplace communication page, or visit our home page Communication Skills .

Contact information

Robert F. Abbott
Email: wordengines@gmail.com or wordengines@gmail.com

Copyright Robert F. Abbott 2009