Norm Brodsky on the Right Way to Reward Top Empl

When you have a stand-out employee, is increasing pay and benefits enough?

Dear Norm,

I own food-tour companies in 11 cities. Business has been good, and we've been growing. I have one employee in particular who has played a key role in our success. She's been with us for a year and a half and has worked tirelessly. I'm planning to increase her pay and benefits. I'm also thinking of giving her some stock to show her how much we appreciate her contributions. Any thoughts?

—Jeff Swedarsky, CEO, Food Tour Corporation, Alexandria, Virginia

A year and a half may seem like a long time when you're just starting out in business, but I told Jeff Swedarsky he would someday look back on it as the blink of an eye. Many changes lie ahead for him, his company, and the employee in question, and he should bear that in mind as he thinks about what incentives to offer her. If he wants to give her stock, it probably should be phantom stock—which pays bonuses based on stock appreciation but is not an actual ownership stake. But I warned him that stock might not have the same significance for her as for him.

There might be something else she would value more—such as additional time off or cash bonuses. I suggested he spend some time with her away from the business and get a better sense of who she is and where she wants to go in life. He'll then be in a much better position to offer her an incentive that will really make a difference.