Since hieroglyphics aren’t ideograms (occasionally they’re logograms where they represent what they look like), the object overlaying the phallus may not represent anything being done to or with the phallus and is is just there for phonetic value. I think the addition represents, by itself, a folded cloth, but it shows up combined with other symbols (e.g. a horned asp) to make up third hieroglyphics. According to something I saw, the hieroglyphic may represent an erection (or the process of becoming erect - it’s unclear to me).
