Does Facility Size Matter?
|Copyright 2014 by Virgo Publishing.|
|By: Pam Alton|
|Posted on: 02/01/1998|
By Pam Alton
When an owner or a management company calls me looking for a new manager for their facility, one of the first things I am asked is, "How much should I pay the manager?" First, let me stress that there is no right or wrong answer when paying wages. Managers are like most commodities: You will pay the going rate that the market will bear. Some areas of the country may pay higher than others; likewise, larger cities or facilities in questionable areas may have to pay more than other facilities.
Does Facility Size Matter?
Size doesn't seem to come into play when talking about wages, meaning a 400-unit facility could be paying its manager more than a 1,300-unit facility that has extra maintenance or office staff. There does not seem to be any magic formula for fighting base wages, either. If that was the case and a facility that brings in $40,000 per month pays its management team $2,200 per month, then a facility that brings in $120,000 per month would pay its management team $6,600 per month. Of course, we know that this is not the case.
At a small site--less than 300 units--the manager could be making a minimal amount due to the fact that a smaller site is easier to maintain, the facility could be full, the office is only open a limited number of hours per week, etc. Obviously, a larger site also has a higher mortgage, tax base, insurance costs and operating expenses. That is why it is extremely important to design a budget with your manager's input, so they can see the expenses the owner is expected to pay on a monthly basis. If managers are exclusively responsible for bringing money into the facility--$40,000, $75,000 or $100,000 per month--and have no knowledge of the operator's expenses, they may be under the impression that the owner is raking in the dollars but giving management only a scant salary, even though they are doing all the work.
Living On-Site vs. Off-Site
Whether or not a manager lives on-site or off-site will affect wages. Generally, a manager's salary will be less when housing and utilities are included. If the manager lives off-site, they must offset their own costs of housing, utilities, commuting, etc., and generally will receive a higher salary. Therefore, you should be prepared to pay more in wages, and possibly interest or insurance rates, with off-site management. I hear a lot of talk in the industry about management moving off-site, however, after talking with numerous builders in the industry, I've found that most are still building apartments at the new sites.
Other factors to consider in the debate over on-site vs. off-site management include the generalization that lenders seem more comfortable with on-site management, and that could determine the interest rate or loan amount you will receive when building or buying a facility. Off-site management turnover could be greater due to the fact that there seems to be less pride of ownership and less of a commitment. If a better job offer comes along, the off-site management has no obligation to move; instead, he can just quit and start a new job on Monday morning.
Single vs. Team
Whether you hire a team of managers or a single person will also determine monthly payroll expenses. A single manager might receive a little more--on a per-person basis--than a team of two people. For instance, a single residing at the facility might make $1,600 per month, whereas a couple at the same site might earn $2,600. Obviously, some singles make less than this figure and some are making as much as the team. As we discussed earlier, the location of the facility and cost-of-living needs will vary from site to site and regions of the country.
Salary vs. Hourly Rate
Some of the larger operators pay an hourly rate of approximately $5 to $7 or more per hour, sometimes as much as $12 per hour, for off-site managers. One option may be to employ a team where one person works full-time, and the other member of the team is paid for 15 to 20 hours a week. Most teams will work together, and just because they are "not on the clock," it doesn't mean they don't go out to show or sweep out a vacant unit, run errands or go to the post office.
Other owners will pay their managers a salary, based on a 50-hour work week, and expect that if the manager has to stay late because an out-of-state tenant is moving in, for example, they will stay late and help that tenant. On the other hand, the owner also knows that the manager is not slaving away 50 hours a week. If they want to start dinner early, toss in a load of laundry or run to school to pick up the kids, then the manager has the freedom to do that.
Whichever way you decide to pay your manager, make sure they are making at least minimum wage, especially if they are residing at the property. You certainly do not want to use the cost of housing to offset any minimum-wage deficiency. Of course, the final decision is up to you; however, the old saying "better safe than sorry" is never more true than in this circumstance.
National Wage Averages
I recently received an annual publication that gave some national wage averages for managers. It said that approximately 42 percent of the managers that lived on-site received an annual base wage of $10,000 to $19,000, which breaks down to between $833.34 and $1,583.34 per month. These numbers are in direct conflict with my personal experience in manager placement. Out of 20 job openings that I may review at any given time, maybe one or two will pay under $2,000 per month, and a few will pay more than $3,000 per month.
A few years ago, the salaries in the Pacific Northwest and the South were the lowest in the country. Fortunately, over the past several years, the gap in wages nationwide has narrowed. The average salary I see being offered for new hires is $1,200 to $3,400 a month, depending upon facility location, full- or part-time employment, on-site vs. off-site housing and facility size. In my experience, the average wage for a team seems to fall into the $2,000 to $2,800 per month range. For a single manager, the range is $600 to $2,500, with an average of $950 to $1,800.
Sometimes owners prefer to avoid naming a salary when hunting for a manager, leaving it "open to negotiation, depending upon experience and past track record." This allows owners to test the waters, so to speak, and not limit them to the quality of management that a pay range might dictate.
No matter what wage you decide upon, selecting the proper management for you and your site--and giving them training, motivation and tools to complete their job duties--is the most important task for the owner. If you pay your managers well, treat them as members of your team, train, guide, direct and motivate them, you, your facilty and your management team will create a win-win situation.
Pam Alton is the owner of Mini-Management, the self-storage industry's largest nationwide manager-placement service. Based in Santa Barbara, Calif., Mini-Management also offers policy and procedures manuals, sales and marketing training manuals, facility inspections and audits, consulting services, telephone shopping and training seminars. Ms. Alton has written numerous articles for Inside Self-Storage and is a frequent speaker at the Inside Self-Storage Expos and Trade Fairs. For more information, Ms. Alton may be reached at (800) 646-4648.