A Self-Storage Owner's Guide to Manager Bonuses: Program Types and Considerations

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Per-lease bonuses usually don’t cost the owner anything extra since most facilities charge the tenant an "administrative fee" of $5 to $15 at move-in. He can give a portion of that fee to the manager as a monthly bonus. However, admin fees should be considered part of facility income just like late fees and the sale of retail product. If you do decide to make the per-lease bonus part of your program, it should be based on renting units at full price—no discounts or free-month giveaways.

Facility-Income Bonus

Your facility's annual operating budget should outline monthly projections for income and expenses. Your manager should participate in the creation of this budget, since he knows the market and current rental rates as well as what rate increases should take effect in the year ahead. This way he also knows each month's income goal and can work to achieve it. A bonus based on facility-income goals serves as incentive to do so.

An income-based bonus can be paid monthly, quarterly or annually. It can be based on a percentage of the income over last year's monthly figures, for example 5 percent to 20 percent of the overage from last year, or it can be a fixed dollar amount. Just remember that if the manager is not part of the budget process and the goals are not realistic and obtainable, then all you'll do is the demotivate your manager. 

Ancillary-Sales Bonus

Some owners give the manager a percentage of retail-merchandise sales. A fairly standard percentage would be 10 percent to 20 percent. But again, isn't part of the manager's job to sell these items?

I've seen some managers sit back and not even offer to sell a lock when a new tenant moves in. If they do, they don't even think to ask if the customer also needs boxes, tape or packing materials. They have an attitude like, "Hey, I don't get paid extra to sell that stuff, so why do it?"

A good manager, on the other hand, will do everything he can to rent a unit at full price and sell the customer a lock and other merchandise, regardless of whether he's receiving a bonus to do so. He does it because he takes pride in his job, not because he's receiving a bonus. Having said that, if an owner does offer the manager a percentage of merchandise sales, the manager may sell more, as he's sharing in the profit.

Some owners offer managers a commission on the sale of "property protection," or tenant insurance. The bonus is based on how many tenants sign up for the protection program and can vary based on the program being offered.

Some owners offer managers a commission on truck rentals at the facility. I've seen an average of 10 percent to 20 percent for this bonus. Some managers really hustle truck rental, making almost as much in these commissions as they do in their wage!

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