By Michael Kennell
In many business sectors, top-performing companies often treat their employees better and offer more enticing compensation packages than their competitors. But when it comes to salary and bonuses in self-storage, pay is all over the board! If you’re an independent owner or small regional player, you may give your staff more responsibility and empowerment than the big-box, national companies. In a lot of ways, that’s a big advantage; but are you doing enough to attract and retain the most talented employees available?
According to a recent survey, the five most important work-related issues for employees are enjoyment of the work, finding work/life balance, pay satisfaction, a correlation between pay and performance, and whether a company is adequately staffed. Your pay plan should touch all five of these areas. Paying a strong hourly wage isn’t enough. To retain talent, you need to make your employees “bullet proof” when competitors come hunting for new staff.
For example, what’s your plan to increase the wage of a team member as his learning and productivity improve? Do you offer bonuses, and how are they unlocked? Consider creating an incentive plan that’s tied to goals—ones employees can achieve and exceed. Also, think about what you can do to keep things fun and give your business a spark of energy. Here are some ideas to keep competitive in staff compensation.
It’s good to start with a range. You may want to pay above the “going rate” or minimum wage, but you don’t want to overpay. Base your starting wage on a combination of what you’re willing to pay, what the applicant has earned in the past, and what will get the candidate to sign with you. This doesn’t always jive with how the “big boys” do things, but as a smaller operator, it gives you a decisive advantage. Pay different people differently.
It’s also effective to show candidates a pay “road map.” For example, if you start someone at $12 an hour, offer an ongoing training plan with different achievement levels. A new employee would start at Level 1, but after he’s completed his training, he would move to Level 2. Once he effectively grasps the basics of running the property, he would move to Level 3, and so on.
Assign each level with a pay increase, or tie in eligibility for a bonus. For example, you might tell the employee, “We’ll start you at $12 per hour and put you through three weeks of training. At the end of the training period, you will have reached Level 2 and be eligible for a bonus. Once you reach Level 3, we’ll bump your hourly pay to $13.”
A pay road map should also include a formal feedback plan that ties into compensation. Feedback is the “breakfast of champions” for employees. Maintaining a formal calendar that details when employees will receive candid, balanced reviews with the potential for compensation adjustments adds a layer of accountability to the work environment and rewards your top performers.
Incentive Plans and Bonuses
Your staff incentive plan should be monthly. Think of it as a TEAM program:
- Incentives should be timely.
- They should be structured to allow managers to exceed goals.
- Incentives should be attainable.
- They should also be measurable.
Common pitfalls are making incentive plans too easy to achieve, or failing to explain how they work or why they’re in place. You want the plan to be be challenging, but also simple to follow and within reach of the levers your employees pull daily. This will result in positive business-performance metrics.
The metrics managers impact at a self-storage facility include rentals, merchandise sales, occupancy, delinquency and bad debt, so build your program to focus on these areas. For example, let’s say your facility had four move-ins last month. You might set the move-in goal for the current month to five. As an incentive, try a “cash pool” approach.
For every move-in up to five, you’ll put $2.50 into the pool. Once the goal is hit, the bonus could jump to $5 per move-in. If the team manages to get seven move-ins, you could bump the bonus to $7.50, $10 or whatever you believe is appropriate. The benefit to scaling the incentive is it encourages a “pour it on” mentality from employees when they’re having a good month. At the end of the month, divide the pool among the staff. Just remember to include a disclaimer in any incentive plan stipulating that a bonus can be invalidated for unsatisfactory behavior or performance.
You can also build goals and incentives around controllable repairs and maintenance, though it’s a bit trickier. One way is to look at your budget for these items and then motivate staff to reduce recurring costs for landscaping, pest control, etc. Other goals could be structured around renegotiating prices with existing vendors, hiring new suppliers and so on. You can also incentivize staff to perform some maintenance tasks themselves, such as minor latch or door repairs, painting and other routine duties.
Remember, incentives should be the coal feeding the engine that propels a business forward. Self-storage is a game of inches, and those inches add up. Losing just one customer or failing to convert one lead, compounded over a year, will cost you in occupancy and revenue. A good plan will include levels your managers can hit and provide incentive to reach stretch goals. It should also give you the flexibility to add to or subtract from the plan as you see fit.
Culture of Enthusiasm
Finally, make your framework for goals and incentives fun. For example, you could create a contest to increase online reviews or promote a holiday sale. Consider offering a gift card, or bonus dollars that can be paid on an employee’s next check.
Building a formal goal and incentive system helps create excitement within your business. It gets staff focused on operational goals and personal improvement, and allows everyone to share in the success of the business.
Michael Kennell is owner and president of Storage Management Pros LLC, a self-storage consulting firm, and American Value Self Storage in Port Charlotte, Fla. He has 16 years of industry experience as an owner, regional vice president and district manager for several national and regional self-storage companies. To reach him, e-mail [email protected]; visit www.americanvalueselfstorage.com.