The Compensation Question: What Should You Offer Self-Storage Staff in Today’s Competitive, Inflationary Environment?

Unlike some industries, self-storage doesn’t have a uniform pay scale for property managers and other staff. Compensation can vary based on many factors including facility location and size, company policy, experience level, work benefits, and more. In addition, the industry is now competing with retailers, hotels, restaurants and other service-oriented businesses for quality employees, which may be impacting companies’ general philosophy on pay. Finally, steep increases in the cost of living are leading to stronger demands from job candidates.

With all of this going on behind the scenes, it can be extremely difficult for a self-storage owner or facility operator to know the right pay and benefits to offer new and existing team members. Let’s explore the latest trends in industry compensation and how to assemble a package that lures the right hires and encourages them to stick around.

Rising Pay Scales

There’s been a great shift in the way people perceive job opportunities. While there continues to be great emphasis on work-life balance and career growth, compensation is playing a bigger, more pivotal role. “Compensation is always at the top of a candidate's list when deciding if they’ll accept a job offer,” says Gabe Howard, senior director of the Total Rewards Division for self-storage real estate trust at Extra Space Storage Inc., which operates 3,500 locations.

Pay is what gets employees in the door, meaning it’s essential to lure a better pool of applicants. “Compensation for our in-store employees is critical to attract the right candidate from the start,” says Roby Pait, vice president of operations at Storage Asset Management, a self-storage management firm that operates 580 facilities. “Maybe not the most important to retain them, but to get them, it’s the most critical piece.”

According to Pait, the emphasis on compensation has only intensified in the wake of COVID-19. Following the pandemic, his company noticed a drop in the number of applications it was receiving. “To stay competitive with other industries and the self-storage industry itself, we had to increase our starting pay,” he says. “Since the pandemic, on average, we have increased [it] for both managers and assistant managers by $2 an hour.”

Industry-wide, the starting hourly rate for self-storage managers has risen by about $3 to $4 over the past 10 years, Pait adds. Competition within the environment has been a key factor.

“Five years ago, 10 years ago, you could hire, honestly, anybody to warm a seat and you would still be OK,” says Rick Beal, co-founder of Atomic Storage Group, which operates 65 self-storage facilities in several states. “But you're in a much more competitive market than we were. You have to have people who are on their game, who can fill in their dead time, who can really help progress your business forward.”

That means paying candidates more from the start. “The difference between an $18-an-hour employee and a $22-an-hour employee is night and day,” Beal says. “Good compensation and paying people well will get you, by far, a better manager than trying to save $2 or $3.”

The Storage Manager, which owns 17 self-storage facilities and provides third-party management for an additional 25 sites, has increased its starting wage 37% from just a couple years ago. It’s now at $18 an hour, says CEO Gary Edmonds, adding that anything beyond that is based on the applicant’s qualifications.

The Impact of Location

Self-storage pay rates are affected by a number of factors, but a big one is geographic location. “Employees in San Francisco are in a very different market than employees in El Paso,” Howard says. Tapping research and data, Extra Space bases its pay ranges for a position by assigning it to a “zone,” which is determined by comparing the cost of labor in that market to the national average.

Pay for property managers at Atomic-managed facilities ranges from $18 to $30 an hour and are largely based on location. “If you're in downtown Seattle, we're not getting anybody to even apply if it's anything under $27 or $28 an hour,” Beal says. “But we do something similar in South Carolina at $18 an hour and we get 100 applicants.”

Experience is another critical factor. “Experienced full-time managers will always receive a higher wage than someone who has never managed a self-storage facility, even though they have experience in similar rental-property management, such as apartments, mobile-home or RV parks, or motel/hotel management,” says Pamela Alton, founder and CEO of Mini-Management Services, which offers management and marketing support for self-storage operators. She attributes the pay hike to industry-specific information seasoned managers may have, like knowledge of lien sales.

Don’t use minimum-wage thresholds as your sole guide, Alton adds. While paying minimum wage is legally sufficient, offering less than a living wage may leave you more vulnerable to competing businesses. “There are still states that pay that minimum wage of $7.25, however, most businesses do pay higher than that, Alton says. “There is a huge difference between the federal national minimum wage of $7.25 an hour and a living wage. I do not know anyone who can live on $7.25 an hour today, do you?”

Alton points to tools like Zip Recruiter that can tell you what the average wage is for a particular area. For instance, in Washington state, the minimum wage is $15.74, with the Seattle area clocking in higher around $18.69. In California, it’s $15.50, but $18.50 in Angeles County.

Salary vs. Hourly

Deciding whether to pay your self-storage facility team an hourly wage or annual salary depends on your company’s needs and resources. Going hourly can make sense if you need part-time staff, plus it helps you save money on benefits that may be required or expected for salaried employees such as health insurance, paid time off (PTO) and retirement plans, points out Abner Gault, director of human resources at Crescendo Self Storage Management, which has 35 locations.

“Additionally, you can maintain a pool of hourly employees to ensure you have the flexibility you need to cover your storage operations,” Gault says. “This is important for the storage businesses that experience busy seasons and slow seasons or that want to be sure they have backup options in case regular employees are unavailable.”

An hourly rate has benefits for workers, too. One is improved work-life balance, Pait says. Another is the option to work overtime, which is paid at time-and-a-half. That said, accounting for overtime is critical, as it can be costly. Operators must follow all applicable employment law and watch overtime use carefully to ensure it isn’t abused.

If you have hourly employees, be sure to track all their time per week, month and year to determine their eligibility for PTO, family and medical leave, and other benefits, which require a time-and-attendance tracking system, Gault notes. At Alton’s company, self-storage managers are paid a salary based on a presumed 45-hour work week, with 40 hours at straight pay and five at time and a half.

A Plan for Raises

Pay increases are an important perk for self-storage employees and, when used effectively, an essential tool for owners, too. There are many ways to handle them. Like lots of operators, Beal offers performance-based raises. “I have a big issue with, ‘You've been there warming a seat and you should get a pay increase,’” he says. In his eyes, not all employees deserve the same compensation.

Any policies related to pay raises need to be well-structured and clearly outlined to incentivize staff, not discourage them. Extra Space uses a performance matrix to guide annual merit increases where top performers see greater increases, Howard says.

In addition to performance-based raises, Edmonds’ company offers a standard cost-of-living increase to every employee. Alton’s company also increased its annual cost-of-living raises to align with high inflation. “This year we gave our site managers 5% instead of 3%, which was the norm in previous years,” she says.

Pait advises considering “equity adjustments,” which are raises given to existing employees to offset big increases in a company’s starting rate. “The last thing you want to do is lose a great manager over a $1 to $2 increase,” he says. “We, as an organization, had to do a lot of equity adjustments for our hourly managers during COVID when we increased our starting to pay to stay competitive.”

How often to offer pay increases is up to the needs and preferences of each self-storage business. “Raises can be based on a 90-day review for new employees, be annual reviews, or based on performance and given at any time,” Alton says. “There is no right or wrong. However, an annual raise should be given.”

The Right Bonus Program

When executed well, a bonus program not only offers employee encouragement and incentive, it can boost the self-storage facility’s bottom line. Ninety percent of the openings Alton fields for manager placement offer one.

“Bonuses should be simple. They should be measurable, and they should be something that's attainable,” Beal says. His company’s bonus structure is a matrix based on rentals, reviews, accounts receivable, retail sales and insurance.

“The big thing here is to make it something managers control, like tenant-insurance enrollment or retail sales,” Edmonds says. “Don’t base an incentive program on something like occupancy or profitability. Managers can’t control rate increases or profit.”

Alton agrees the focus should be on income, not occupancy. “You can’t take occupancy percentage to the bank, but you can take dollars,” she says. “The smart owners who use this type of bonus program think, ‘Well, I would gladly put $85,000 extra this year in my pocket and give the manager $15,000.’ These are the ones who keep getting more and more income each year due to motivating their managers and making them a ‘partner’ in obtaining record incomes.”

Think Beyond Money

While compensation plays a critical role in securing the best self-storage employees, it isn’t the only factor job candidates consider. “It’s about taking a full view of the compensation and benefits,” Howard says. Other factors that are important to staff include benefits, work-life balance and opportunities for growth.

Extra Space conducts regular surveys, roundtables and a lot of two-way dialogue about benefits to uncover what team members want. “This has resulted in offering plans and programs that give employees affordable access to care for both their physical and mental health, financial wellness, and work-life balance,” Howard adds.

Gault points to a handful of compensation priorities based on feedback from employees and candidates over the past two years. In order of importance, they include pay rate, bonuses, health insurance, PTO, free onsite residence with all utilities paid, a free storage unit, and paid holidays.

Location can also play a significant role when seeking employment in the self-storage industry. “Probably the No. 1 reason a manager is looking for a new position is they want to move closer to family,” Alton says.

A growing interest among facility managers is the option to work from home, which has picked up speed since the pandemic. “The ability to work from home is high on the list,” Edmonds says. “We are asked about it more than wages during interviews.”

For smaller self-storage companies, adding benefits like health insurance or comprehensive retirement plans are challenging. But as demand for more comprehensive compensation grows, those extra perks can help a business capture the best candidates.

“In today’s market, our industry is paying a similar amount to many other retail or admin positions,” says Frank Certo, vice president of operations at The Storage Mall Management Group, which has 55 self-storage locations in seven states, “So, a full benefits package is necessary to create some skin in the game for employees. The days of ‘loyalty because I work for you’ are over.”

Fortunately, building a solid compensation package doesn’t have to be a sprint. If your business doesn’t have one, add one layer at a time, Gault advises. “First, make sure you're providing an attractive PTO component. Second, when you are financially ready, provide an average health-insurance plan. Lastly, conduct enough research to determine what's the best retirement plan you can provide.”

Whether your self-storage facility offers a compensation plan with benefits and competitive pay or an aggressive bonus program that handsomely rewards excellent performance, one thing is certain: Keeping employees’ success and well-being center stage is pivotal to job satisfaction and, ultimately, the health of your business. “The bottom line is that just being willing to pay a couple of bucks more does not guarantee a candidate chooses you,” Certo says. “Your organization must have the employees and their personal and professional growth top-of-mind and back it up with opportunities for them.” 

Rachel French is a freelance content writer and copywriter. Her background is in business-to-business media and copywriting for web applications. She’s covered a range of industries and markets including self-storage as well as financial, food and beverage, healthcare, and nutraceuticals. She previously worked for Inside Self-Storage as an intern turned associate editor.