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

Whether or not a self-storage manager deserves a bonus depends on various criteria, but if an owner wishes to provide a bonus program, he has several factors to consider. This article addresses program types and considerations for each.

February 1, 2013

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

By Pamela Alton

Should a self-storage manager get a bonus? That depends on whom you ask. Of course, every manager is going to say "Yes," and most owners will say, "Only if the manager deserves it!

By definition, a bonus is something provided in addition to what is expected or strictly due, such as money or other equivalent given in addition to an employees usual compensation. A bonus is like respectit should be earned, not demanded or expected. A bonus is not part of a manager's wage. It is a reward for doing a good job, for achieving or exceeding a goal.

Not all bonus programs are alike, and there is no one-size-fits-all approach. There are a number of factors to consider when designing a program. This article addresses bonus types and considerations for each.

Bonus Options

Bonuses can be based on a number of criteria:

  • Number of lease signings

  • Facility occupancy levels or income

  • Collections success or low delinquency levels

  • Meeting or exceeding budget projections

  • Renting units at full price (no discounts or concessions)

  • Property improvement

  • Sales of ancillary products and services

  • Outstanding performance during a mystery call or shop

Bonuses can also be paid in different ways, such as annually, quarterly or monthly. Besides money, they can be given in the form of vacations or trips, gift cards, or other luxuries such as flat-screen TVs or video cameras. There's no black and white when it comes to a bonus program. Like the facilities they run, managers differ from location to location, and what motivates one does not necessarily motivate another.

Per-Lease Bonus

Some owners like to use a per-lease bonus, mostly because it's easy to calculate. The manager rents X amount of units, the per-rental bonus is paid at X dollars, which equals so much per month. Does it motivate the manager? Probably not.

Isnt renting units what a manager is already getting paid to do? Why reward him for something that's already part of his job? If you're opening a new facility, then maybe a per-lease bonus could be part of an overall bonus package. With a new facility, you have hundreds of units to rent. But at some point, there will be fewer units to rent, and the rental bonus should dry up.

Per-lease bonuses usually dont 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 priceno 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!

That said, I'm not a big supporter of offering truck rental at self-storage facilities. I know, I know ... It can bring in customers and extra income. However, depending on how busy your facility is, truck rental can take up a lot of manager time and effort. It can sometimes be a full-time job. If you have a busy site, hire someone to run the truck-rental business and let the self-storage manager do what he was hired to do: rent units.

Mystery-Shopping Bonus

A lot of self-storage companies use mystery-shopping services to shop their managers on a monthly basis and see how well they handle customer calls and walk-ins. Are they selling the facility's services and spaces? If your manager does well on a phone shop, perhaps you reward him with a bonus. This can be $50, $100, a gift card, tickets to a baseball game or movie theater, etc. The possibilities are unlimited in this type of bonus.

Non-Monetary Bonus

To repeat: What motivates one manager may not motivate the next. It's the owners job to explore which bonus program or combination of programs will motivate each of his employees. You know what they say about money: It's always the right color and it usually fits! However, a manager would sometimes prefer his bonus in the form of gifts or company perks.

Non-monetary bonuses can come in many forms. It might be a gift like a surround-sound audio system or all-expense-paid vacation. It might be some time off to visit the kids or lay on a warm sunny beach in the middle winter. It might be medical coverage, or upgrades to the manager's apartment. All of these things are alternative ways to say "thank you" for a job well done.

There's no right or wrong in designing your bonus programs. Just remember that a bonus should be a reward, not a given. It should be neither expected nor demanded by the employee. It should make him stretch his abilities but also be reasonable and obtainable.

A bonus should be something the owner is happy to give and the manager is happy to receive. A combination of programs is best because a manager might achieve some goals but not others. For example, he might score high on his phone shop but fail to meet the facility's monthly income goal.

Just keep in mind that if a bonus program is so complicated that you need a degree in finance to decipher it, or it is unachievable, then you'll do nothing more than demotivate your manager. This could cause ill will, and that's when your manager might go looking for another job.

Pamela Alton is the owner of Mini-Management Services, a company that has been placing self-storage managers all over the United States since 1991. She can be reached at 321.890.2245 or www.mini-management.com .

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