When it comes to staff, the most common questions self-storage owners ask are how much they should pay their facility managers and what type of bonus plan, if any, they should provide. This isn’t 1992. A lot has changed. Not only is the market much more competitive, industry compensation programs have evolved. These days, it’s worth exploring whether a formal incentive structure makes sense for your operation.

Though it’s natural to wonder whether inducements are necessary when you’re already paying employees a healthy wage to perform well at work, it’s important to remember that a bonus is designed to compensate your team above and beyond their normal pay. It can be issued as an incentive or a reward for good performance. It isn’t necessarily expected.

Typically, self-storage bonuses fall into two categories: discretionary (not guaranteed) or nondiscretionary (guaranteed by an employment contract). They can come in many shapes and sizes, but they’re generally based on the extent to which an employee contributes to company revenue. Let’s examine some common plans offered in the industry for established operations as well as what may work for new facilities just coming online.

Per-Lease Bonus

A per-lease self-storage bonus is a no-brainer and easily calculated. If your manager rents 10 units in a month, and you pay $10 per lease, they earn an extra $100. Even though renting space is their No. 1 job, this type of incentive can provide additional motivation to convert leads to rentals.

Think of it this way: Many operators charge new tenants a one-time administration fee of $10 to $20 when they sign a lease. You can simply share that money with your managers. Keep in mind, though, that the level of enthusiasm for this type of payout will depend on your physical occupancy. If you’re at 98% and don’t have many units to rent, this probably isn’t a good plan. However, when combined with other types of incentives, it certainly can add up.

Add-On Sales

Many self-storage facilities have a retail center that offers locks, boxes, and other moving and packing supplies. Though some managers already do a fantastic job selling these items, others struggle. It isn’t unusual for the office to have a great looking merchandise display only to have employees doing more dusting than selling.

To inspire your team to move merchandise, it’s common to offer them 15% of the income. This can be a real motivator, particularly for someone with strong add-on sales skills. Just make sure you track what’s actually being sold.

Truck rentals are another popular add-on in self-storage, and they can be a strong source of extra income. However, they can also consume a lot of staff time, particularly during busy moving seasons. Again, consider offering a 15% on these sales, which is a solid incentive.

Income Increases

Another common bonus in the self-storage industry is one based on increasing year-over-year income. At the end of each month, you simply compare your facility’s income to where it was at the same time the previous year. With the right plan, you’ll incentivize your team to focus on growing revenue every day.

Let’s say that in August 2021 your facility brought in $50,000 in income, which grew to $60,000 in August 2022. If you offer your manager 15% of the overage, that’s $1,500, and you still put an extra $8,500 in your pocket. Not only is it worthwhile to your business, your manager will stay focused on bringing in every possible cent. This includes staying on top of collections and raising rates. It also means refraining from waiving fees and offering excessive discounts. Over time, this can really add to your bottom line.

I know some self-storage owners who saw an increase of more than $250,000 through the first six months of 2022 compared to the same period last year. If they stay on this trajectory, the annual income growth will be close to $500,000. Is it worth paying $75,000 in bonuses to put an extra $425,000 in your pocket? Only you can answer that question!

New Property vs. Existing Facility

It’s fairly easy to pencil out bonuses for an established self-storage property, but what about a facility in-lease up? You can still offer incentives around new leases, merchandise sales and truck rentals, but you might also want to create a goal-based structure that rewards managers for renting space within a certain amount of time. The faster units are rented, the higher the bonus received. For example, you might design your program around renting 50% of units in:

Feel free to experiment with different combinations. The takeaway is this type of program will motivate your self-storage managers to pre-rent, even before you receive your Certificate of Occupancy. This enables you to have tenants move in the day you open and puts you ahead of the game, as you’ll have income flowing as soon as possible. After the initial start-up bonus is achieved, you can change the structure to align with the others we’ve covered.

Other Incentives

Self-storage bonuses don’t have to be monetary, though money always fits, is the right color and will never be returned! I’ve often given $250 to my managers for scoring 90% or higher on their mystery-shopping scores. Still, feel free to think outside the box.

For example, the reward could be sending your team to an industry conference so they can gather new ideas on marketing, collections and other important tasks. They’ll return energized from the experience and ready to improve the business! Material goods can also provide incentive, such as a new flatscreen TV, iPhone, iPad, Xbox or PlayStation. Gift cards for Amazon or local restaurants can be nice as well as concert tickets. Heck, how about plane tickets to see the grandkids or a lovely four-day cruise?

Additional Advice

Offering bonuses to your self-storage staff shouldn’t be a one-size-fits-all approach. What motivates you may not motivate your managers. Discuss with your team the types of incentives they’ve been offered in the past to see what they did and didn’t like. Did the programs inspire them, and were they achievable?

Bonuses only work if they yield positive results. Don’t put a program in place that isn’t easy to calculate or that looks great in theory but can never be attained. This’ll only serve to demotivate your employees and harm morale. Finally, don’t forget that a kind word and pat on the back go a long way toward letting employees know you respect them and appreciate all their efforts to make you successful.

Pamela Alton is owner of Mini-Management Services, which has been placing self-storage managers in positions all over the United States since 1991. She also offers staff training, operational consulting, and facility audits and inspections. For more information, call 321.890.2245; email [email protected].