By Pamela Alton
I started in the self-storage business with my late husband in 1991. We sold real estate during the 1980s, and when the market took a downturn, we decided to get into property management. We didn't know much about the service other than we had used it a couple of times.
We started out as relief managers, working two days a week to help supplement our income. Within two months, we were offered a resident-manager position at a facility in Santa Barbara, Calif. Using the sales techniques we’d learned as real estate brokers, we took that 477-unit property with 139 vacant units down to just nine within just three weeks. Our salary was $1,500 per month.
That was a long time ago, and many changes have happened in our industry. We now have offsite as well as resident managers, and wages have increased dramatically. Plus, many companies now offer bonus structures.
When it comes to building an attractive and fair manager-compensation package, there are many factors to consider. These include housing status, facility size and even the manager’s level of experience. There’s no one-size-fits-all approach. Below are some elements to think about as you build the program that’s right for your business.
Manager wages vary by city, facility and owner. While some owners pay on the high end of the scale, others are still at the bottom. Most land somewhere in the middle.
One factor to consider is whether you’ll pay your managers hourly or an annual salary. The new overtime rules from the U.S. Department of Labor have changed the minimum salary required for exemption from overtime pay. The new minimum salary threshold for employees to reach exempt status is now $47,476 annually, or $913 per week. Managers who make less than this are entitled to time and a half for every hour they work beyond a regular 40-hour work week. However, there are exceptions to the rule. If you’re unsure about whether your staff is exempt, speak with your attorney.
Many facilities with resident managers still employ a two-person team and, in most cases, this type of situation pays a salary. However, there are exceptions. I recently placed a single resident manager just outside of Atlanta. He not only manages around 400 units but office suites as well. He earns $15 an hour plus bonuses based on a percentage of year-over-year revenue increase.
Another offsite manager near Orlando, Fla., earns $16 an hour plus a bonus, while a manager in Dallas makes $20 an hour. A husband-and-wife resident-management team near Seattle earns a salary of $4,000 a month, plus healthcare and bonuses. That same owner has a top-notch team who helps him with his other properties. He pays them $6,000 per month plus bonuses. He also throws them $500 here and there as a "thanks for the job you do for me" on top of handing out dinner certificates, little trips, etc. He does this because he respects his team, the job they do and the increase in income they’ve earned him!
Always be aware of the federal and state minimum-wage requirements. The national minimum wage is $7.25 an hour, or $15,080 annually. That’s $7,270 less than the federal poverty level of $22,350. Some states, such as Washington, have a minimum-wage requirement of $15 an hour. You can check the living wage for your state at http://livingwage.mit.edu. This site also lists the typical wage for various job titles.
It’s important to note the minimum wage and living wage are two very different things. I don't know anyone who can live on $7.25 an hour, do you? Ask yourself, does the job of a self-storage manager—rental agent, collection agent, salesperson, marketer, maintenance person and office manager—deserve more than a clerk at a gas station or McDonald's?
If you decide to pay a salary, make sure it’s at least the same as the national minimum wage or that of your state. Remember, you can’t use housing to offset any minimum-wage deficiency. For example, you can't pay a husband-and-wife team $3,400 a month, and then charge them $1,200 a month for the apartment. Based on a 40-hour work week, that would make their wage $2,200 per month for two people, or $6.35 per hour for each employee, which is far below the federal minimum wage. Not only will you have a hard time finding and keeping quality staff, you could face penalties from the labor board.
Bonuses are definitely a grey area. The definition of a bonus is an amount of money added to wages on a seasonal basis, such as a holiday. It can also be issued as a reward for good performance or accomplishments such as increasing revenue or reducing delinquency. Essentially, it’s not part of a manager’s "normal" wages.
If offered, bonuses should be motivating, rewarding and obtainable. Never structure a program that’s difficult for a manager to achieve. This will have the opposite effect on your staff, leaving them unmotivated. Also keep in mind that what motivates one person may not work for another.
Bonuses don’t always need to be cash-based, either. It could be a free trip, extra vacation days, a new TV or a substantial gift card. Use your imagination. You can also ask your managers what types of bonuses will motivate them.
Paying a good manager top wages makes good business sense. Happy managers lead to a more successful self-storage facility and improved revenue. A great manager is worth his weight in gold! Pay your employees well, treat them with respect, and give them the authority to manage the property. Then put a motivating, obtainable bonus program in place, and it’ll be a win-win situation for you, your manager and your business.
Pamela Alton is the owner of Mini-Management Services, a company that 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; e-mail [email protected]; visit www.mini-management.com.