How to Determine Base Salary, Bonuses and Incentives for Your Self-Storage Staff

How much to pay staff is among the most common questions asked by self-storage owners. Payroll is one of the biggest operational expenses you incur, and it can be a costly item to get wrong. Hiring and training is also expensive, so for those of you who have only one or two staff members, high turnover will cost your company more than it can afford.

Though there isn’t a magic formula to calculate how much to pay facility managers and other employees, there are some key areas on which you can focus to feel confident you’re compensating them fairly.

Offer a Reasonable Wage

Paying a realistic living wage is critical to limiting staff turnover. A self-storage facility is worth millions of dollars, so paying minimum wage to those responsible for its success is like stepping over $5 to pick up a quarter. Managers make or break the business by how they answer the phone, treat customers and rent units. They’re the face of the operation, so pay them in such a way that their needs are met.

Keep in mind, determining a fair wage will depend on where your facility is located. It’ll be very different, for example, in Los Angeles vs. New Iberia, La. Housing, food, health insurance, transportation, etc., are important factors to consider. Calculate the average cost of these items to help determine a base salary that would cover employees’ basic needs.

Stay on Budget

When determining compensation for staff, pick a base salary or wage that fits comfortably within your budget. Choose a few activities to reward, calculate how much they will cost, and then build your bonus program around that number.

For example, let’s say you decided to pay an employee $30,000 a year and offer bonuses up to $10,000 a year. Identify a few areas you want to incentivize and then determine how they’ll increase over time. Create a series “mile markers” at various intervals and the reward attached to each. Think about how often these incentives will come into play and ensure the payouts fit your budget.

Keep It Simple

Offering bonuses and incentives is a great way to reward employees who help your business succeed. Any plans offered should be easy to calculate and encourage the behavior you want to reward. They should be attainable but not too easily achievable.

If your bonus structure is overly complicated, requiring detailed accounting before staff members know how much they’ve earned, it will fail. If employees can’t readily explain how they earn a bonus or meet an incentive, they don’t understand it and won’t work for it. The KISS adage still applies: Keep it simple, stupid!

Reward the Positive, Reduce the Negative

What can you incentivize? Anything! However, your bonus program should be built around encouraged procedures and behaviors. For example, if an increase in move-ins is desired, consider offering bonuses based off new rentals or unit reservations. Just keep in mind that if you reward managers based on the number of move-ins but don’t consider total rental revenue, they may be motivated to drop unit prices to close deals.

If you’ve been in business for a while and are trying to reach the next level, consider offering a bonus program that rewards managers for beating income by a certain percentage over the previous comparable period. For example, I know an operator who offers a bonus for 5 percent growth in money collected compared to the same period the preceding year.

Ancillary sales are another great place to offer incentives. For example, to encourage growth in add-on profit centers, you might offer a percentage or bonus on each merchandise sale, moving-truck rental or insurance policy sold.

No self-storage owner wants to deal with delinquencies or lien sales. Programs that include incentives for reducing past-due accounts will encourage staff to stay on top of collections.

Finally, don’t allow employees to double-dip! Think about how the structure will work and ensure multiple rewards aren’t being paid on the same income. For example, let’s say you offer one bonus for total money collected and another for tenant-insurance sales. The insurance income is already part of the total collected, so the employee would be receiving a double bonus on any insurance sales. (Also, if your facility collects sales tax, make sure you exclude that income from any revenue goals.)

Provide Non-Monetary Perks

People are motivated for many reasons other than money. Sure, we all need to earn a living, but beyond that, people want freedom, autonomy, respect and a feeling of a job well done. Treating your staff with kindness and respect will go a long way toward ensuring they’ll want to remain on your team. With that in mind, here are some free ways to reward staff:

• Say “Thank you.”
• Let them leave early on a Friday.
• Write a note detailing what you appreciate about them.
• Tell them how they’re doing a good job and why you enjoy having them on your team.
• Bring them a small treat, coffee or candy. (This isn’t technically free, but it’s not expensive.)
• If you have a large staff, honor a team member of the month.
• Brag about them in front of your customers or partners, or their family members.
• Take time to understand their personalities and communicate in their preferred language, not yours.
• Ask them what they need.
• Ask them for ideas on how to improve the business.
• Ask their opinions and ensure they feel like part of a team.

Practice Communication and Care

Sometimes even the best-laid plans go awry. Communication between the owner and staff is the key to a strong compensation structure. When everyone understands the goals of the company and, as a team, buys into the policies and procedures designed to achieve them, success is possible.

There are many ways to compensate staff. No matter how you structure wages, bonuses and incentives, it’s better to increase pay than decrease it, so start a little low and increase slowly. If you treat your staff with kindness and respect, they’ll want to stay onboard and succeed alongside you.