How to Align Your Manager’s Compensation with the Business

Unless you self manage your mobile home park, the onsite park manager you hire is vital to its success. A very important decision you must make is how to compensate your manager. It is very customary to pay your manager a straight salary (ie $10/mo per lot) plus free lot rent. While this is perfectly fine I want to suggest trying an incentive based compensation which is aligned with your park’s needs.

Now there is nothing revolutionary about this idea. Private companies do this all the time and I think it can be very effective when the incentives are aligned with business needs. Let’s take a look at some ways to structure these.

• If you have lots of park owned homes for sale offer commissions for each home the manager sells
• If you have had poor collections incent them on a monthly/quarterly basis for hitting a collections target by X day of the month
• If there had been rules or other visual issues set a discretionary bonus for maintaining a well run park (Note: this is a much harder rule to evaluate and can be subjective)
• If you had prior expense issues with contractors, etc incent them based on overall P&L. You may grant some bonus for end of year targets; profit sharing is a way to think about it.

The key is to assess what are the key facets of your business that needs to be monitored and incent your manager to do a killer job on those areas. As our park goals change each quarter or year, we may adjust the incentives as needed to best fit with our park goals. In my opinion this structure has several benefits:

1. Keeps your manager more motivated and on their toes – they will want to make as much money as they can
2. Keeps your manager aligned with your best interests, not their own or other tenants’
3. Engenders more loyalty with your manager – if you make money, they make money and we want them to make money!

PS:

• I recommend a base salary along with these incentives. You cannot have an incentive only structure (ie commission only sales jobs). Most of your managers still need the security of a steady income
• Before you create all these incentives, set the maximum total salary and work backwards. If your business model allows for a total annual manager’s salary of $28,000 then give them a $20k salary and incentives to earn an extra $8k.