America is in a labor tsunami in which it’s harder to find and retain workers than ever before. In this environment, many mobile home park owners face the reality of managers asking for more money. But should you give in to their demands? In this Mobile Home Park Mastery podcast, we will review how manager compensation works and share thoughts on navigating this new reality.
Episode 289: Considerations When A Manager Wants A Raise Transcript
We live in turbulent times in the labor market right now. It's very, very hard to find and retain good quality employees. This is Frank Rolfe, the Mobile Home Park Mastery podcast. We're gonna talk about considerations when a manager wants a raise, which happens all the time today. We see all the articles about people, the grass is always greener on the other side. People are always trying to jump from one employer to the next to try and increase the rate of pay, and that's perfectly normal that people should wanna make as much as they humanly can, but as a park owner, you have to put some guidelines on that. There are some thoughts you have to take when a manager comes to you and says they need more money. So the first question will be, Is it reasonable? Now, if someone comes to you and says, Look, I've been the manager now for several years and I haven't had a raise, and I think I need a raise. And here's how much I propose.
The first building block is, is it even within the realm of possibility. If someone says to you, "Yes, I need to get an increase of 5%, I want an increase of 10%." Well, that is worthy of consideration. If they want an increase of 100% or 50%, it's not. Many people read these articles on, they see all of these big pay bonuses that happen to everything from airline pilots to registered nurses, but that's not mobile home park management, that's not a highly skilled labor item. So some people get these wrong conceptions misconceptions that they should be able to get giant amounts of additional money, and that simply is not going to happen.
The next question is, Do they deserve it? Now, if you've got a mobile home park and you've filled a lot of lots, and you fill those lots because not only you very smartly bought a very good location and a very good park, but also you went out and put together a capital source and started bringing in new or used homes to those lots, let's be honest, the manager is not the reason that you have so much greater occupancy. It was based on things that you did, things that maybe others did, but not only the manager. Now, however, if the manager was a very integral part of the sales process, and they went out there and they really worked hard answering the phone and showing homes to customers then that's a different deal.
Also, if you have collections and the collections are very, very high, and that's because the manager has been going door to door to get them, as has happened frequently during COVID. Okay, again, that's worthy maybe of extra effort in compensation, but not if the reason you have better collections now is everyone just got an automatic withdrawal every month, therefore the manager really isn't even a part of the collections process. So the key thing is, Do they deserve it? Is the things that they are saying that are so good about the mobile home park, Are those things that they actually contributed to or did they not?
Number three, Can you get there using bonuses or commissions as opposed to simply increasing their regular pay? For example, if they say, Well, I'm having to work all these extra days and times answering the phone and showing homes to get them sold to increase the occupancy. Can you pay them instead of just raising them a flat amount? Can you raise them with a commission or bonus? There's two benefits to that. Number one, therefore, now they're being compensated by their actual contribution, so there's actual accountability, there's meritocracy involved when someone actually is getting paid based on something occurring, and number two, it takes that increase in pay and it makes it more accurately based on whatever that cycle and the management of the park currently is.
If you paid someone a commission or bonus based on every home you sell, when you ultimately run out of homes to sell because you're full occupancy, then that goes away, which means that they are contributions, that they wanted more money for has also ended. So think if you can change it over instead of when they want more money as a flat amount, instead see if you can change that to some type of commission or bonus.
Also, we find with some managers, what they really want often to be happy is just to give them the same amount of money, but work fewer hours. Many mobile home park managers are not really in it for the money, they have other attributes. They really just live for the weekend, and sometimes what they want, you can turn around to them and say, "Oh, okay. Well, you want higher amount per hour, but I've got a set amount budgeted that I can pay, but I think what we could do is, You're doing such a great job. Maybe I could give you more time off." You would be shocked how many managers have given the option of more money or more time to do whatever they want, they actually will take the time. So that's another way to try and twist it around to make you be able to stay within your budget and yet not necessarily lose that manager.
Also, and this is very important, sometimes it's just the right time when the manager comes to you wanting more money to go ahead and get rid of the weak manager. It's no surprise that many mobile home park owners retain managers that they know really are not winner material. Often they inherited it from a prior owner, or often what simply has happened is, mobile home parks are like rocket ships, they go in various stages, and the manager you currently have may not be appropriate for the stage that you are in. For example, when you first buy the mobile home park you need a really kind of rough and tumble manager because often you're having to go and tell residents unpleasant things like they can't keep their giant dangerous breed of dog, or they can't keep that car parked in their front yard, but over time as those problems are resolved, normally the mobile home park starts focusing instead more on such items as filling vacant homes and lots and just keeping residents happy.
And certainly as you start raising rents more than ever before, trying to keep resident retention high by having the manager serve as a good public relations and humans resource person. So when someone comes to you and says, "Hey, I think I need more money," that is giving you an out to say, You know what, actually, I don't think I can afford to pay you more money, and basically start the process of them leaving. So I would not even worry or think about, Should I get this manager more money? If the answer is this manager is not the right person to begin with, and even though it's really hard right now to go out and find people, often that's what you really need to do. Because mobile home park only really has one key employee, one quarterback, and that's the manager. And if you don't have the best manager you can get, then your profit will not fit the profile of being in performance as good as it can be.
Finally, and this is a major item is, When's the last time they asked for more money? There's nothing that drives you crazier than when the manager comes to you all the time wanting an increase. It's one thing to go to the park owner... Oh, I don't know, once a year is certainly reasonable. If you are doing a spectacular job, maybe every six months, but not every month. Not every week. So the problem you have is the person who is in that job, in that role as mobile home park manager, is strictly for the money. It rarely works out well.
Now, we've had some managers who've done amazing jobs, but if you look at what really motivates them, it's more than just the money. They do that amazing job because they own their own home and it's in the mobile home park, and they want that property to be as nice as it can be, or they do it because they like to help others, and they think that if they go ahead and make that property a better place that it's gonna benefit the greater community, but some people are just literally in it for the money. And when they're just literally in it for the money, what normally happens is they keep pushing you and pressing you and pressing you, and if you go ahead and give in to their demands, it doesn't solve anything. No sooner did you get a resolve of that raise, they write back at you again saying, Oh, gosh. Well, you know what, I've got this better offer over here over there, and if you can't match it I'm just gonna go ahead and leave.
Now, what we found is when we try and retain those managers who are constantly hitting us up for money, it never has a good ending. Every time we think we have the problem solved, every time we think, Well, it's worth to go ahead and give them this bonus because gosh, darn it, they have done a pretty good job, and then they're back at us again wanting more money, we always end up losing them. Because now more than ever before, there is a definite scarcity of skilled labor, even when it comes to the skill of managing a mobile home park. So whether it's another mobile home park that's trying to steal them away or an apartment complex or some other group, I will ultimately probably lose them. And so therefore, it's not really not even worth our while to spend a whole lot of time and energy on the person who's always relentlessly wanting more money, because in the end, no matter what I do, I'm always gonna lose them anyway. That's the way that it works. All Park owners are always hoping they can get that kind of lifetime manager situation, and it is attainable.
We've had it many times. Typically, someone who already lived in the park when we bought it, they become the manager, they're not in it for the money, they're in it to try and make the place a nicer community to live in, and they can do a wonderful job and they can really change lives and get lots of things done and you can get along with them very, very well. Because everyone has the same goal, and that's to make it the best mobile home park that it can be. So we all want that, but unfortunately we can't always get that. And when we can't get that, it's very, very important that we understand that every manager needs to be fairly compensated, but at the same time they need to be worthy of the amount they are getting paid and they can't take that to an extreme.
This is Frank Rolfe of Mobile Home Park Mastery podcast. Hope you enjoyed this. Talk to you again soon.