Pay Structure for Full time Property Manager/Coordinator

[Hector Perez]

I have read several post with great comments but those dated back 5 to 7 years ago, so I was wondering if I can get updated information

I am planning to hire a project manager full time (W2) so what are the recommended pay structures you suggest?

This was what I was thinking

1) $1000 a month + 10% commission on expected Net Profit

or

2) $1000 a month + $2000 per completed project (we do 30 to 50 rehabs a year)

or

3) $50,000 a year and bonus at the end of the year based on performance

I appreciate your comments

[Aaron McGinnis]

You hiring an employee or a partner?

Employees get paid salary or hourly. Period. Profit share is for partners. (Also, "Expected net profit" is a terrible idea as a pay scale. What if you don't get your expected net profit?)

Employee gets paid hourly if: The result of their labor is largely in the minute

Employee gets paid salary if: They are expected to have job-related epiphanies in the shower

If you want to offer some kind of bonus, then have a Christmas bonus or something. Or a job performance bonus tied to a very specific thing (IE: Some aspect of the job, under the employee's direct control, gets done in XYZ fashion... employee gets some kind of bonus)

Also, before hiring a full-time W2 you should think carefully about the tax and legal ramifications. If this is your first W2, I strongly recommend consulting an experienced accountant and maybe an HR person to make sure that you have all the legalities taken care of and you are paying all the right taxes. Payroll withholding is a pain in the ***, straight up... both in calculating it and paying it. Plus, the ramifications of getting it (even a little bit) wrong are considerable.

And, on a personal level, consider the implications of having to cut payroll weekly or biweekly. If you don't have some way to automate the system (or have someone to do it for you), you need to be physically available to make it happen. 

You should also check in your state laws regarding insurance. Here in GA, once you have 3 or more W2 employees you have to start carrying worker's comp insurance. If you are not at that level, but think you may someday be there, do yourself a favor and BUY WORKERS COMP NOW while it's cheap with your single employee... you'll get an experience rating and that will make a huge difference later on down the road.

I'd also recommend thinking very carefully about what this person is going to be doing, and how you want it done. Make sure that you're not hiring someone full-time to do something you don't understand how to do yourself. Remember: If you can't metric it, you can't manage it... and you should outsource it to someone who has to pay the price for their failure. 

Employees can be a blessing, or a curse. Hire slowly, fire quickly. Metric and systemize what you want the employee to do, don't expect them to write their job for you. Have a system and hand it to them to execute - pat on the head when it's done right, and if it's done wrong guide and mentor (and document failures) and then fire.