By Rev. Dr. Perry J. Hopper
Compensation can be a sensitive issue for ministers and congregational leaders.
They might be adept at collaborating on matters of faith, spiritual health, and the day-to-day functioning of the congregation or ministry. But when it comes to discussing compensation for themselves or their employees, many lack the necessary knowledge and experience.
Just as with corporate employers, recruitment and retention of qualified staff is a common goal shared by churches and faith-based organizations. A well-negotiated and fair compensation package will aid in achieving this goal.
Compensation is a matter of good stewardship by the church as a responsible employer. When we view compensation as a justice issue, it is important for a congregation to offer fair compensation to all its staff. The bible teaches us, “Respect those who labor among you and have charge of you in the Lord and admonish you; esteem them very highly in love because of their work.” (1Thessalonians 5:12-13). By doing so, you demonstrate care for the pastor, staff and their families so they can focus on their ministry to care for the people of God. Freedom from financial anxiety fosters a joyful atmosphere, where staff feel appreciated and cared for.
We can also think of compensation as risk management. When church pastors and employees can keep pace with inflation through yearly compensation increases and by receiving salaries and benefits commensurate with their level of skill, experience and credentials, they are more willing to serve for longer periods of time.
Also, providing benefits to church staff and pastors protects the church from unexpected financial expenses in the event of an employee death or disability. Employers might provide a benefits package that often includes a retirement savings plan, life insurance, disability insurance and health insurance. The package might also include a paid sabbatical. Providing benefits such as these contribute to an employee’s feeling of security and well-being.
Setting compensation is typically not handled or negotiated by one individual; it is often the responsibility of a Pastoral Relations Committee or, in larger churches and faith-based organizations, the human resources department.
What constitutes ‘fair’ compensation?
Fair compensation takes into account the cost of living in your area, salaries offered by comparable church-related employers, as well as salaries for those with similar responsibilities, education and experience in the community-at-large. Each candidate’s education and experience should be taken into consideration when a compensation package is created.
When considering compensation for a senior pastor, the proposed package should reflect the pastor’s value to the congregation. One suggestion is to consider the
package provided to a local high school or middle school principal. This person often has the education, responsibilities and experience similar to that of a senior pastor.
When reviewing pay for staff, consider paying at an appropriate percentage of the senior pastor’s pay as one approach.
Your church might also want to consider a salary survey, a helpful tool for comparing other churches or faith-based organizations within your denomination or geographic area. A salary survey is a collection of salary and market data. It might include information such as average salaries, inflation indicators, cost-of-living indicators, and salary budget averages. Denominations also conduct salary surveys and publish reports with compensation recommendations for pastors and church staff.
Compensation can be flexible
For example, in the case of a bi-vocational pastor, if your church cannot afford to compensate the minister for all the work he or she is doing, you might want to consider reducing the minister’s responsibilities.
Many smaller churches can manage with a part-time or bi-vocational pastor. This is a perfectly viable option, but it is best to set clear guidelines so the pastor and church are aware of the expectations of both time and specific goals for their work.
Regularly revisit, review compensation
Once you have established your staff’s compensation, it’s important to review the compensation package annually.
At the minimum, staff salary should be increased annually to account for inflation. The Consumer Price Index, or CPI, is generally used to approximate the rate of inflation. The federal government establishes the CPI.
There are also performance-based factors to consider during a salary review. Did the staff person meet established performance goals? These goals should reflect the organization’s ministry. It is important that the goals are realistic and measurable, using objective criteria for staff persons in terms of what each person is able to achieve.
You might also want to consider if the staff person took the job initially at a compensation level that was below market rates. If so, the annual salary review might result in an increase to make up for this deficit.
Church leadership is responsible for paying a fair wage and retaining talented pastoral leadership and other church employees. There are ways to negotiate the total package. Having a solid understanding of the gifts for ministry, and knowing the value your pastor and staff bring to the congregation, are essential elements in negotiating compensation effectively.
Rev. Dr. Perry J. Hopper, associate executive director at MMBB Financial Services, oversees all aspects of denominational relations and is responsible for coordinating special programs that support MMBB’s mission.