Make “cents” of compensation

payrollBy Jim Cook, CFP®

I recently had a conversation with the new administrator of a large, multi-site congregation regarding review of the pay structure for the staff. She was shocked by the seemingly random salaries for many staff, noting that many — with similar levels of responsibility, background and credentials — had widely divergent salaries.

To prevent such dilemmas, it’s critical to establish a consistent, well-organized and fair compensation policy.

Define your compensation philosophy
As a Christian ministry, what biblical foundations will guide your process? In 1 Thessalonians 5:12-13, Paul urges the church to “respect those who labor among you and have charge of you in the Lord … esteem them very highly in love because of their work.” This and other scriptures suggest that you affirm the value of your leaders and staff, the contributions they make, and your intention to reward them accordingly.

Detailed job descriptions matter
A senior pastor needs different skills than a youth minister or a business administrator. In larger congregations, a single job description might cover multiple staff serving in similar positions.

The value of preparing accurate job descriptions can’t be overstated. They should include responsibilities, requirements, functions, lines of accountability and other elements that clarify expectations. Other factors include education, experience and level of responsibility.

Evaluate roles, determine salary structure
Once you have a job description, how does your church know what level of compensation is fair? Begin by grouping and ranking various positions.

Different churches will approach this based on their particular structure. One possibility is: pastoral staff;  executive staff; administrative and support staff.

Once you have staff groupings that make sense, consider ranking them by responsibility and expectations.

Many large companies have complex salary grids; a simpler, but effective method for churches is to establish a range based on a percentage of a key leader’s salary. If the senior pastor’s salary is considered 100 percent, the next tier of leaders who manage multiple areas and have significant professional skills might fall in a range of 75 percent to 85 percent of the senior pastor’s salary.

In smaller congregations, all salaries could be tied to the senior pastor’s. In larger congregations, it might be wiser to tie salaries for senior leaders in each department to the senior pastor’s, and then tie subordinate staff in a department to their senior leader’s salary.

The goal is to build a compensation system that reflects objective criteria such as responsibilities, education, experience and success in meeting goals.

Once you have your structure, then test your actual salaries against the marketplace. The failure to keep pace with market wages can lead to widely divergent salaries for similar positions. Avoid this scenario:

You have two long-tenured employees in similar positions. One retires, and you discover that the going rate for a replacement is 20 percent above what you currently pay. You fill the position at market rate — but now, your new employee makes 20 percent more than a valued long-term employee in a similar role.

Communicate your philosophy
Solicit feedback and approval from the committee responsible for compensation and from top-level staff. Monitor the policy for consistency. Make adjustments as needed.

A comprehensive compensation policy is a win-win for the church and your employees.

Jim Cook, CFP,® is national outreach manager for MMBB Financial Services.

For 36% of Church Executive readers, HR / benefits is among the top 3 most useful topics.
Source: 2014 Reader Survey



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