The benefits of long-term incentives
A well-defined benefits approach will attract and retain ministry talent.
By Sherre Stephens
Effective and gifted employees are essential to a growing church or ministry. Their services impact ministries and their communities. By offering long-term incentives, churches will have better employee retention. Other than traditional benefits, there are additional programs that keep ministerial staff engaged over the years.
Some churches offer a sabbatical commensurate with accumulated service. Other ministries fund travel abroad that enriches the employee’s ministry discipline. Also, churches will fund the cost of an advanced degree or extra classes.
Taking that a step further, churches can establish and fund a scholarship in the employee’s name at his or her Alma mater or seminary of choice.
Still, traditional benefits typically account for about 40 percent of a minister’s total average compensation package. In an economy where employees face rising costs of everything from food to gasoline, benefits are increasingly important for employees considering a new position.
The value of health insurance
Recent research shows that most Americans value their employment-based health benefits far greater than the actual dollar amount that employers pay toward the coverage. In fact, a 2009 Health Confidence Study from the Employee Benefit Research Institute reports that when asked to choose between $7,800 in employment-based health benefits and $7,800 in taxable income, 72 percent of those surveyed chose the health coverage.
Economic factors and trends affect ministries. A 2008 Southern Baptist Convention Compensation Survey found that the denomination’s senior pastors change jobs, on average, every seven years (six years for other ministerial staff). This is comparable to professionals in the secular world. The Department of Labor cites that professional secular employees change jobs an average of every six years. Not surprisingly, benefit coverage factors heavily in attracting and retaining ministry talent.
A well-designed benefits approach is effective in attracting and retaining talented and gifted employees. Depending on the location and ministry needs, the addition of certain incentives can give any church a leading edge. A judicious and well-balanced benefits package reflects the value your church places on the staff — and valued employees naturally focus more on their ministry assignments.
Establishing a salary and benefits package entails some research. Often a compensation committee takes on this role. Benefits package design should take into account the wide range of options available on the market today. It is important to align the ministry assignment with salary and benefits that are comparable and consistent with churches in your region.
Many view healthcare coverage as the foundation of all benefits packages. Although expensive, it is an important way for churches and ministries to provide for the welfare of their staff. To reduce plan costs, church leaders can have staff members pay the difference for family coverage. Alternatively, they should consider a cost-sharing approach.
Next level health plans
There are new options that take health plans to the next level, mitigate the cost to the organization and attract staff known as Consumer-Directed Health Plans. These insurance plans are getting a lot of attention, both from the media and from potential employees. That’s because these plans allow employees to assume greater responsibility for the level and cost of healthcare, while the organization saves on plan costs.
Consumer-Directed Health Plans use three separate and distinct programs provided by the IRS:
1. Health Reimbursement Arrangements: Employer-owned funds that save employers money yet also allow them to provide first-dollar benefits for their staff. When used in conjunction with high-deductible health plans, the savings in premiums provide funds to reimburse employees all or a portion of their deductible expenses.
2. Health Savings Accounts: Employee-owned accounts that allow employees to save for personal healthcare expenses in a tax-free and portable vehicle. You must use an HSA only with a qualified high-deductible health plan.
3. Flexible Spending Accounts: Completely employee-funded, and contributions are good for one calendar year plus a three-month grace period. They allow employees to pay approved out-of-pocket expenses with pretax dollars.
When employees plan for the future they should consider the possibility of disability, accident, serious illness and even death. Offering both short-term and long-term disability plans is an excellent way to protect an employee’s financial security.
The most common type of retirement plan for churches and ministries is a 403(b) plan. For employees who are maximizing contributions to their 403(b) plan, consider offering a non qualified deferred compensation plan.
Beyond the traditional benefits package of retirement and health/life/disability insurance, here are some additional employee benefits offered by an ever-growing percentage of ministries:
Long-term care coverage: A study by the U.S. Department of Health and Human Services says that people who reach age 65 have a 40 percent chance of entering a nursing home. And about 10 percent of those who enter a nursing home will stay there for five years or more.
Enhanced disability coverage: Look for disability plans that offer a greater percentage of income replacement.
Milestone rewards/ recognitions: At a set number of years, add another week of paid time off, increase employer-matched funds or contribute a dollar amount to an employee’s nonqualified deferred compensation plan.
Relocation reimbursements: Make a down payment on a home and/or cover moving and transition costs.
Financial and estate planning: Reduce personal concerns by assisting with financial and estate matters.
The right benefits package can factor heavily in whether pastors and staff members commit to a life of serving your church.
Sherre Stephens is director of executive services for GuideStone Financial Resources, Dallas, TX. [www.guidestone.com]