Paying the Church Staff

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Paying CashIn North America, we live in a wage-based society where individuals sustain themselves and plan for the future based on expected income. Church employees live in that same society.

While nothing is ever guaranteed, it is important for church employees to have fair compensation and knowledge of how and when that compensation can change.

Just as churches teach people to be good stewards in their finances, churches should also be good stewards in their compensation.

Here are some best practices for church employee compensation:

1. Minimize the Salary Gap

One of the measurements used to determine the equity of a pay system is the salary-gap between the person at the top and the other staff.

Universities are the worst offenders.  This Chronicle of Higher Education article points out that in some schools the President of the University is compensated 10 times more than the best paid faculty members.  On average Presidents make 3 to 4 times more.

Churches should never allow such pay-gaps to exist.  If a senior pastor is earning more than double or triple what other pastoral members are earning, the pay scale is unjust.  A senior pastor’s pay should be determined by the same salary-metrics as the other staff.  More on those metrics in a minute.

2. Use an HR professional

Most small to medium size churches run just like small to medium size businesses in which a few staff wear many hats. This can result in someone managing the payroll and benefits who knows more about leading youth services than Human Resources.

It’s better to secure the services of a knowledgeable HR manager than a willing student pastor.

Good HR management does not require a church to hire an HR director. There are HR agencies who do human resource management for small businesses and non-profits. These agencies can serve churches very well.

The benefits of using a human resources management company go beyond making sure payroll gets out on-time. The growing complexity of healthcare services can often be better managed for church employees by an HR agency.

Never treat people’s benefits as perks.  

Too often churches behave as if health and disability insurance or retirement plans are perks that employees should be grateful to have.  These services are the employee’s benefits not the church’s.  If employees have questions about their benefits or want to make changes, they should receive prompt service and sound advice.  Often times an HR agency is better equipped to provide that level of service.

3. Develop a Job Classification Worksheet

Churches can be inequitable when it comes to determining pay for employees. Many churches determine pay grade using the three “F’s”: family, favorite, and faithful.

A person’s pay increases the more “F’s” they get (go figure). Family is paid better than a favorite, and a favored employee is paid better than a faithful employee. If you can achieve being a faithful-family-favorite then you’re the next pastor.

The truth is faithful-family-favorites don’t always make the best employees when it comes to productivity and responsibility.

A job-classification worksheet, like this one, can help a church avoid operating with all the dysfunction of a family dynasty. This kind of salary-metric uses a point system to determine an employee’s rate of pay based on predetermined categories.

Employee compensation should be based on the position’s influence, required levels of responsibility and budgetary oversight plus an employee’s education and experience.  A person with five direct-reports and a budget of several thousand dollars should be compensated more than a person with one direct report and hundreds of dollars.

A clearly defined and consistently followed compensation plan goes a long way to create a healthy work place for church employees.

Join the Conversation: Agree or Disagree?  Should the Senior Pastor’s salary be determined using a job-classification worksheet?

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  • Jonathan Arneault

    Good article.

    As both a pastor, and a secular executive, the disparity between the two approaches is staggering. In part, this is likely because of the “sacrifice / unpredictable church revenue” world-view that churches have of paid ministry, but it is also because, as stated, the majority of ministers have no knowledge or background in a formulated compensation approach. A significant contributing factor is also the likeliness of bringing folks onto staff before the church is ready to fully compensate them.

    Pastors immediately will cringe at this. Most have significantly sacrificed their own paychecks, and don’t see an issue with others “following the same hard path”.

    It should be noted, however, that in professional occupations in secular service, that management suffer the same blind spot that church management does: that once you hire a person for an amount they accept, it is difficult to reset their compensation base or structure at a future date. The thinking is “they’ve been satisfied with what they have been paid in the past, so why should we wholly reassess their pay”. COLA increases do not satisfy this need either. Sadly, usually staff leaves, and to replace competent, experienced staff means you will pay that new person likely the same or more as what your leaving staff “should have been paid”.

    Likewise, part of the fault lies on the employee. Having hired hundreds of people, the reality is once a person accepts a pay package for a job, that is the agreement that they and the employer (secular or church) have agreed to pay them for it. To say they are unfairly compensated, unless the package has been changed downward from that agreement, or the amount of work has changed, is an incorrect assessment. They are compensated what they agreed to, for whatever motivation.

    While professional ministry is indeed sacrificial, compensation sacrifice should not be “expected”. It is better NOT to hire someone if you can not properly compensate them. In the church, it is far better to manage volunteers and deal with the gaps, then to hire someone and cause them and their family to suffer.

    Regarding HR consultants: the internet has afforded a huge number of low cost HR, Benefit and Pay administration Companies who do excellent work, and can indeed keep a church out of legal or financial trouble regarding employee pay, workers compensation insurance and employee benefits. Church administrators and Pastors would do well to join a local chamber of commerce and leverage their education and contacts, as well as attend free online seminars to become aware of the issues and options. Don’t ask your friends, ask those that do it for a living.

    Lastly – Don’t hire someone if you can’t fully pay them a good living wage for them and their family. You hurt them, yourself, and your church.

    • Jonathan, thanks for these great comments with practical points.

      I agree that “part of the fault lies with the employee” in accepting a pay package “for whatever motivation.” Do you think most church employee’s mistakenly accept a low package or do you find they accept verbal agreements that later become a downgraded reality?

      I agree many pastors see no problem with employees “following the same hard path.”

      I like the paragraph that starts with “While professional ministry is indeed sacrificial, compensation sacrifice should not be “expected”. Really good stuff.