Setting Staff Salaries

Churches often fail to count the hidden costs of poor salaries.
—Wayne Pohl

The importance of paying pastors an adequate wage was a lesson learned the hard way early in my ministry.

I graduated near the top of my seminary class. I had high hopes of securing a well-paying position, yet my first call was to a mission congregation. To my knowledge, I was offered the lowest salary of anyone in my graduating class. Of course, I accepted the call, failing to realize the impact an inadequate income could have on the morale of me and my family. To use a biblical phrase, I was zealous without knowledge.

Trying to set an example for my flock, I even tithed on this substandard salary.

One Saturday my wife and I were out canvassing the neighborhood on behalf of the church. About noon we decided to stop at Burger King and grab lunch. We were tired and hungry as we stepped up to the counter. After we ordered, we each looked to the other to pay. As we opened our wallets, we realized that neither of us had enough money to pay for our burgers. We left in embarrassment. My wife is a naturally up person and rarely cries. That day she wept.

Unfortunately, similar scenarios occur in churches around the country. Pastors in far too many places are underpaid. Churches often fail to count the hidden costs of poor salaries. Individuals do not work effectively when money is a constant worry. They become resentful, unproductive, and the ministry suffers. Their families bear the scars for years to come.

Now that I’m in a different position, in which I have a bit more influence over my own salary and those of our staff, my philosophy is that pastors should be free from money worries, as much as possible, so they can concentrate on ministry.

We don’t want to overpay or underpay. We don’t want anyone to stay at our church only because they couldn’t get the same salary elsewhere. Likewise, we don’t want anyone to leave solely on account of money. We seek to remove money as a preoccupation.

Our goal is to keep productive and hard-working staff free from humiliating circumstances such as those my wife and I experienced early on in our ministry. Not incidentally, our staff turnover rate has been small through the years.

A Difficult Question

This is not to say that arriving at a proper wage for a pastor or staff member is always an easy process. In times of economic downturn or recession, the problem can become even more difficult.

Back in the early 1980s, our city was hit hard by a recession and layoffs. Because our city is so closely tied to the automobile industry, the sluggish economy had resulted in a 20 to 25 percent unemployment rate.

One Tuesday evening during this recession, our elder board met to determine proposed raises for staff for the coming year. Several families in our church were unemployed. We even began a support group for jobless men who had nowhere to go in the morning. The irony was, despite the bad economic news on the outside, our church was doing well financially. We had seen growth both in membership and giving.

That evening I watched as our elder board agonized over a pay increase. They struggled to reconcile the grim conditions of the city’s economy with the legitimate needs of the pastoral staff. A large pay increase might convey insensitivity to those in the congregation who were in difficult straits. A minimal increase might discourage the staff who had worked hard and productively that year. Arguments on both sides of the issue were convincing. Eventually the elders compromised, and the staff received a modest increase, somewhat less than what we would have received under normal conditions.

The next morning the first knock on my office door was from an elder. Don sat down and calmly informed me he was resigning from the elder board. He simply could not live with the pay increase enacted the night before. He felt it was excessive, given the hardship many in the congregation were facing and in light of the city’s hard times. I asked him to avoid making a rash decision and to pray about the matter for a week or so.

That afternoon another elder knocked on my office door. He too had come with a purpose in mind. John didn’t feel it was right to catch me by surprise, so he had come in person to explain why he was leaving the elder board. He couldn’t live with the pittance of a raise the elder board had voted for the staff. John felt it was unjust, regardless of the economy, to penalize the staff after such an outstanding year at the church. I asked him to wait on his decision, to pray about it for a week, and then call me again.

Fortunately, both men relented of their decisions to resign. But the situation illustrates how difficult it is to arrive at staff salaries that everyone can feel good about. The issue of compensation can become emotionally charged and highly volatile if not handled in an orderly fashion.

Who Should Get Paid?

A basic question needs to be answered in discussing staff salaries: Who should be paid and who should not? The church is heavily dependent on volunteers. The list of people who normally work without financial compensation is long in most churches. Teachers, ushers, kitchen workers, music personnel, and a host of other positions are often staffed by volunteers. No one, including most church boards, wants to pay for something you can get for free.

But there are situations where a volunteer simply won’t do. When should you begin to pay someone for their ministry to the church? We follow two guidelines:

First, we determine the level of expertise needed to do the job. I went from a small mission congregation to a congregation of 2,000 people. I discovered there was a great difference in the time and ability needed to manage a Sunday school of 50 children versus 500 students. As the complexity of the situation grows, so does the need for a paid staff member.

Second, we ask if the quality of the program will diminish without a paid staff position. We operate a vacation Bible school in the summer on three separate campuses. A program of that size takes exceptional management skills simply to handle logistical matters. Coordinating volunteers, transportation, and curriculum for a large vbs demands attention to maintain quality. If a paid staff member was not overseeing our operation on these three campuses, the ministry would collapse under its own weight.

That, however, is the beauty of moving volunteers into staff positions. As ministries grow, our staff grows. We enjoy hiring from within the congregation. It’s been wonderful to watch qualified lay people be trained for ministry and then join our staff.

There are several advantages to growing your own team. They blend well with the existing staff; they understand the ministry; and they are trusted by the congregation. By promoting from within we often save up to seven years in the time needed to make someone truly effective.

The Right Staff Members Pay for Themselves

We try to pay individuals based on their contribution to the ministry. Performance and results play a big part in this decision.

In setting an initial salary, the elder board determines a top and bottom cost barrier. Once that’s established, we look at the individual’s position, experience, and education. Their ministry record plays a part in our decision making. Someone who produced elsewhere is likely to produce in our setting as well. We look for achievers. Why? Because they tend to achieve. It’s much easier to set salaries for producers than it is for those who seem to retire on the job. The producers eventually pay for themselves, and then some.

For example, we discovered that the single largest demographic group in our congregation was the 15- to 19-year-old age group. Yet, we had to admit honestly we were doing little to minister to these teenagers.

Then we hired a young man as youth pastor who I believed was a winner from day one. Our youth program boomed. His high school choir programs attracted parents and other relatives. Unchurched families began to seek out the church to see what it offered their children. He turned inactive families with teenagers into active participants in the life of the church. While the primary goal of all this was ministry to kids and their families, it resulted in increased financial giving. The enthusiasm he generated for the church eventually reached people’s wallets.

It is a fair and valid question to ask, “What is an individual worth to our congregation?” I believe that the right person will pay for himself or herself within two years. That goes for other positions besides youth pastor.

When our music minister came to the church, we had fifty people involved in the music ministry. Within two years, 250 people were active. He developed a concert series that drew patron dollars. He began a music academy at the church. He saw his job as more than playing the organ; his job was to build a ministry. As a result, financially we gained far more than we spent on his salary.

At the same time, hiring the wrong individuals can cost a great deal. A secretary with poor phone skills can quickly sour the image of the church. A custodian who resents the wear and tear on the church and continually reprimands members is costing some congregations money. Any individual who adversely affects the ministry of the church will eventually be a drain financially to the congregation.

The Mean Doesn’t Always Work

Some have suggested that the senior pastor ought to make the equivalent of the average income of the entire congregation. In principle the idea is misguided, yet in practice, many churches follow this maxim. The reason is simple: Whether we admit it or not, all of us evaluate what others should make based on what we make. Whoever sets a pastor’s salary cannot help but compare their own earnings with his. But is this always fair?

Let’s say the average household income in a congregation is $40,000. Let’s say the average wage earner manages a retail outlet, has five years’ experience, and a bachelor’s degree. The store has shown a profit some years, a loss others.

Now let’s say the pastor has two bachelor’s degrees and two master’s degrees—as much education as any lawyer in his congregation. He’s been at this job for twenty-five years, the congregation has grown by 300 percent, and the budget has grown tenfold. He manages a staff of six individuals and in addition puts in long hours dealing with highly stressful situations.

Now, should this pastor be paid exactly the same as the retail manager who has limited experience, a lesser education, and mixed sales results? That would be unfair. Such policies not only discourage capable pastors but push capable pastors to seek churches elsewhere.

What happens when the average income of a congregation is much higher than the senior pastor’s wages? Perhaps it should not be this way, but all of us assign a measure of respect to individuals according to what they earn. For example, college basketball coaches have turned down professional nba positions because their players would be making two or three times their salary. Who is going to listen to whom under those circumstances?

The same principle applies to the church. Affluent parishioners will have a difficult time respecting the pastor when he is making less than half of their income. In that setting, leadership will be a difficult task.

Is Every Angel Worth the Same?

I bristle at the notion that all staff members should be paid the same. This makes no more sense than the idea that the pastor should make the average mean salary of the congregation.

It could be called the “littlest angel theory.” It goes something like this: Every individual, though each might differ in gifts and abilities, is of equal value to the church. Therefore everyone should be paid the same to avoid showing partiality, a sin which Scripture condemns.

This is a distortion of biblical thinking and sound business practice. It completely sets aside the teaching on diligence, rewards for investment of talents, and the idea of fairness.

Should an effective music minister whose program is booming and reaching hundreds in the community be paid the same as an individual who plods along, perhaps alienating more individuals than he attracts? Sooner or later the person making the extraordinary effort will ask, “Why am I working so hard when others, who do far less, get the same reward as I do?” People need to be rewarded for effort, and a positive evaluation coupled with a monetary reward is a strong motivational tool.

The idea that everyone should make the same salary as the next person is irrational. Should I pay someone simply for breathing? Such forced equality is the ultimate unfairness.

Playing to Great Reviews

The actual process of establishing salary increases for the coming year begins in the staff care committee. That committee meets with representatives from the finance committee to determine what range of increases we can afford for the next fiscal year. Last year we settled in the range of 2.9 percent minimum to 8 percent maximum. There’s no use in promising staff members raises that the congregation can’t deliver. So to be realistic, we have to first determine what the giving potential is for the next year.

Our minimum figure is never less than the annual cost-of-living index. We have been able to keep pace with that for all but two of the seventeen years I’ve been pastor here. There were two years in the late 1970s when inflation was running in excess of 14 percent a year. We simply could not afford those increases.

When the staff care committee has determined the range of salary increases for the year, the elder chairman, acting as their representative, brings the recommendations to me. It is then my job to evaluate each of the staff members who report directly to me. In turn, each staff member who supervises employees is charged with evaluating their work.

We are results oriented in our philosophy. In evaluating, we see if their program has resulted in growth and expansion. Have they gone beyond maintenance to achieving significant goals that have benefited the entire church?

Rather than have a department evaluate an individual, I’ll let the statistics do the talking. I’ll examine what percentage increase that department experienced that year. That’s an evaluation you can work with. If demographic changes in our community make growth difficult or impossible, I take that into account. This is also an excellent time to review a person’s strengths and weaknesses.

I’ll often take my employees out to lunch one by one. I will have a salary-increase figure in mind. If it is different from what they feel is justified, I’ll allow them to make their case. Occasionally I’ll change my mind, but usually I stay close to the figure I’ve established.

We recognize that people on our staff respond differently to a self-evaluation. So we try and tailor the evaluation to people’s personalities. If they are more technically oriented, we have them fill out a more objective evaluation. If they are more verbal, we allow them to write extended answers.

It’s important to remember that when you are establishing the salary level of another individual, they are a brother or sister in the Lord. However, that should motivate us to be more open and candid in our evaluations rather than less. We owe it to them to tell the truth in a candid but gracious manner.

We conduct our evaluations in May and June even though the actual budget process does not begin until the fall. The reasons are simple. The peak of any program in a given church year is reached in May. It would be grossly unfair to evaluate a program in the dog days of August, when many parishioners have dropped out of sight or headed for their lake cabins. It’s much easier to do a statistical examination of a program in the late spring rather than late summer. Results are more on the minds of everyone as the programs come to an end.

I’m evaluated by the chairman of the board of elders. I have long believed that it’s virtually impossible to be evaluated coherently by a board. It is guaranteed schizophrenia. On any given board you’ll have members who admire and love you, and others that would love to see you leave at the earliest possible moment. So the chairman filters all the input and presents my performance review in a coherent way.

We can take a lesson from the business world. As much as possible, individuals do not report to boards, but to other individuals. I recognize the risks involved in giving so much authority to one person in the evaluation process, but I would rather be evaluated by one person than by a group, especially a group that is changing every year.

Of course, simply because a supervisor recommends a particular salary doesn’t mean it is automatically granted. All such recommendations are taken back to the elder board for their final approval. They force us to justify the recommended salary increases to insure fairness.

Once we are agreed on the figures, however, it allows us to present a united front in presenting them to the congregation. When someone asks how we arrived at these income figures, we reply that it was the decision of the pastor, the chairman of the elders, and a special committee of elders that proposed them. That helps to distribute the responsibility.

For Our Eyes Only

I’m a firm believer in keeping salaries confidential. That’s why we lump the salaries in three categories in the budget. When they are presented to the annual meeting, we list one budget for senior administrators, one for coordinators, and one for administrative assistants. It is very unusual for one staff member to discover what another is making.

It does happen occasionally, however. I had a secretary quit one year because she discovered a co-worker was making a nickel an hour more than she was. She resigned in protest, and I was more than willing to accept such a resignation. We don’t need that kind of attitude in our work place.

Though in some denominations the staff salaries are a matter of public record, I believe such a practice is demoralizing. It would embarrass some of my staff for the congregation to know what they were making. They are not particularly great performers at this point, and their salaries reflect that judgment. Those receiving higher salaries should not have to justify that to the congregation or other members of the staff. I believe it is better to keep such matters confidential.

Policies to Promote Loyalty

I sincerely desire long tenures for my staff members. We’ve had an education person with us for ten years. Our administrative secretary has been here for thirteen years. Most of our staff have been here more than a decade, which is rare in churches today.

When we lose someone of high quality, it has actually tended to help our salaries. The elder board realizes that they had better pay us according to our worth or another church will do so. When an associate went to Iowa for an $18,000 increase, the message was not lost on our board.

We also try to create an environment that is caring and compassionate for employees. When a secretary has a son at home with a 105-degree fever, we release her from her work without penalty. We know that her mind is at home, and that’s where she belongs that day.

When our staff receive offers to perform weddings or take special speaking engagements, we don’t ask for the honorarium. They are the ones who earn it, and they should keep it. However, simply because they are called to minister elsewhere for a week does not negate the work they are expected to have completed here. Such outside obligations are understood as time above and beyond their normal work load. If they can handle the time away and still complete their tasks, we encourage them to take advantage of the opportunity.

The point of all this, of course, is the original premise: we want to free individuals from money worries so they give their best to their ministry. We want no one to stay or leave on account of salary.

The day my wife and I left Burger King hungry and penniless, I realized that the issue of just compensation for those in the ministry is an issue no pastor or church can afford to avoid.