It makes a difference who sets the pastor’s pay? and how it is done. In some congregations only one person’s influence matters; in others the whole congregation gets into the act. But in every congregation there are various persons, committees, and groups that influence how much is paid. It may be done overtly or behind the scenes. But it is done.
Pastors consider staying put or leaving their congregations for a variety of reasons, but a generous compensation plan is a strong attraction. Those who move do so because a new opportunity may offer a new challenge. That is not to say that preachers are in the business to make more money each time they move, but the consequence is still the same. There is usually more money in the next place up.
Thus the people in a congregation who set pay can influence a pastor’s decision and attitudes greatly, from deciding to continue at that place or move elsewhere, to being productive or lazy, to being insecure or optimistic. Surely it is the Lord who issues the call to serve in the church, but no preacher is immune to the attraction of better pay in a different place. The point is that preachers preach because they feel called to do just that, but the place in which they preach is often influenced by the salary and benefits they receive.
Furthermore, if the pay scale of the pastor is perceived by that pastor to be too low, the result can be inefficient pastoral leadership, carelessness, and certainly preoccupation with making ends meet. Productivity declines, dissatisfaction prevails, the work just doesn’t get done. How can it? In similar circumstances we all worry, we are angry, we are impatient, we are nervous when more money is going out than we can bring home. Pastors living on low pay suffer the same problems as other people.
The brightest clergy, the best, the most ambitious, the aggressive?these are generally paid the best. That’s why they’re where they are. And they will move up by moving away unless the leaders in their congregations keep up pay to meet the competition some place else.
It takes some special people.
“Seat-of-the-pants” salary administration will often prove disastrous. However, carefully developed guidelines can often enhance the pastor’s pay plan’s attractiveness and at the same time appease all those who believe they too should influence the plan.
There is no practical way in which an entire congregation can get involved and still come out with a plan that’s reasonable, fair, and attractive to the pastor. Letting members vote in congregational meetings on the pastor’s pay can be disastrous?to the congregation and to the preacher. Every member will have his or her own notion of what ought to be paid. Members with the lowest salary will believe any proposal above a bare minimum is extravagant (after all, the pastor is serving the Lord; money should not be a consideration!). Others will believe the pay is too low and demeaning for the pastor of their church. Many will believe an average member’s pay will be quite all right. But all? including the preacher?may disagree on what is best.
Progressive congregations will delegate the authority. A pastoral relations committee is a good choice?a small committee of members committed to fair pay, people whose influence is respected, whose understanding of the church budget is clear, and whose relationships with pastor and people are good.
Here is a procedure that many congregations find workable.
A special standing committee is appointed, membership limited to five to seven persons. Selection to membership is determined by 1) influence in congregational decision making (so the committee’s recommendations will be taken seriously); 1, positive attitudes about the ministry in general anc about the pastor in particular; 3) a working knowl edge of clergy compensation (tax law, denominational benefit programs, personnel administration);
4) awareness of the church budget, its limitations, and its support from the membership; 5) an unwavering commitment to the cause of the Gospel and to fair, equitable treatment of all persons, including their financial concerns.
Upon appointment the committee selects its officers and proceeds to draft its plan of operation. It will meet on a regular basis, keep its discussions confidential, limit minutes to the essentials of action taken, and include the pastor in its review of compensation arrangements. Resource materials will be secured and assembled, read by each member, and utilized in discussions of pay. A schedule of necessary dates will be drafted and reviewed at each meeting. Positive and public support for the pastor should be obvious.
Among the responsibilities assigned to such a committee will be the obvious one of recommending the pastor’s pay to the official board. However, the committee may also offer help to the pastor as needed or requested such as help in family budgeting, income tax advice, assistance during some financial emergency, a listening ear, a support group for concerns and reactions affecting the pastor’s pay.
Here’s how to do it
If you use the term “negotiation” to describe conversations with the pastor concerning pay, you will conjure up visions of union halls, strikes, and recriminating vibes from both sides. Suggest a bargaining session and the vision is worse. But sensible salary arrangements, for pastors as well as for other employees, requires conversation that is mutually supportive.
You will never know your pastor’s expectations, dreams, ambitions, or financial difficulties unless you talk to him about them. Name it what you like, sitting down to work through a compensation plan requires some negotiating, that is, an exchange of ideas, some give and take. Both the pastor and the official board should know what the other is thinking. For example, your ‘committee will want to be aware of special problems or special tax rules that may affect the pastor. The pastor will need to know about budget constraints, if any, on the cost of ministry.
When compensation is reviewed, more than one meeting may be required, first to lay the framework for conversation, to hear the other side, to define parameters. Then, in another meeting, the specifics can be set down.
Upon agreement on a compensation plan the committee makes its recommendation to the official.
 Salary must be reviewed carefully, upward adjustments must consider inflation, ability, competition, and pay of other professionals.
board, and strongly supports its case. Modifications may be suggested by the Board, but if the committee has done its job well, it will have perceived the consensus of the Board early in its discussion so that change now should not be necessary. Boards should not automatically rubber stamp, but the credibility of the plan and the committee’s recommendations are enhanced by unanimous agreement of the specifics by the Board.
Congregational action, if required, should be routine. It is simply unfair to the pastor and the pastor’s family to go through severe congregational questioning concerning that which has already been thoroughly and carefully discussed by knowledgeable committee members and the board. Besides, the committee should know about congregational sentiments ahead of time and be prepared to defend their plan against unnecessary change. Members will be tempted to comment and to change, but a carefully developed committee pay plan that is clearly explained should be acceptable. Enthusiastic official board support enhances the chances for approval by congregational action.
Set up equitable parameters
Procedures and process determine the structure of compensation planning for the preacher’s pay. Principles provide the parameters within which the specifics of the plan are developed. The proposal is the end result.
Setting pay for preachers is done many ways, usually routinely, too often automatically, frequently without much creativity or though tfulness.
Pay can be set, of course, by adjusting last year’s rate by some artificial and automatic amount. If in years past, 5 percent has been added, then 5 percent is considered adequate and automatically added once again this year. In five minutes the committee has done its job.
If pay has been set in years past by the town’s banker, a member of the congregation, because he deals with money matters, the banker decides next year’s pay, too. Upon vote by the congregation, the pastor finds out how much the local banker thinks he should be paid.
If salary adjustments are based on denominational minimums, it’s easy to look at the schedule, make the necessary change, and recommend minimum pay again next year. If inflation is the criterion, last year’s rate is added to this year’s base to provide next year’s pay. Simple, quick, efficient!
But for committees dedicated to a fair and equitable plan, nothing should be automatic about the amount a preacher is paid. It’s easier that way, of course, but it’s really not fair. Besides, what was done last year or two years ago may not have been equitable in the first place, so how can it be now if changes are only made automatically by a percentage adjustment each year?
Here are pay planning principles that can be useful in deciding what your congregation is going to pay your pastor next year.
1. How have things gone this year? What difference should that make in what is paid?
2. What does the denomination recommend? Is that reasonable? Should it be considered?
3. What’s the inflation rate? Still soaring at ten percent plus? What difference should inflation make?
4. How well does the pastor relate to other people? What responsibilities is the pastor expected to fulfill?
5. How much are other professionals in the community paid? What are other clergy paid? How about average pay of the membership?is that relevant?
6. Are professional expenses reimbursed in full? Are supplemental benefits properly considered and appropriate? Is housing adequate? Is salary attractive, fair, reasonable, an inducement to stay (or leave)?
Aggressive committees will come up with other yardsticks by which compensation is reviewed. But please notice that nothing is said about age (should pastors be rewarded financially simply for growing old?) or size of congregation (good preachers are in small places, too) or experience (time on the job is no guarantee of quality) or education (a degree 20 years ago does not insure current theological expertise). These may be typical ways to set the pay, but good pastors want performance evaluations that 1) emphasize their ability to relate to other people and that 2) consider the responsibilities they carry no matter what their age or experience or education or size of congregation. Those who determine salary cannot rest their case on traditional, easy-to-measure statistical charts.
And among all considerations, the devastating impact of inflation cannot be ignored. Pay advances less than the current cost of living rate amount to a cut in pay, and keeping up with inflation means no pay for merit.- Only pay raises beyond 10 or 11 percent say anything about the congregation’s attitudes toward ministry.
Automatic inflation escalator clauses, however, are generally inappropriate. In times of rapidly rising costs they do help employees maintain a stable standard of living. But if inflation slows down, employees can easily be discouraged when annual pay raises become less and less dollar-wise. Besides, such clauses lock in congregations to costs they may not be able to afford.
Inflation is not likely to go away or even drop down to more reasonable levels of 6 percent or so anytime soon. So consideration needs to be given to the impact those costs do have on compensation? and the congregation’s budget. Pay adjustments described as cost-of-living increases simply do nothing to enhance one’s perception of compensation as a reward for a good job. Of course, they do keep pay even, but they say nothing about a job done good or bad.
Be sure to include . . .
Pay plans do come in all shapes and sizes, depending on the denomination, the congregation, the committee, and the pastor. But generally there are certain specific components that go to make up any plan, specifically reimbursements, benefits, salary, and housing.
Reimbursements. Compensation planning for clergy salaries should always begin with noncompensation items. A car allowance is a reimbursement of professional expenses. It is not compensation to the minister, even though almost all church budgets incorrectly list the pastor’s car allowance as part of salary, because it is not discretionary income to be used in whatever way the pastor elects. It is reimbursement, to be used solely to pay for the expenses of operating that car for church business.
Thus, the first basic principle of compensation planning is that a congregation should pay for all costs resulting from having a pastor. Part of those costs includes providing transportation. Pastors should not be expected to dip into their own pockets to pay for church-related car costs nor should such reimbursements be listed on church budgets in such a way as to suggest they are really salary. They are not. Put reimbursement payments down under the administration budget item. That’s more appropriate than in the ministry slot.
Benefits. Almost every employee gets some benefits in addition to salary. They may be nothing more than social security tax withheld, worker’s compensation or unemployment insurance benefits. But benefits can include pension, health and life insurance, disability benefits, and much more. Committees developing clergy compensation plans need to be aware of those benefits appropriate for clergy and to budget accordingly for them.
A pension plan is a must, paid for with contributions from the congregation (in order to get the best tax benefit). Health coverage for a minister and his family is essential to avoid potential economic disaster in the event of illness or accident (premiums also to be paid by the congregation as a tax benefit). Disability benefits, survivor benefits, medical reimbursement plans?all are important. Even malpractice insurance, a social security allowance, an equity allowance (for those in a parsonage), a sabbatical leave, and a scholarship fund can be part of a pastor’s benefits.
It is estimated that 30 to 40 percent of the typical worker’s total compensation includes supplemental benefits. Only 60 to 70 percent is paid in salary. Stacking up a lot of benefits, therefore, is really not at all unusual (unusual for clergy perhaps, but not for other employees.)
Of course, those benefits are a cost to the congregation, but they also represent an important compensation benefit to the pastor. On the church budget they are best listed under the category of employee benefits rather than salary.
Housing. Clergy are generally provided housing as part of any compensation plan. If it’s church-owned housing, there’s really not much negotiation that goes on about the matter. The house is there, to be used by the pastor, so what’s there to talk about? However, if it’s never talked about and if it’s an older place, things could go from bad to worse. Maintenance and repairs are a constant headache for any congregation that is landlord to the pastor’s family. So housing should be talked about.
Naturally, housing is compensation. Sometimes that’s hard to realize, and often it is ignored in counting up the costs. But it is real and it is a benefit that adds dollars to the pastor’s pay.
In some places, congregations have done away with the parsonage. There’s a housing allowance paid instead. That’s more easily seen as compensation because it’s a cash payment. With the money the pastor personally arranges for his housing?an apartment, condo, ranch style, beach side, mansion, contemporary or what have you. It’s the pastor’s choice.
The housing allowance is attractive for a number of reasons?it gets the congregation out of the real estate business, gives the pastor an opportunity to build up some equity in a home, provides a place for the pastor to live in retirement (or disability), and offers added tax benefits over those available even with the parsonage.
The issue of housing for clergy is not a simple matter of just electing one choice or the other. The ramifications of either choice are significant. It’s one thing for a pastor to enjoy the relative benefits “^of an elegant parsonage. It’s quite another thing to be thrust into such an enormous investment as owning one’s own home. But the issue is a special problem, not really part of the annual salary review. Sure, adequate housing must be available and that becomes the issue. But a decision between parsonage or allowance needs more than just a cursory review and does require some time to resolve.**
Salary. Salary may be the last item in this list oi compensation components, but it is probably the most important item. In total dollars paid it certainly exceeds any other item.
Leaving a discussion of salary to the last for th( committee’s review is intended to create a mor< realistic approach to pay and to benefits. If thi committee tackled salary first, some benefits migh get eliminated because too much money may havi been committed to other areas. Let the committe agree on benefits, and they will likely determin that dollars are available to pay a competitive salar anyway.
Nevertheless, salary must be reviewed carefully Upward adjustments must consider inflation, abi ity, the competition, pay of other professionals, an include all the items listed above.
No question, it’s a very difficult assessment I make, which is all the more reason to use a commi tee that is able to separate the issues, clearly antic pate the consequences of the actions proposed, ar forcefully (and persuasively) convince others th the decision and the plan are right.
Guidelines for clergy compensation are som times available from denominational judicatorie Or, at least denominations tend to report statist) on past averages and ranges for the years gone and to recommend minimums for the next ye;
That’s a help. But for salary, it boils down to wl those who hold the power in the congregation thi is best to do.
Finally
The pastor’s pay in your congregation will be in the way your congregation chooses. But thi who set that pay must recognize the impact of tt-choices on both the pastor and the congregation carefully developed plan is a must, a select comn tee is important, and congregational support is c cial. It can be no other way.
Adequate support of the pastor, economicalb least, is required for successful ministry. Ther no choice.
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