Top Compensation Factors to Consider When Setting Church Salaries
By: Vanderbloemen August 25, 2020
Compensation is a contention point for every organization, but this is especially the case for churches. As a small church, it’s hard to know what hires to make, and deciding on a salary for those hires makes the decision-making process even more difficult.
No one enters ministry to get rich, but even pastors have to factor in pay and benefits when considering a role. After all, you still have to feed your family and save for retirement, right? But how do you know if your compensation plan is fair, and how can you navigate a conversation about it in a practical and God-honoring way?
1. Consider the role itself
Often, candidates we interact with will let us know about specific family needs when it comes to compensation. Your family’s needs should guide your job search process and help you determine which roles you apply for. However, your needs should not dictate what you expect the church to pay you for a specific role. The expectations and responsibilities of the role will and should determine the compensation.
If possible, try to learn the average salary for your role, in your area, and at a church of comparable size. This will give you an idea of what might be a fair salary and a good starting point for a conversation about your compensation.
2. Consider your geographic cost of living.
In this day and age, it’s easy to do a quick Google search and arrive at what seems to be a reasonable number for compensation. Don’t fall into this trap!
The data you find online is often a conglomeration of information compiled into one giant average number. Accepting this as the final truth is a disservice to both your organization and your future staff member – both things you want to avoid. Instead, look at the data and compare it to your church. Ensure the data is from churches of similar size and budgets, and make sure you adjust the final data for the cost of living.
The cost of living will probably have the biggest impact on your compensation needs. A $50,000 salary may make you feel as rich as Croesus in one area, and like a pauper in another because of the cost of housing and necessities. Before you dismiss a salary offer based on numbers alone, check the cost of living in the area against the cost of living where you currently reside. You may find that the salary is much more generous than you first assumed.
The cost of living across the US varies widely, so before you begin researching salary information, start with the cost of living for the area in which your future staff member will live and work. Almost equally important is the need to communicate these things with potential future hires. They may have to make considerable adjustments to their standard of living and need to be aware of that before they ever agree to join your organization. This will help ensure you are hiring someone who will be a good long-term fit and will avoid potentially uncomfortable discussions about salary and raises down the road.
3. Know your budget
As a small church, growth should be anticipated. Not just in an “expect great things…” kind of way, but also in the area of financial forecasting. As your church grows, you will need to move part-time employees to full-time status, and at some point hire more staff. These moments of growth should be able to be met with celebration, not with stress. The best way to do this is to be extremely familiar with your budget and anticipate financial growth. Entrust your budget to more than one trusted individual and regularly check your financial progress and goals.
In general, unless a small church has exceptionally generous givers, it won’t be able to pay as much as a larger church, which you can expect to have a larger budget.
But a larger church may have more room in their budget to consider salary raises, or generous donors may make adjusted salaries possible. For a large church, keep in mind ways you can spread that generosity around to maximize it’s potential! Although you may not be experiencing as much rapid growth as a small church, your budget still is influential in determining salaries.
Churches have to be good stewards of their finances, and regardless of size, budget is a huge factor in how much a church could offer you for a ministry position.
4. Consider the “extras.”
Working on a church staff is unique for many reasons, one of them being the non-monetary benefits associated with church employment. Pastors are eligible for many unique benefits, including housing allowance, expense budgets, various tax breaks, free lunches, school stipends for children, sabbaticals, and the list goes on.
When assessing appropriate compensation for a pastoral position, these factors must be included. Do your research – determine what your organization offers that is unique, and incorporate that into your pay scale. Be realistic about the actual value of these benefits to your candidate (ex: a stipend for the education of children will not make much of a difference to a person whose children are already educated), and factor those things into your compensation.
Beyond your salary, what other benefits is the church offering you or might consider adding to your compensation package? We’ve seen churches get very creative in their compensation packages beyond the salary. Some churches have robust health insurance packages with full family benefits, others may choose to offer generous retirement matching programs, or even some provide staff with the option of regular, paid sabbaticals (or a high number of vacation days). Again, don’t look only at the salary number; take the entire compensation package into account.
5. Assess the risk of loss.
It’s important to assess the risk of loss for your key staff members. How much would you have to pay a new senior pastor if the planter of your church answered a new call? If your children’s ministry pastor left, how much momentum would your church lose overall? You should be asking these kinds of questions to determine pay.
Assess specific ministries’ growth and the overall value they add to your church. The people you determine add more value to your church should be compensated commensurately.
This is also a good place to consider the experience of your staff members. In virtually every career field, increased work experience directly correlates to an increase in pay. Ministry is not immune to this same pay structure. A pastor with 20 years of experience should and will be paid more than a pastor with three years’ experience.
In addition, the scope of your responsibilities in previous roles will have an impact on how much a church will consider paying you. When you bring greater knowledge and expertise to a position, it’s only fair to expect that it will be reflected in your compensation and vice versa.
6. Regularly analyze pay.
We all want our church to have the most engaging worship, the most capable pastor, the best children’s programming, etc. We’ve talked a little about how to determine pay for potential candidates, but the second half of this discussion is how to keep the people you hire.
We write a lot about creating and maintaining contagious office culture, but the truth is that pay plays a factor as well. Be proactive about your staff’s compensation. Assess performance and put plans in place to link performance to pay (think raises, bonuses, and additional vacation/sabbatical time) at least once a year. Analyze industry standards for similar roles in organizations within the size and scope of your church.
Good employees should be rewarded and reminded of their value, and a great way to do that is to consider and evaluate salaries and make sure they match the work and value your employees are bringing to your church staff or organization. Figuring out salaries is a process, however, and it’s not a one size fits all process either. But done well, it’s a way for you to build a staff that will stay for the long term and love working there.
As stewards of God's Kingdom, it is vital that your church's budget aligns with your church's vision, mission, and values. Ensure you're on the right track with our free download, 8 Costly Church Budget Mistakes
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