Common Mistakes in Setting Salary for Church Staff

Orginally published on Thursday, November 15, 2007 at 7:59 AM
by Todd Rhoades

Dan Reiland writes, "In my first full time job out of seminary, as a pastor in a local church, I made an annual salary of $18,000. That was the total package, and I was thrilled. I was thrilled for several reasons. First, I was making about $40.00 a week serving food in the cafeteria at Asbury, so this seemed like a lot of money. Second, 18K went a lot further in 1982 than today. Third, I wasn’t worth much more than that, (experience wise) and last, but mostly, I really didn’t care. Patti and I were a young married couple without kids and so happy just to serve in a local church it wasn’t about the money. Perhaps we were just young. Today, some 25 years later, it still isn’t about the money, but I will admit that a mortgage and kids in college changes one’s perspective. The reality of what a pastor is paid is a sensitive topic that eventually must be addressed..."

There are extremes. We read about pastors who drive Bentleys and live in mansions. And we hear about pastors who must work two jobs in order to barely make ends meet. This article doesn’t reflect these extremes. The context of this article reflects the big middle. My focus is on the vast majority of pastors who are neither rich nor poor. In this first part of the series, let’s start with:

“Common mistakes in salary setting”

Lack of clarity in communicating the financial package. A mistake here can cause an otherwise sweet deal to go south really fast. Pay attention to detail. If you are the employer, you are focusing on finding the perfect staff member. You are likely not focused on the details of their financial compensation. This is why we so often speak in generalities such as, “The job pays in the 40K—50K range.” I promise you that if you say that to a potential staff member, they heard only one number. 50K. This is a guarantee. Know your numbers before you start. You may have a range, but you must quote the low end. If you can go higher, then do and everyone is happy.

Be clear about the difference between basic salary which is comprised of salary and housing, and benefits. Benefits include a number of possibilities such as: health insurance, self-employment taxes, 401K, paid vacation time, supplemental life insurance, disability, sick days, continuing education in either time off for school with pay or in some cases contributing to the tuition.

There are other items that are benefits but are typically not included in personnel numbers such as car mileage, business meals, books and magazines etc. These items typically come from their individual ministry budget areas. Where these items are budgeted isn’t as important as how much and that you are clear up front with the potential new employee.
Make sure you put all this in writing, and have the potential staff member take it home to read and sign before he or she shows up for their first day of work! This will help you avoid nightmares like, “What do you mean I have to pay for my health insurance out of my salary – I thought you said it was covered!!”

Do your homework, know your numbers, and put it in writing.

“Determining a salary based on issues of emotion “

This is so common. I remember the first time I did it. I was inexperienced, and foolish about established trust and friendship. I knew the person well and couldn’t wait to have them on staff. This person was experienced and competent. We locked in and made the whole process overly spiritual saying “Ah, we’ll catch the details later”. Big mistake. I didn’t take the time to discover that one of their kids needed a special medication that cost $500.00 a month and wasn’t covered by insurance. Their previous church had paid for this medication. Somewhere in the midst of our “friendly” conversations a huge assumption was made. And this late in the game, if I didn’t cover the medication, they wouldn’t or couldn’t come. I wasn’t desperate, but close. I / we really wanted him. We really liked each other. The whole team liked he and his spouse. The thought of starting all over was overwhelming. I hired him and he was wonderful, but things continued to get complicated from day one regarding his financial package.

Know your numbers and stick to them. If you make an exception, make it in the form of a one time bonus or special hiring agreement that isn’t part of the ongoing salary.

“Promising what you cannot deliver ”

This mistake isn’t about integrity. I don’t know of any church who has ever knowingly misled a new employee in terms of setting a salary. But church leaders do often speak in highly general terms of “evangelistic exaggeration” in order to encourage the potential staff member. Statements like this are made. “Just join the team, I know the salary isn’t where it should be, but we’ll get it there as soon as we can.” That’s not smart. Even though it’s a sincere gesture, you can never promise (and thereby unknowingly mislead) because you don’t know what the church can and can’t do in a year or two.

You can say something like “If God continues to bless us financially and you do well in your job, we have a track record of being generous with our staff.”

On more than one occasion, because we couldn’t afford someone, we started them part time and built from there. With one person in particular we set up a three year plan, increasing his salary by 1/3 each year, along with his relative time commitment until he was full time.

The good news is that in the local church you can promise the job of a lifetime based on a vision attached to the Kingdom of God. Now that is big. The salary might not be impressive, but the work is the most exciting and rewarding in the world!

“Paying all staff members the same ”

I’ve only seen this in a few churches. The leaders were bright and innovative and it sort of worked for them, but as the churches got larger the system broke down. The need to hire more experience “senior or executive” staff required salaries that couldn’t be paid to all levels of the pastoral team.

The main thing here is not structure as referenced above, but morale and performance. One of the worst things you can do that will lower morale is to pay everyone the same. In other words, you pay the least experienced, and least productive person, carrying the least responsibility and pressure as much as the top staff. This is not a wise move. Your team may be spiritual and mature, but if this doesn’t bother them, they are not smart.

By the way, staff salaries should not be public or known by other staff members any more than you should post the congregation’s salaries or tithe numbers in the bulletin. It is essential that you have guidelines and accountability with the board and an annual audit etc, but I recommend that you don’t publish the numbers. It doesn’t help anything, and never really proves trust as some would say. The requirement to publish is more often a sign of mistrust. Aside from those more negative thoughts, if for no other reason, it kills the morale of the staff. Let’s be candid, nobody thinks anyone works harder than they do. And not all of your staff are mature enough to really understand levels of pressure and responsibility. This is not a harsh statement, it is actually one of major grace that recognizes and embraces our humanity.

You will make your own decisions on this sensitive topic, and hopefully I’ve given you some helpful thoughts to guide you to a policy that works for you and your church.

“Lack of generosity”

If anyone has told you that if you want top staff, it will cost you more, they told you the truth. I began by saying that church staff are not in it for the money and that is still true. But keep in mind that a world class staff will more than pay for themselves if you get them working in their sweet spot. We’re all aware of limited resources, salary structures, and the importance to be wise stewards. Nonetheless, within those realities, be as generous as you can. Your staff will know if you are or not. They understand the realities of limitations, but they will know if your heart is in doing all you can for them, or if you are trying to save a buck.

There is much more to cover but I’ll close for now. In part two, I will cover:

* The wrong reasons to increase salary
* Key issues in setting the first salary
* Key issues to consider when increasing a salary
* And five important questions to ask in determining salary

You can go here to read part 2 (which includes ‘wrong reasons to increase salaries’).  It’s from Dan’s Pastor’s Coach newsletter.

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Hi... I'm Todd Rhoades. I'm a Christ-follower, husband, father and I love to connect leaders with other leaders. Hopefully you'll find something here at MMI you like and will return often. If you want, you can find out more about me or follow my every step on Twitter.

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