The word “compensation” is an administrative term that describes the cost to a church for the employment of an individual. Compensation is the total expenses that churches will have to bear for an employee. Compensation is usually computed on an annual basis and becomes part of the annual church budget.
Compensation is all inclusive. The Personnel Committee and Finance Committee together should arrive at Personnel salary, fringe benefits like medical insurance and annuity, business expense for travel, education/conference expense, and computers. Personnel Compensation is one of the largest portions of a church budget.
Do Churches Pay A Fair Wage?
This writer often gets two questions related to compensation: 1) How much of our church budget should be going to Personnel Compensation?; and, 2) When does a church need to know to add additional personnel/staff? If churches restrict compensation values, they can and often restrict Kingdom growth and development. Most everything rises or falls due to leadership – the lack of it or the quality of that leadership.
Luke 10:2a, 7 – Jesus appointed 70 to be sent out in pairs to every town and place. He said:
“The harvest is abundant, but the workers are few, . . . pray for more workers.” Verse 7: “Remain in the same house, eating and drinking what they offer, for the worker is worthy of his wages. Don’t be moving from house to house”. (HCSB)
This biblical lesson speaks of compensation; not in numerical or financial form, but never-the-less, compensation provided by the Holy Spirit. These verses direct us [the church] that there are those called out for ministry and they were cared for with a place to stay and food to eat BECAUSE the Kingdom of God needed to grow and the harvest was great. Lesson one, to the church: know your possibilities in ministry and apply as many resources as it takes to accomplish Kingdom Growth! Lesson two, to the church staff: don’t go from house to house – be content to receive what the house offers – the compensation, and give yourself and the Holy Spirit time to work.
So, the church of the 21st Century needs to know – the Kingdom of God still needs to grow – workers are few and need to be fairly compensated for their ministerial labors. The church staff needs to know that what is offered is fair and to be content and not move around.
The closest qualifier this writer has been able to see is to keep total Personnel Compensation between 55% – 60% of the total church budget. Churches may have a single full time pastor for the first two hundred total church members and add full time ministers for every one hundred members there after. Support staff is added as full time ministerial staff is added. Some churches may elect for two part-time ministerial positions rather than full time. This is not an official dictated rule of thumb, but an observation of an average view point.
Do Churches Pay A Fair Wage?
The question should possibly be – Do Churches Pay a Fair Wage for Kingdom Responsibility? There must be a consideration for fair compensation based on “Churches” Kingdom perspective NOT on the percentage of the bottom line of a church budget that goes to Personnel.
“…the worker is worthy of his wages”, is the work [church work] worthy of the worker?
Compensation for Church Personnel is usually divided into three categories: Salary, Benefits and Reimbursements. Churches are employers and should administrate a good and fair compensation in these three categories.
Salary: is the take home pay that the employee will pay taxes on. Ordained ministers will have housing options that are included in this category.
Benefits: are termed as business expenses of the employer, they are not part of the taxable salary paid the employee. Benefits provided by the church are good opportunities to reward and market employees above their salary option.
Reimbursements: are basically that – the church pays an employee back for out-of-pocket business/ministry expenses incurred while on church related business.
Churches need to see Compensation as a major portion of the church budget, and it must be appropriately planned, administrated and accounted for. There is stewardship required on the part of the employer and the employee.
Personnel Administration for a church requires a thoughtful salary plan that describes how it will conduct operations with regard to salary, benefits and reimbursements. A salary plan, establishes the policies and procedures that the congregation wishes to have administered to its employees.
According to Robert H. Welch, [Creating Efficiency for Effective Ministry, Church Administration, Broadman Holman Publishers, Nashville, 2005, Page 125] there are 8 steps in developing the Salary Plan.
- Determine the Mission and Purpose of the church.
- Create a leadership organization to meet that mission.
- Write job descriptions for all employee positions.
- Determine the relative worth of each job description.
- Determine the categories and limits of a scale of salaries to be paid.
- Establish policies and procedures relating to the administration of pay.
- Determine benefits that will be provided.
- Determine reimbursable business expenses offered.
Dr. Welch cautions that: “without first establishing what the church is to do and a determination of what personnel will be required to fulfill church mission, the numbers 4-8 of the Salary Plan will not be spiritually based”.
Basically, this writer finds two of the eight points grossly violated in the local church. One – churches omit their mission and purpose, and two – churches do not determine the relative worth of the job description to the mission and purpose.
Determining the relative worth of each job description is vitally important. These usually fall into four basic ministry areas: Pastoral, Educational, Musical and Support. Relative worth is placed upon a position as it applies to the overall mission and purpose of the church. The value and amount of personnel in a church is not to be based on church wealth, but church purpose. Money follows mission! Create the mission (of the church) and giving will come to support it and the personnel needed to carry out that mission.
Determine the worth of a position not by history of a position – again, focus on the worth of the position based on mission. When a mission or priority is added, add staff; if a mission or priority is changed or omitted, change or omit staff positions.
Church Personnel must have worth and purpose, and deserve a fair compensation. Churches need to fund positions that create missions – not just positions to be filled because the church has always had it.
One of the first steps a church should take to fairly compensate personnel is to prioritize the relative worth of each job description. Of course, the roll of “over seer” or Pastor, as found in I Timothy 3:1-7, is a dynamic job description for the lead position we recognize in our church. Other positions like Associate Pastor, Educator, Age Group Specialist, Musician, Recreation, and Support Staff also have worth placed upon the position and that worth has a significant impact on the mission, purpose and priority set by the congregation.
Job description worth should be the worth of the POSITION, not the PERSONALITY in that position. Compensation to all personnel should be in direct correlation to the priority of the POSITION and parallel to the priority of mission and purpose.
Each church should establish a priority of POSITIONS for their church staff. Usually, the Pastor position has worth of about 20% more than the next prioritized position. Each following ministerial position has a 5% difference in worth. This concept requires churches to have a Salary Plan where compensation for POSITION (not personalities) are placed in order of worth to mission and it intentionally values a BASE pay for each position.
The illustration below shows the concept of Staff Pay Grade and Ranking of Worth.
Notice: the BASE PAY follows an ever-increasing worth based on cost of living allowance over time. Churches who fail to actualize this concept, fail to stay in the “market place” and when the positions are vacated, they find they must really adjust the base to fill the position.
Notice: the Base for Pastor is set 20% over the next position of worth and subsequently thereafter.
Notice: each box has 5% segments within – these give allowance for Merit or Tenure Advances for positions OVER BASE. Long term employees may be compensated at a percentage over BASE. However, it is possible a long term employee could reach the max pay above their max worth that is proposed in the BASE worth.
Notice: the importance to having a BASE for each position is that it gives a steady increasing reference point when a position is vacated.
A Salary Plan with Base Worth is an important aspect of Church Personnel Administration – consider worth of Ministry Position to Church Mission and Priority. You will see a difference in church effectiveness!
Compensation studies are available to help churches determine fair and efficient Salary Plans for their personnel. Studies are available for just about every church staff position. The study is classified by categories based on worship attendance, church income, church setting and size, gender preferred for a position, education level, years of employed experience, and whether or not housing or parsonage is included.