NEGOTIATING A FAIR SALARY

Recently a friend told me how he had felt compelled to leave a growing Midwest church after a series of below-inflation pay raises With three teenage children, he found himself unable to keep up with the rising costs of raising a family.

For years he swallowed hard and hoped things would be different next year. But they never were. Feeling increasingly discouraged and unappreciated, he accepted a call to another church.

Tragically, the church he left had been happy with his ministry. As far as they were concerned, everything was going well. They had no idea he was unhappy, and they didn’t want him to leave. But by then it was too late. Not wanting to repeat the same mistake, they hired their next pastor at a substantially higher salary, a salary that would have been more than enough to meet my friend’s needs.

He still might lee pastoring that church if only he had known how to negotiate a fair salary. Instead, he finds himself in another church in another city, struggling with some of the very same issues. The church lost a pastor it wanted to keep. He lost a ministry he once loved.

Admittedly, my friend’s case is an extreme example of what can happen when a pastor doesn’t know how to negotiate a fair salary. But his problem is not an isolated one. While many pastors have been well trained in the theological and pastoral realms, few receive any instruction when it comes to hammering out a reasonable pay package.

I, too, had to learn the hard way. When I arrived at my first pastorate, I discovered one man held the offices of board chairman, finance elder, and treasurer. He was also the driving force behind our fledgling building program. His number one priority was to save enough money to purchase property for the church to build on. As a result, my “promotion” from youth pastor to a senior position resulted in a three-thousand-dollar cut in pay and benefits. I figured, I’d better learn to negotiate. If I don’t, I might soon be paying or the privilege of pastoring a church!

Over the years things have changed. Much of the credit belongs to a kind and supportive board, but some of the credit belongs to the principles of negotiation I learned along the way. My concept of negotiation is simple. I have just two major goals: (1) to produce a fair salary, and (2) to avoid any hint of an adversarial relationship with the board. Here are the principles that have helped me reach those goals.

Commitment to Honesty

Fair negotiations are founded on a commitment to openness and honesty. Since most of us are already striving to develop more open and honest relationships within our congregations, this shouldn’t be a problem. But our commitment often gets sabotaged at salary time, undercut by an equally strong hesitancy to talk about money.

I know, in my role as pastor, I hate talking about money. I cringe at the thought of a building or fund-raising program. It bothers me when record numbers of visitors show up on Stewardship Sunday. Therein lies the problem. At negotiation time, my reticence to talk about money conflicts with my desire for openness and honesty.

Many of us choose to let our distaste for discussing money win out; we keep our feelings inside. We say “Thank you” when we really mean “That’s not enough!” The result is often an unfair salary and a dissatisfied pastor.

Whenever I hear a pastor friend complain about some aspect of his contract, I listen for a while. Then I casually ask if he has told his board members or the annual salary-review committee how he feels.

Invariably, the answer is no.

When I ask why, I am given a variety of reasons, but the bottom line is usually a fear of the consequences. Some pastors fear getting their heads bitten off; others fear the appearance of greed or a lack of contentment. Some fear breaking the spiritual relationship with their board.

But the truth is, most of these pastors have nothing to fear. While it’s true that some boards are out to “keep pastors humble,” most boards are made up of good people who want nothing more than to serve God faithfully and support their pastor There is no need to fear being open and honest with such people.

As we talked one day, Gary, a fellow pastor, expressed discouragement with the level of his most recent pay raises. After seven years of solid ministry, he felt he wasn’t being adequately compensated. I asked if he had ever told any of his board members how he felt.

As usual, the answer was no. For the next twenty minutes, I challenged him to tell even one or two of his board members what he had told me. I knew he was doing a fine job and that his board was pleased with his ministry. I figured they simply had no idea how he felt.

I was right. The next time I saw Gary, he was quick to inform me his board had not only listened to his request, they had responded with a significant increase in his financial package.

When I complain to outsiders and friends before I have expressed those same feelings to the board, I am being less than forthright. I’m ignoring the “golden rule”-failing to treat my board as I want my parishioners to treat me whenever they are upset by my actions or decisions.

A word of caution here: It’s important to know who can and who cannot handle my honest feelings. Openness and honesty does not mean foolishly giving ammunition to those who would hurt me. When faced with a divided board or a one-man thorn in the flesh, it is usually best to share my feelings with some of my more loyal supporters on the board.

However, to be effective, I can’t limit my transparency to my best friends. I have to talk to those who actually make the decision. In marketing, it’s called “selling the decision maker.” In other words, when you’re selling hand organs, don’t talk to the monkey.

It’s unfortunate so many pastors are leery of honesty when it comes to their compensation package, for without an open exchange, pastor and board are left with assumptions and guesswork, a wholly inadequate basis for making decisions.

Time for Reflection and Feedback

The second key principle is to build into the salaryreview process adequate time for reflection and feedback.

Obviously, the best time for helpful feedback comes before, not after, the board has finalized next year’s salary. Yet most pastors have no chance to review their proposed package before it is finalized. Instead, their annual salary is set without any opportunity for their input.

Often a weary board decides next year’s salary at the tail end of a late-night budget meeting. After the pastor or pastors have been asked to leave the room, the treasurer suggests a salary figure he feels the budget can handle. A brief discussion follows; then the board adopts a figure remarkably close to the treasurer’s original proposal.

No wonder many pastors feel frustrated with such a process. It wouldn’t be so bad if a well-rested group carefully evaluated the implications of the proposal for both the church and the pastor. But it hurts to watch your family’s financial security rise and fall with the whims of an exhausted board.

Wanting to end such scenarios, I added a “week of reflection” to our annual review process. It is not a week for hard-ball negotiations but simply an opportunity for my staff and me to reflect on the proposed changes in our contract and how they will affect us next year.

I began by asking the board to give me a week to think and pray over their proposed compensation package-before it was finalized. I promised them honest feedback at the end of the week. I also assured them I would willingly accept their final decision to adopt or reject any changes I might propose. I just wanted them to have an opportunity to know how I felt and what I thought before they made their final decisions. This “week of reflection” has proved to have two major benefits for our church 13 and our staff. Ej

First, it has given us a forum for discussing and; correcting inequities brought about by false assumptions or misunderstandings. I can clarify issues the board might not be fully aware of: the impact of rising social security taxes, inflation, or the added cost of feeding teenagers.

The week also allows us to correct inadvertent mistakes. A few years ago our elder board decided to completely rework my compensation package. In the process, they thought they were giving me a substantial raise. So did I. When I took a sharp pencil to the figures, however, I realized the actual result of the changes would be a cut in monthly income. Given the complicated nature of the changes, without a week of reflection I probably would not have realized the implications until the package had been finalized. My “raise” would have been lost, and worse, I would have had no forum in which to ask the board to reconsider.

A second benefit of our week of reflection has been the opportunity to vent frustrations and feelings before they become major issues. For instance, my annual vacation allotment aggravated me for a long time. It was a purely symbolic issue, but the type of issue that can easily become blown out of proportion. In my previous ministry, I had received four weeks of annual vacation. When I was called to North Coast, they offered two weeks. We settled on three.

Thanks to my week of reflection, I had a vehicle to voice my desire to the board rather than to outsiders. Each year I carefully explained I felt the vacation time could be expanded. Each year they returned to tell me they thought it was ample.

Yet there was something amazingly cathartic about the process. Even when they disagreed with me and said no, somehow the tension and frustration were removed. I no longer felt as if I were on the receiving end of uninformed and arbitrary decisions.

This year I finally received my four weeks. But in the interim, I had a vehicle to vent my honest feelings. It helped keep this admittedly minor issue from growing into a major source of hurt or frustration. We’ve found our week of reflection to be the proverbial ounce of prevention worth a pound of cure.

Accurate Comparison

A third principle in negotiating a fair salary is to be sure everyone is comparing apples with apples. Many unfair compensation packages are the result of people not knowing how to compare accurately a pastor’s salary with a layperson’s salary.

Most board members have no idea of the true cost of their salary. When you ask the average layperson what he makes, he is likely to say an amount equal to his take-home pay or, if he is a salaried employee, his gross salary. He will almost never include the cost to his employer for such items as medical insurance, employer contributions to social security, retirement, expense accounts, or other benefits. My friends in business management say these expenses usually add at least 40 percent to the gross salary. In other words, a man who thinks his salary is thirty thousand dollars a year in actuality will be making something closer to forty-two thousand dollars. And this figure will be higher if the job has especially good benefits.

Yet when a church looks at the pastor’s salary, it often looks not at the cash salary of the pastor but at the cost to the church for providing a pastor. People then figure the pastor is making thousands of dollars more than he or she actually makes, and compared to their pay stubs, the pastor’s compensation appears out of line.

To help my board and congregation more accurately compare our salaries, I suggested we reorganize our budget categories. Our budget originally had a category entitled Pastor, which included my salary, housing allowance, and medical insurance. It also included many items that should not have been confused with salary: mileage and entertainment expected to attend, it is an administrative expense.

To reflect this, we put all the expenses of running a ministry into a category called Administration, the same one that contained the utilities, postage, office supplies, and insurance. Now when the board and the congregation look at the salary figures in our budget, they can more accurately compare them with their own.

Even with these changes, in numerous areas a pastor’s salary cannot be compared exactly with a layperson’s salary. For instance, few lay people (except military personnel) have anything similar to a tax-exempt housing allowance. Not many lay people understand how it works. Some underestimate its benefits; others vastly exaggerate its worth.

Often lay people also misunderstand selfemployment taxes. Since most pastors are self-employed for social security purposes, they pay substantially higher social security taxes than those who work as company employees. Unless a layperson is self-employed, half of his social security taxes are paid by his employer. It’s another part of that extra 40 percent most people forget when figuring their salary. Those who make the decisions concerning my salary need to understand these differences and their implications.

The purpose of structuring an annual budget this way is not to trick anybody, nor to make a raise easier to come by. But clear categories insure people are comparing apples with apples when they review the pastor’s annual salary.

And when good people get the facts straight, the outcome is usually fair for all concerned.

Larry W. Osborne is pastor of North Coast Evangelical Free Church in Oceanside, California.