Little explanation is needed for why this article, published in Leadership in 1987, is a classic. One of the most interesting discoveries from our national survey of pastors (see “ The Truth about Debt and Salaries“) is that clergy who ask for a raise generally get it. Here’s how to ask for one.
Few pastors receive any formal instruction when it comes to hammering out a reasonable pay package. It took me a few hard lessons, but I’ve learned some principles of negotiation along the way.
My concept of negotiation is simple. I have just two 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.
Be honest 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.
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.
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.
I need to be honest first with my leaders. When I complain to outsiders and friends before I have expressed those same feelings to the board, I am being less than forthright. 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. Without an open exchange, pastor and board are left with assumptions and guesswork, a wholly inadequate basis for making decisions.
Create a process The second key principle is to build into the salary-review process adequate time for reflection and feedback.
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 before they made their decisions.
This week 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.
The week of reflection also gives the opportunity to vent frustrations before they become major issues. For instance, my annual vacation allotment aggravated me for a long time. 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 the week of reflection, I had a vehicle to voice my desire to the board. 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, I no longer felt as if I were on the receiving end of uninformed and arbitrary decisions.
Make 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 lay person’s salary.
Most board members have no idea of the true cost of their salary. If you ask the average lay person 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 $30,000 a year actually will be making closer to $42,000.
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 reimbursements, professional dues and subscriptions, the cost of attending denominational conferences, continuing education expenses, and book allowances. These represent the cost of running a ministry. They should no more be confused with the pastor’s salary than the cost of having a secretary or lighting the office.
If the money is mine to spend as I please, it’s salary. If it is a reimbursement for the cost of work I am expected to do, or meetings I am 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 lay person’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; other vastly exaggerate its worth.
Also, lay people often misunderstand self-employment 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 lay person 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.
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 Osborne is senior pastor of North Coast Church in Vista, California.
1997 by Christianity Today/Leadership Journal.
