Usually the biggest line item we see in our clients budgets is not building and grounds, evangelism, missions, or programs but rather personnel. This isn’t surprising as the people working day in and day out at the church are what makes the church what it is. They are the hands and feet of Jesus, devoting all of their working hours (and often many of their personal hours) in service to God and the flock.
It may be uncomfortable to talk salaries, but it is crucial for your church to compensate employees fairly. If basic needs are not met, it will be challenging if not impossible for staff to focus on the needs of others. Paying at or above market value for the role also ensures retaining the people who make your church the ministry that it is.
While the location and demographics of your area play a huge factor, probably the most important consideration in determining salary is the size of the church. The more people in attendance, the bigger the needs. Pastors alone often wear multiple hats. They are a speaker and teacher, counselor, administrator, manager, fundraiser, vision caster, event planner, and more! They are often doing the work of 5+ different people in a corporate setting.
With that being said, it is also important for churches not to allocate too much of their annual budget to salaries and staff benefits. This can cause the budget to become difficult to manage and does not leave enough room for building maintenance, ministry programs, benevolence, missions, and other needs. 35% of the annual budget devoted to salaries and benefits is ideal with wiggle room up to 50% of the budget. If 50% or more of your annual budget is devoted to church staff, you should take time to re-evaluate and make some changes.
How to “trim” the personnel budget
If you need to trim the personnel line item in your church budget, giving everyone a 10-20% pay cut is not the way! That would not only lower morale but would likely cost you your top staff members as they would quickly be looking for a new place to serve. And when church leaders move on (especially on difficult terms), it may mean church members also quit attending. This is a recipe for disaster.
Instead, your church should determine who the A Players are on staff and commit to retaining and hiring A Players moving forward.
But you may be thinking All of our church staff members are important! That’s true, they are important as individuals and image bearers of God. But that does not mean they are all contributing equally within the ministry.
A Players outperform other players by 3-10x. They are self-motivated and self-managing, capable, talented, and teachable. They take direction well but love autonomy. They lift others up. If a person on staff came to you and said they were leaving for another opportunity and you immediately feel sick to your stomach or panic, they are an A Player.
In contrast, B Players need direction, drift at times, and their role may have outlived its usefulness to the ministry. They are often well loved by others but their performance is only adequate, never great. They probably make more money than you wish they did. If a B Player came to you and said they were leaving for another opportunity, you would wish them well but you would not fight to keep them.
They key to letting B Players go (so that you can build up a staff of A Players) is to help them leave with dignity. Depending on the situation, you might be able to offer them an early retirement package with a severance. You might have a conversation with them about their career goals and aspirations and find out that they are actually craving a change (hints their subpar outputs in the ministry). Offering this person six, nine, or even twelve month severance so that they can find a position that truly suits them may be just what both they and the church need to make an amiable split. Adequate performance should earn a generous severance package and a going away party.
By allowing yourself to say good bye to the B Players and focus on building up your A Players, the ministry can continue to thrive and grow because the culture is now one of exclusively high performers. Plus it frees up budget dollars to pay at or above the market value for the position so that you can keep your A Players compensated in a way that continues to motivate them and provide for their needs. If an A Player is doing what 3 or more B Players can do, your A Player deserves to be compensated for that.
Performance is contagious. While trimming up your church staff may cost a bit in the short-term, within 1-2 years your church staff could be unrecognizable!