Setting Salaries, Including Your Own

7 Things Lead Pastors Don't Like to Do · Part 4

Setting Salaries, Including Your Own

Two uncomfortable conversations in ministry are about paychecks. One is telling a staff member what the church can pay them, or cannot. The second is even more awkward. It is sitting in front of your board and talking about what the church pays you.

Most pastors would rather do almost anything else. Money and relationships are tangled together, the budget is tight, and there is an unspoken sense that caring this much about compensation is somehow unspiritual. It is not. Paying your people well and paying yourself appropriately are both acts of stewardship, and both get easier once you stop improvising and give them structure.

Pay Your People Like the Work Is Real

Start with the staff, because that is where the daily tension lives. You want to attract and keep good people, and good people have options. You also have a budget that does not stretch, and every dollar of it was given by someone. The job is to hold both honestly, not to quiet one by ignoring the other.

The instinct many churches lean on is to underpay and call it sacrifice. It rarely works. Underpaying your best people is not thrift, it is a slow leak. Church staffing studies find that replacing someone who left usually costs 10 to 15 percent more in salary than keeping them, before you count the months of lost momentum while the seat sits empty. Paying a good person well is almost always cheaper than replacing them.

Discipline still matters, and payroll is where it shows up first, because it is the largest number in most church budgets. The old rule of thumb split the budget in thirds: one third to people, one third to the building and debt, one third to ministry. That math has quietly changed. A church is in the people business, and it takes people to pastor people, so personnel now commonly runs between 35 and 55 percent of the budget, often near half. Where your church lands depends on its size, its model, and how much it carries in facilities and debt.

The way through the tension is information. Find out what comparable roles actually pay, both in other churches and in your own community, and build your salaries from that data rather than from habit or guilt. Then staff lean and pay those people well. Fewer people paid fairly will always outperform more people paid poorly.

Take Yourself Out of Your Own Number

Then there is your own salary, which no pastor should be setting. Making the case for your own pay looks self-serving no matter how carefully you do it, and it puts your board in an awkward spot too. The answer is not to be braver about it. The answer is to hand the job to someone else.

Every church should have a compensation committee. Its role is simple. It approves the staff salaries the pastor proposes, and it independently sets the pastor's pay, along with the pay of any family members on staff. You bring the plan for the team. You do not touch your own number.

For the lead pastor's salary especially, that committee should work from real comparison data, either a church compensation study or an independent expert who does this for a living. This is not only good manners. The IRS effectively rewards it. When an independent group with no conflict of interest sets an insider's pay using outside comparison data, and writes down how it decided, the government presumes that pay is reasonable and has to prove otherwise if it ever asks. Skip that process, and pay later judged excessive can bring real penalties on the recipient and even put the church's tax standing at risk. It is worth setting up properly, with someone who knows the rules.

The same applies to relatives. If your spouse or your child draws a salary, the committee should set it too, on the same comparisons, for the same reasons. That is not an insult to your family. It is protection for them and for you.

Fair Pay Is Stewardship Pointing Both Ways

Compensation is stewardship in two directions at once. You are stewarding the congregation's gifts, which means you cannot overpay or let payroll swallow the mission. And you are stewarding the people who carry the ministry, which means you cannot underpay them and call it faith. A compensation committee working from honest data serves both sides of that at the same time. It protects the budget, protects the staff, protects the pastor, and protects the church.

What a church pays quietly says what it believes about the people who serve it. That is a message worth sending on purpose, set by the right people, on the best information you can find. Do that, and two of the conversations you dreaded become simple acts of doing right by the people God gave you.

Kerry Jones is the founder and CEO of Healthy Church CFO, a firm providing fractional CFO services to the local church. He has served churches as both pastor and CFO for more than 30 years.