Especially related to process for setting salaries and possibly giving end-of-year appreciation gift.
Setting salaries
Presuppositions
… Every salary should be reviewed every year.
… Any raises would not be automatic.
… Raises (or demotions or releases) should be based on at least these factors:
—- Hard and productive excellent work (related to clear job description and conclusions of main supervisor and also senior pastor, not a committee or board that does not observe daily)
—- “School spirit,” a subjective issue that relates to unity, Christian joy and servanthood, main values and goals of the church, appropriate honor to leadership
— Christian, biblical character
Steps to setting
1… The board of oversight, with recommendation from the strong finance committee (which is one of the two or three or four main teams of the board), sets a percentage increase for all salaries if one is possible. This percentage of increase is usually the same percentage as that allowed for the increase in total budget.
Many churches with large budgets base this on the giving of the current year (with reliable projection for November and December giving, based on the previous year(s) — since budget for a calendar year is usually begun in November for a calendar year.
(Many churches like to switch to a fiscal year of September August to be more in line with the “church year” of ministries.)
2… They (financial committee or financial committee and board of oversight) also set, confidentially, the salary of the senior pastor in line with his review by the strong finance committee or board. (See sample for annual review of pastor.)
(Best when the finance team is chaired by a member of the board, and the senior pastor is an active member.)
3…Then the senior pastor joins the strong finance team (sometimes just the members of the board who are on this team) to set salaries for the main associate pastors, or the rest of all the staff in a church where associates are not leaders of segments of staff.
4… Then the senior pastor joins the appropriate associate pastor to set salaries for people that area, including support staff.
5. Each staff member receives and signs a “Letter of Agreement” each year —a letter which lists each part of salary and benefits and health benefits and vacation, etc., to avoid confusion.
Annual reviews, bottom line +++
Grade A — extraordinary excellence.
Grade B — strong good contributions
Grade C — rather average, but not a detriment
Grade D — should be on probation with a goal spelled out, or told a plan for leaving So if the budget (including salaries) is to average 3% increase,
Grade A receives 5%…
B receives 3%, the average called for…
C receives 1%
(Obviously, if the board determines there cannot be an increase, the reviews should still happen, though without financial consequences.)
(And if the possible increase is 5%, adjustments can be 7, 5, 3. If 1%, they are 1.5, 1, .5 %)
+++ Obviously. the leaders must adopt a strong, objective, standard guide for annual reviews. (I would be glad to share the one I like best.)
A RELATED BENEFIT THAT CAN BE USED AS AN ADDED INCENTIVE
Rather than give too large a raise that in one sense must stay even in what may be leaner years for the church related to budget, a type of symbolic bonus can be given toward the end of the year (Thanksgiving Bonus) or at the end of the calendar.
For instance, Grade A receives $500, Grade B $300, Grade C $100.
A great way to thank, only in growing and productive years when the church is growing and generous with giving to the budget and missions and expansion.
(Some churches have avoided the issue of salaries mounting beyond the best amount over a number of strong financial years and then the church hits harder times ….by giving only end-of-year benefits as one-time additions.
Or some combination of raises and end-of-year one-time gifts.)
There are and will be many years when this should not and cannot be done, of course. But you asked about what are some alternatives when ministry and finances are strong for the church