Documenting your Compensation Program is a very important part of annual salary budgeting, especially as it relates to providing “back up” and rationale for where a particular salary needs to be in the new budget. Are we talking about a cost-of-living or merit (depending on what you call it) increase, an equity adjustment, or no increase at all?
The first and most important area of consideration, especially as it relates to hiring staff from the outside, is the market. What would it take to replace the position if you had to go outside and find someone new? This information should be taken into consideration when evaluating a current staff member’s salary. Right?
So, how is this done? First, you have to decide on a “standard(s)” that you will use for comparison. There are many out there. The one we have used over the years is the National Association of Church Business Administration (NACBA). They have a product that’s great for getting salary data from a bunch of churches. It’s called Ministry Pay. There’s a subscription fee, but the tool allows you to do custom searches of their database, comparing your salaries to churches around the country that are similar in size, budget, denomination, etc.
The second thing you must do is establish “comparison positions.” Using your documented job descriptions, find those positions on your staff that are most similar to the positions contained in the standard you’re using. In addition to the title, the position specifics should be compared to those of the positions in the standard. Comparison positions should come from different levels in your organization, from administrative support to senior staff. This provides a good “baseline” of comparison.
Based on the comparison, positions are placed in salary ranges that are given grade levels. The grade levels are listed on the job descriptions.
A market comparison like the one I’ve outlined here should be done on a regular frequency to ensure your pay ranges are moving over time relative to the market.