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Clergy, steal some sheep

Clergy, steal some sheep

From the HBR Daily Stat:

Financial incentives have a significant impact on ministers’ efforts and their levels of service to parishioners, according to a study … that looked at more than 2,000 Methodist pastors in Oklahoma.


These ministers are paid nearly 3% of the incremental revenue that comes when a new member joins a church. Thus, when a member joins, a minister’s annual compensation increases by just under $15; when a member leaves, the minister’s pay falls by about $7.

Source: Is a Higher Calling Enough? Incentive Compensation in the Church, Jay C. Hartzell, University of Texas at Austin – Department of Finance; Christopher A. Parsons, University of North Carolina (UNC) at Chapel Hill; David Yermack, New York University – Stern School of Business, February 8, 2010, Journal of Labor Economics, Forthcoming

From the abstract:

We study the compensation and productivity of more than 2,000 Methodist ministers in a 43-year panel data set. The church appears to use pay-for-performance incentives for its clergy, as their compensation follows a sharing rule by which pastors receive approximately 3% of the incremental revenue from membership increases. Ministers receive the strongest rewards for attracting new parishioners who switch from other congregations within their denomination. Monetary incentives are weaker in settings where ministers have less control over their measured performance.

From the paper:

Are clergy motivated the same as CEOs?

Based upon the stream of donations associated with a typical church member, we argue that ministers’ incentives operate as a type of sharing rule, by which a pastor is paid close to 3 percent of the incremental revenue that typically accrues to a church when a new member joins. These effects translate to a pay elasticity with respect to membership of approximately 0.35, virtually identical to the pay-firm size elasticity found for corporate CEOs (Baker, Jensen and Murphy, 1988). This equivalence suggests either that ministers have lower intrinsic motivation than we believe (and therefore need CEO-like incentives), or that CEOs’ work gives them substantial internal satisfaction that is typically ignored (Carlin and Gervais, 2009).

Sheep stealing

This compensation policy, which is administered at the congregation level, leads to a collective action problem for the church as a whole, because the community of Methodist clergy are rewarded for poaching members from one another’s flocks. This practice of “sheep stealing” is well recognized and frequently lamented in religious circles (see, for example, Chadwick, 2001).

When performance is difficult to measure

When a pastor’s private effort and measurable output are weakly correlated, then a risk averse minister will reduce effort (e.g., Holmstrom (1979) and Banker and Datar (1989)) because an additional unit of effort has a certain cost but an uncertain outcome. Incentive contracts should therefore reduce an agent’s exposure to factors that are beyond his control. … some regions of Oklahoma are particularly exposed to oil prices. For churches that lie in such oil-sensitive areas, church attendance (and the local economy) fluctuates with oil prices, exogenous shocks that impose risk upon the minister. We find that pay-for-performance in churches that are particularly sensitive to oil prices is significantly lower than in churches without such exposure. Together, these results provide support for one of the most standard predictions of agency theory, but one that is often difficult to test cleanly.

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Jeffrey L. Shy, M.D.

"Financial incentives have a significant impact on ministers' efforts and their levels of service to parishioners"

If that is indeed true, then it is to our great shame. I cannot think at the moment of a more "counter-Gospel" message. I seem to remember a certain Galilean Rabbi who got pretty upset at making the temple into a business institution.

Whenever I hear about "growing" a congregation, I wonder what is in the minds of those who want growth? Do more numbers translate into power/prestige? Do we want growth in order to get more income and keep the doors open? If "winning a soul" becomes a financial calculation ($15.00 a head for a new convert. Is that the price? How about "And I beheld, and loe, a blacke horse: and hee that sate on him had a paire of balances in his hand. And I heard a voice in the midst of the foure beastes say, A measure of wheate for a penie, and three measures of barley for a penie, and see thou hurt not the oyle and the wine"), then what have we come to?

I am not totally naive about the needs for money to do the work of God in the Kingdom, but if we start by thinking about "incentivized growth" in financial terms, we have our root priorities out of kilter.

[BTW, "forgive" the archaic style quote. For the anniversary of the KJV, I have been reading from the "original" 1611 version. It has been a most refreshing experience to hear the old words in a "really old" way.]

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John B. Chilton

Thank you for the wise and informed comments thus far.

Another point to raise in this conversation comes from the economic theory of incentive contracts: you may indeed want to incentivize clergy to grow the congregation, but the very big danger is that you if there other tasks to perform that aren't so measurable (and therefore can't be compensated in the same way) you may create an adverse unintended outcome.

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Richard E. Helmer

I wonder, probably in agreement with Marshall's query, about the clericalism implied by this approach: Why is it, in essence, solely the cleric's responsibility to "grow" the flock? It strikes me in any community that there is built-in incentive for the laity to reach out to build their community in numbers.

It reminds me, too, of the classic question asked by almost every search committee and vestry/bishop's committee in The Episcopal Church when interviewing candidates for clerical leadership:

How will you grow our congregation?

Of course leadership does matter, and vibrant leadership can help a community grow. Still, the correct (but unwise, if you want the job) response to the question might be: Pardon me? Who are the ministers of the Gospel here?

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Execute

As a chaplain in health care, I work in a world of measurement. It can be a difficult world for chaplains, especially because our "outcomes" don't lend themselves to measurement.

But, there are two sorts of measures. There are outcome measures, based on results. There are also process measures, used when statistical information establishes best practices, tools that work in most cases but, because we are unique individuals, not in all cases. Since no tool works in every case, and because the reasons a tool might not work are beyond the control of professionals (and often of the patient), outcome measures don't help. doing the right thing won't always have the desired result; but because it's the thing most likely to work, it's still the right thing to do. So, the measure isn't the outcome, but how consistently the right thing is done - and, thus, a process measure.

I haven't read the study yet; but based on what has been excerpted here I find myself wondering whether the outcome measure (the correlation between parishioners joining or leaving, and clergy income) is meaningful in light of the mission of the congregation. Just because there is something measurable doesn't mean the measurement is meaningful.

As I can, I'll get to the article. I think, though, that we need to address that question: is this measure meaningful in light of the mission of the congregation, and the congregation's expectations of the minister.

Marshall Scott

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