I am worried about a growing trend that I see in Canadian churches – the desire to operate as a business. Most pastors who want to move in this direction have never run a business and don’t understand the business world. Most board members who want to move in this direction have never run a church and don’t understand the church world.
I hear pastors in Canada all the time complaining that their churches don’t run like American churches who “operate” their churches like a business. That’s actually a false notion and I’ll show you later why.
In my opinion you cannot run a business like a church or a church like a business. This does not mean that one cannot learn from the other. In the same way that businesses’ are now talking about social responsibility, so churches ought to be talking more about fiscal responsibility.
In the next few paragraphs I wish to outline the differences and ways that Churches can implement business best practices.
Differences
purpose – A business’ sole purpose is to make money. A church’s purpose is to assist people in their spiritual awareness, care and development. We are not talking about the difference in industry. We are talking about a fundamental difference in direction.
volunteers – A business only has employees and customers. A church has employees, volunteers, and members. Most churches rely heavily on volunteers. This is an extra element non-existent in any business.
firing – In the case of a business, if you fire a person you might lose one customer. In the case of a church if you fire a person you might lose half your members.
hiring – In the case of a business, you hire the best talent. It may or may not effect your customer base. In the case of a church, you hire the best talent but every hire will effect your volunteer base and membership base.
salary – In a business your salary grid is important. It effects your bottom line and employee loyalty. In a church it is equally important but has little effect on employee loyalty. Employees may be willing to take a lower salary for personal fulfillment and calling.
culture – In business, negative culture has little effect on customer loyalty or employee retention. In a church, culture has everything to do with it. If you yell at an employee in a business you might get a bad reputation. If you yell at an employee in a church you could lose your entire church (aka Mars Hill).
board – In a business there is one goal – make money. In a church the variety of opinions in a board of directors can alter the organizations purpose and thrust.
talent – There is less available talent in the church world than in the corporate world.
hours – Business’ have the option to have a start and end time. Churches run a 24 hrs a day customer service co-op experience.
responsibility – Business’ ethics can get blurry. In the church there is less room to manouver.
ethics and legality – the ethics that a pastor is held to are different than a corporate employee.
leadership structure – accepted in the business community. Church structure not accepted by greater society. We are actually moving culturally where leadership in churches is not hierarchical but “flat”.
disadvantages – Celebrated for different ends. Business’ are celebrated for what they keep. Church’s are celebrated for what they give away.
economy of scale – Business’ generally have more customers than churches do. Upset one business customer and its not usually an issue. Upset one church member and your finances could be drastically reduced.
metrics – In business its easy. In church not so easy to discover SMART metrics.
finances – There are obvious different rules related to taxation.
employee handbooks – they benefit business’ wanting to control their employees. They are a disadvantage to churches wanting to squeeze their leaders.
accountability – Pastors are trained to be disciplers not leaders and need to be coached outside of bible school to become better organizational managers. In a business if you don’t have the skills you don’t get coached – you get demoted or fired.
What can Churches learn from business’?
Strategic Planning – too many visions, not enough of us working it out on paper to see how it will really work.
Scorecards – pastors need to be harnessed, regularly assessed, and held accountable.
Systems – reproducible systems that work in every context
Policies and Procedures – written codes of behaviour employees are held accountable for.
HR – most churches’ don’t like HR because they have to pay their employees fair and be held accountable to government employee rules.
Outsource Experts – It is often cheaper to outsource various areas of a church’s life – payroll, accounting, graphic design, sound, etc.
Accounting and Investment – Business’ look for a profit margin. Churches should operate with a profit margin that can be reinvested in future growth.
Stories that highlight the differences….
I once worked in a church that tried so hard to operate as a business that it set targets for its pastors that were tied to year end bonus’. These included number of salvations, volunteers, new tithers, etc. This is really unethical and has no biblical origin. Its hard to tie bonus’ to sales based metrics.
I once knew of a church that wanted to operate as a business and so they hired a person with an MBA who was to help them create the culture to take their church to the next level. His management philosophy was “if there’s a problem, fire everyone and hire the right people.” He fired a 40 year member of the church who had sacrificed a higher paying salary years back and had served the church faithfully for 15 years. He didn’t realize the pain it would cause that family and the two hundred “core people” of the church that were so put off by him that they left. He ended up with a loss of 33% revenue with that “business decision”.
I once worked in a church that refused to put in place an employee handbook because they wanted their pastors to sacrifice. They realized that if they went “business” and required high accountability from their pastors, they would have to match salary grid of other similar churches. Their budget didn’t allow it and they continued to squeeze staff. They ended up losing valuable staff who felt taken advantage of and creating an unstable church culture.