• Skip to content
  • Skip to primary sidebar
  • Skip to footer
Smart Church Management

Smart Church Management

Helping Churches Manage Their People, Time And Money

  • Home
    • About
    • Contact
    • Training
    • Advertise With Us
    • Recommended Reading
  • Church Administration Training
    • Church Admin Training Login
  • Articles
    • Church Administration Tips
      • Church Performance Management
      • Church Communication
    • Church Volunteer Management
    • Church Human Resources
      • Church Member Experience
  • Job Descriptions & Forms
    • Church Forms
    • Policies and Procedures
    • Human Resource Forms
    • Employee Job Descriptions
    • Volunteer Forms
    • Volunteer Job Descriptions
  • Document Library
  • Login

2023 Average Salary Increase Projections

October 11, 2022 by Patricia

Facebook26Pin104Tweet0

Estimated reading time: 7 minutes

The end of 2022 is quickly approaching, and hopefully, by now, you have at least started talking about your 2023 church budget!

One fixed cost budget line item is the salary expense.

Churches with the resources to hire employees strive to have engaged employees by providing a great place to work.

One of the key indicators of engaged employees is competitive compensation. To keep salaries competitive, you will need to determine the annual salary increase.

Churches use personnel committees to help determine appropriate and fair compensation for church staff. And much of this work is done during the budgeting process.

Budget For Pay Increases

Church leaders often ask how much to budget for salary increases. This can be a difficult decision if you are giving it your best guess.

However, a well-thought-out compensation strategy – coupled with good budgeting practices – allows for allocated dollars to reward employees for doing a good job.

Employers understand the importance of providing a competitive employee compensation package – and salary expenses are the biggest piece of the pie.

Hopefully, the following information can give you a conversation-starting point as you begin this important decision-making process.

These 2023 average salary budget increase projections will help you plan!

2023 Average Salary Pay Increase Projections

Inflation is on the rise and most are feeling its impact. It is projected that the Social Security and Supplemental Security Income (SSI) beneficiaries will receive an estimated 8.7 percent increase in 2023 – up significantly from 2022.

What The Private Sector Predicts For 2023

Many organizations use COLA to determine pay increases, but there are other organizations predicting percentage pay increases for 2023.

According to these predictions, employees should see an average of 4.1% salary increase – with better-performing employees earning a slightly higher pay increase.

  • As projected by SHRM, employees can expect an average base salary increase of 4.1% in 2023 – up from 3.3% in 2022.
  • A survey by PayScale, businesses are planning to further expand salary increases to 3.8 percent on average in 2023.
  • Another comparison is from Empsight, which predicts that the average pay increase will be 4.0% for 2023.

A small percentage of organizations intend to give up to 5 percent increases in 2023.

Manage Worker Performance

Salary increases should be incorporated into a structured performance management system intended to reward and retain high performers.

The goal is to reward top performers with more of the raise dollar pool than poorer performing employees.

If employees are performing well, they should be rewarded, but if they are not, there should be little if any pay increase.

Budgeting for raises should be part of the annual budgeting process.  This includes budgeting raise dollars and developing a system to award raise dollars based on the best performers.

But how do you do that?

Let’s look at an example.

You want to objectively award pay increases through a structured performance management process.

This will require conducting annual performance appraisals and reviewing employee goal completion.

This information will help you identify and reward your best performers by allocating a higher percentage of the raise dollars to them and a smaller percentage to the lower-performing employees.

OK, let’s assume we have done our performance appraisals, and we have the scores, but how do you tie those scores to raises?

Let’s go through an example. Let’s say (for the sake of easy math) that you have:

  • 11 employees, each making $10/hour.
  • Let’s also say: The church board approved a budgeted 3.5 percent this year for raises. That 3.5 percent equals a pool of raise dollars of $8,008.
  • You get this dollar amount by taking the salaries of those 11 employees and multiplying it by 3.5 percent (.035 x $228,800).
  • The $228,800 comes from 11 (employees) x 2080 (hours) x 10 (dollars an hour) or 11 x 2080 x 10 = a salary budget for those employees of $228,800.
  • Now let’s also say you determined that average performance appraisal scores (3.0) will receive a 3.5 percent increase, and those scoring below average will receive less; those scoring above will receive more.

Now let’s look at what this might look like.

As you can see from the example below, there are 11 employees listed, a,b,c, etc.

The next column shows their average scores as well as an overall average score (3.4) for all employees.

In the next column, you can see the percent increase awarded to each employee based on the predetermined criteria.

Some employees received as low as a 2% increase. The higher performers received as high as 4.5% increase, which translates into a raise of $416 for the poor performers. But more than twice as much – $936 for the higher-performing employees.

Now, if you total what all of these increases add up to, you’ll see that these pay increases will cost the organization $8,008, which ends up being what was budgeted.

Average Employee Scores and Percentage Increase

EmployeeAvg. Score% IncreaseIncrease/hourIncreaseBudgetDifference
A33.5%$10x.035=$.35$728
B44%$10x.04=$.40$832
C33.5%$10x.035=$.35$728
D22%$10x.02=$.20$416
E33.5%$10x.035=$.35$728
F3.53.5%$10x.035=$.35$728
G2.52%$10x.02=$.20$416
H44%$10x.04=$.40$832
I4.54.5%$10x.045=$.45$936
J4.54.5%$10x.045=$.45$936
K3.53.5%$10x.035=$.35$728
Avg. Score3.4Total Raises$8,008$8,008$-0-

If you would like an editable copy of this scoring sheet as well as access to all of our 141+ forms, documents, and job descriptions, click here!

Keep in mind this is an oversimplified example to demonstrate how to do this. Obviously, when there are dozens or even hundreds of employees, this scenario would look much different.

This process should result positively for the good performers and serve as a wake-up call for the underperformers.

Employees who receive a less-than-average raise need to have a clear understanding as to why they received the score they got – and how that impacted their raise percentage.

Have A Conversation

It’s not an enjoyable conversation, but the organization owes honesty to the employee.

It is also common to have a three-strike rule when it comes to performance appraisals.

If the employee consistently scores below average, they should either receive additional training, improve their performance, or be transitioned out of the organization.

Poor performers waste valuable resources. And when you are talking about paying salaries with church tithes, it becomes a stewardship issue.  Think about an employee who makes $25,000 a year, and you carry that under-performer for ten years.

That employee conservatively costs the church $250,000 for a ten-year period. If you factor in a percentage increase each year, it is significantly more!  You have to ask yourself, is that the best use of church resources?

Budgeting for raises should be an aspect of the annual church budgeting process and part of a strategy to achieve the organization’s mission.

Communicate Raise Decisions

Regardless of what is budgeted (or not budgeted) for raises, communicating with employees throughout the process is crucial to avoid unexpected surprises.

Employees need to know if raises will be available if they are meeting expectations, and how raise distribution is tied to performance results.  If budget dollars are tight and raises aren’t available for next year, make employees aware of financial challenges. And get them involved in helping to find cost-cutting solutions.

What percentage are you budgeting for 2023 raises?


Learn More About Staff Evaluations

If you would learn more about raise distribution, please check out our book:

Church Staff Evaluations: A Guide to Performance Appraisals
that Motivate, Develop, and Reward Church Employees

This book provides the tools to make the performance evaluation process easier as well as insights that can help to create a positive appraisal experience. To access this book, click here.

Access our library of forms, documents, and job descriptions by joining the SCM family!

church forms and job descriptions
Learn more here!

Primary Sidebar

Check Out Our Newest Book!

Smart Volunteer Management

SECOND EDITION is perfect for Business Administrators or Church Leaders who manage church volunteers. To access our book, click here.

Learn Church Administration Skills Quickly and Efficiently

Subscribe To Our YouTube Channel

Subscribe To Our Newsletter!

Join over 28,000+ subscribers and receive weekly tips to help you manage your church!

Popular Articles

church administration training

About Smart Church Management

church administration training

Recommended Reading

church administration training

Contact

Are You A Church Leader?

Join 28,000+ subscribers and keep up to date on current church topics! Every week we post articles that provide helpful tips for managing the day-to-day operations of a church!
No charge. No spam. Only love. Don't worry you can unsubscribe anytime!.

Subscribe For Free
  • Privacy Policy
  • Terms
  • Affiliate Disclaimer
SCM is dedicated to Church Management and Nonprofit Training by offering consulting services, online courses, and helpful articles to help churches and nonprofit organizations better manage the resources God has provided: people, time, and money.

© 2012–2023 · Smart Church Management · All Rights Reserved

Exclusive Member of Mediavine