This post is part of the Bible and Business series on Christian ethics for Christian Business Owners.
Description of the Problem: Most business owners take cash out of the business as compensation without any link to the business’s success (Mikaloniené, 2020:919). Cash is often taken because the inherent power structure of a closely held business allows the owner to set a compensation level without justification to another authority (Intuit, 202:Online). But within the construct of Christian stewardship, God becomes the authority who determines the personal compensation of the owner.
Type: This type of ethical decision is a moral temptation.
Filter: Because one of God’s purposes for business is philanthropy, profits taken from a business for personal use by the owner should be done under the direction of the Holy Spirit. How much an owner takes in compensation is a stewardship issue, not a legal or personal-right issue. Because God is the ultimate owner of the business and the profits generated by the business, God has the decisional right to direct the profits to support his agenda.
When an owner is excessive in taking cash out of the business to use for his own benefit, the owner shows a lack of love for God and the owner’s neighbor. In addition, if God has clearly shown the owner that the cash should be directed elsewhere, then the owner is essentially stealing from God and is likely spending that cash on something that approximates an idol in his life.
Correct decision: the correct ethical decision is for the owner to accept a personal compensation level that is directed by God. In addition, the owner may want to consider three principles which this researcher gleaned from a seminary class on ethics as guidelines for the owner’s personal compensation (Grudem, 1987):
Method #1: Census Bureau and education level. Check with the Census Bureau[1] on what the average salary is for the community in which the owner lives who has a similar level of education. Determine that salary range and the owner can set personal compensation in that range.
Method #2: Average CEO compensation for community and industry. Check with current salary surveys and local executive placement firms to see what CEOs of similar-sized organizations are paid. If possible, narrow down the population sample to those who work in the same industry as the owner’s business.
Method #3: Median Community Income. Go to the Census Bureau and find out the median income for the community where the owner lives. If the business is in a different community, check the median income in that community, too. Set personal compensation at median levels.
Bill English, Publisher
Bible and Business
Sources:
Grudem, W. 1987. Christian Ethics. Deerfield, IL: Trinity Evangelical Divinity School (ST 715).
Mikaloniené, L. 2020. Individual Owner Compensation in a Hybrid Limited Liability Entity in a Comparative Context: LLC (the USA), LLP (the UK) and the Small Partnership (Lithuania). European Business Organization Law Review, 21(4):915-936.
[1] https://www.census.gov
