TURNING AROUND THE LORD'S BUSINESS Mainline churches are losing members, but smart pastors know how to call home the wandering lambs. Even MBAs will find their tips instructive.
By Thomas A. Stewart REPORTER ASSOCIATE Rodney J. Erwin

(FORTUNE Magazine) – WHATEVER ELSE IT IS, religion is big business. America has more clergy than Ford and Chrysler together have employees. If U.S. religion were a company it would be No. 5 on the FORTUNE 500, its $50 billion of revenues putting it behind IBM and just ahead of GE. Church land and buildings are worth uncounted billions. And God's business is really far bigger than mammon's numbers suggest: The figures don't include volunteer work, worth a jaw-dropping $75 billion a year. When a business this big is in turmoil -- and this one is -- the situation is fascinating and full of lessons. Mainline Protestants -- the traditional denominations such as Methodists, Presbyterians, Episcopalians, and the United Church of Christ -- have lost more than a quarter of their adherents in the past two decades. Synagogue membership is down. Growth has slowed even for the Southern Baptists, probably the chief beneficiaries of America's move to the Sunbelt and fundamentalism. Yet each week 40% of U.S. adults attend a church or synagogue, a percentage unchanged since 1970. Churches have made slight gains in pursuit of the charitable dollar, getting more than half of individual giving and bequests. Dramatic gains elsewhere in Protestantism -- mostly in free-standing, interdenominational churches -- have equaled mainstream losses. Meanwhile, Roman Catholicism has posted slow but steady growth despite a severe and worsening shortage of priests. Islam is booming. The ''market'' for religion hasn't shrunk, in other words -- but market share has changed drastically. Both growing and declining churches face unprecedented management challenges. Words familiar from boardrooms -- market research, customer satisfaction, asset management -- resound in pastoral and diocesan offices. High-profile gurus like Peter Drucker and Philip Kotler, author of Marketing Management, have turned their attention to churches. A look at success and failure in the religious world, it turns out, reveals a great deal about managing in the secular. Why does one church thrive while another struggles? There is no lack of theories: Americans yearn to be ''born again'' to the wholehearted faith of their forebears; demographic shifts to Sunbelt and suburb have beached traditional churches in stagnant cities or depopulated small towns; baby- boomers distrust the establishment faiths of their parents. There is truth in each of these theories, especially the demographic. Americans have always been footloose, leaving half-empty churches behind. But in the main, success comes to those that best serve their flock. Congregations, says United Methodist bishop Richard B. Wilke, ''are the trenches where the battle is lost or won.'' Like successful enterprises of any kind, healthy churches know why they're in business. No better mission statement for a church can be found than a line from the Sermon on the Mount: ''Seek ye first the kingdom of God, and His righteousness; and all these things shall be added unto you.'' It's not easy to stick to first things first. So many needs cry out -- from evangelism to alcoholism, from food for the hungry to the bread of life -- that churchmen face as many choices as fly- fishermen at an Orvis store. Indeed, the mainline's crisis may be that in devoting its energy to issues such as ecumenism and social justice, it neglected its ''core business,'' saving souls. A merely temporal mission is likely to be a temporary one. Philosopher Allen Graubard warns of this danger in a forthcoming book about Judaism. ''When Jews lived in the cities,'' Graubard says, ''there were Jewish institutions that were irreligious -- even antireligious.'' With the postwar migration to the suburbs, Jews left those secular institutions -- socialist workmen's circles, for example -- behind, and ''the synagogue became the community center -- there was nothing else.'' Now things have changed again. Says Rabbi Barry Friedman, who runs the 950-family Temple B'nai Abraham in Livingston, New Jersey: ''My grandfather needed the synagogue to mediate between him and the rest of the world. My congregation doesn't.'' But, says Graubard, many synagogues compete with the secular world, and in that competition victory is unlikely and religious vitality suffers. In a revealing 1987 survey of Lutheran, Catholic, Methodist, and Episcopal churches, lay leaders rated the importance of various clergy tasks, then rated their own pastors' effectiveness in those areas. The most striking finding: 82% said ''deepening parishioners' spiritual lives'' was ''very important'' (only preaching ranked higher), but just 33% felt that their clergy were ''quite effective'' at it. Lyle Schaller, a parish consultant who has written 30 books on church management, calls this gap ''the most important single factor'' in the decline of traditional churches. ( If a church is to deepen spiritual lives, it has to know its members. ''Churches sometimes forget who the customers are,'' says Alan Houghton. A Harvard MBA, Houghton came to the Episcopal ministry after 14 years at Corning Glass, where his brother James is chairman of the board. In 1974 he became rector of Manhattan's Church of the Heavenly Rest, a then-weak parish whose church -- a combination of art deco and Gothic elements -- was as unwelcoming as it was elegant. By the time he left nine years later, the church's once shrinking endowment was growing steadily, and average attendance had quadrupled. Houghton's secret was to find a need the competition wasn't meeting. ''In New York City, churches are like restaurants -- there's one on every block,'' he says. ''If you don't like the menu, you can walk down the street to eat somewhere else. We decided to try being a family parish in the middle of New York.'' He put a heavy emphasis on pastoral counseling, encouraged parents to park their infants' carriages in the aisles, and to counteract the forbidding architecture, he and his fellow priests greeted parishioners outside the building before services -- ''a deliberate attempt to say 'Come on in.' '' The paradigm of customer orientation is Willow Creek Community Church, an interdenominational Protestant church in South Barrington, Illinois. Fourteen years ago, 23-year-old Bill Hybels took a door-to-door survey that has become celebrated among church-management types. Eight hours a day, six days a week, he asked, ''Do you actively attend a local church?'' If the answer was yes, he went on to the next house. If the answer was no, he asked ''Why not?'' and charted the responses. ''Churches are always asking for money,'' Hybels heard. ''Church services are boring, predictable, routine, and irrelevant.'' He dug further and learned that ''Unchurched Harry,'' as Hybels calls him, ''wants to be left alone. He wants to be guaranteed that he's not going to have to sing anything, sign anything, say anything, or give anything.'' WHEN HIS SURVEY was completed, Hybels not only knew a lot about Harry, he also had a list of hundreds of people who had said they might come to a church that was different. Willow Creek's first service drew 125 of them. There was no collection, and they got ''a service for seekers -- Christianity 101 and Christianity 201.'' Now Willow Creek's three weekend services draw up to 13,500 people altogether. Teams of church members direct traffic, wearing ( headsets and instructed by a controller perched atop the building. Newcomers hear that the church doesn't want their money until they've decided they want the church. The minute Hybels finishes preaching a sermon, tape-duplicating machines in the basement crank out 3,000 copies, which are stacked in the lobby by the time the service ends and which the departing congregation can buy for $2 apiece. Philip Kotler, one of whose students at Northwestern's Kellogg school wrote a case study of Willow Creek, says churches are moving away bit by bit from product-driven marketing (''This is what we have to sell. Take it or leave it.'') toward a balanced approach that listens to the customers. Knowing their members so well, healthy churches get the best out of them. Corporate quality experts, with their maxim that employees are customers too, should study churches. Sunday school teachers, choirs, workers in food pantries and soup kitchens -- these ''employees'' are also the ''customers,'' the members of the congregation. Paid, ill-paid, or unpaid, they are what makes a strong church. Episcopal priest Robert K. Massie Jr., whose resume includes a year working for Ralph Nader and a doctorate in business administration from Harvard, turned around a failing urban parish in Somerville, Massachusetts. He gave the church a budget and arranged a low- interest loan, but attributes his success in part to careful attention to his parishioners' concerns -- ''a combination of grace and planning.'' Says Massie: ''You can run a committed activist group of any kind for one-tenth what it would cost you to run a business.''

That fact means hope for many churches. The number of seminary applicants has plunged -- most seminaries are affiliated with the shrinking denominations. But the alarm, bordering on panic, that church leaders express about the drop is unjustified. If they will seize it, the clerical downsizing is a stunning opportunity to streamline bureaucracy and increase the role of lay members of their congregations. And that is the key to effective church management. Drucker cites a Roman Catholic diocese in Illinois, its priesthood half what it was two decades ago, that has doubled community services thanks to 2,000 volunteers. Each puts in five hours a week and is rigorously reviewed by members of the congregation. Volunteers need special handling -- they can't be bossed like galley slaves. At Willow Creek, as a churchgoer's commitment deepens -- helped along by < small Bible study and prayer groups -- he or she joins a seminar that meets once a week for a month. Members take a series of informal tests to determine their spiritual gifts and interests and, at the end, meet one-on-one with counselors who give them a list of the church's ministries -- there are 90, ranging from ushers to a group of mechanics who fix cars free for the needy -- and what amounts to a job list that shows which groups need people with which gifts. Consultant Schaller suggests that a church will reap in results what it sows in expectations. As members enrich their lives by working for the church, the payoff to the church in mundane things like cash is almost a matter of course. HOW CAN business people best serve a church or synagogue? Constance Buchanan, associate dean of Harvard's divinity school, feels that many churches mismanage male volunteers, who are mainly in business. Too often, she says, men are ''expected to connect with the religious institution through their professional expertise. Maybe a CEO would rather not be on the finance committee. Maybe he'd rather work with young people or the elderly, or be on the worship committee.'' But if a business person wants to give what a church most needs, he should probably offer skill in managing assets and developing leadership -- abilities that business leaders often abandon at the church door. ''When is a businessman not a businessman?'' jokes Alan Houghton. ''When he joins the vestry.'' For churches, the major asset is usually the building -- and it can be a liability. ''A lot of congregations are demoralized because their No. 1 job is to feed the white elephant,'' says Schaller. In that case, even if a building is historic, he has blunt, unsentimental advice: ''Sell it.'' That wasn't acceptable to the Church of the Covenant, the Protestant proprietors of a handsome stone Gothic structure on Boston's Newbury Street that boasts the largest collection of Tiffany stained glass of any church in the world. Rotting plaster abuts the glowing glass. Last year, on Pastor Bruce Bueschel's first day on the job, a stone Celtic cross toppled from the roof. An architect's plan to find rentable space in the church -- he proposed cutting the sanctuary horizontally with shops below, worship above -- provoked such dismay that the church, with help from three other congregations, hired a fund-raising consultant from Ketchum Inc. His solution changed the church's bookkeeping and formal organization in order to separate brick-and-mortar money from money for missions and worship. The church plans to remodel the parish house, renting space to secular nonprofit groups, and to restore the main building. Under the new organization, a capital campaign for those projects can attract corporations and larger foundations, which are not usually comfortable supporting religious appeals. Says Bueschel: ''We need to get the building off our back so we can do our ministry.'' PERHAPS THE MOST critical need is training clergy in leadership and management. If they don't know how to delegate, pastors can get stuck administering, not ministering. In seminaries, management training is rare. Denominational bureaucracies aren't likely to help much. Says Methodist bishop Wilke, who wants more authority to devolve upon his fellow bishops: ''We don't have a pope, and therefore we don't have a CEO. We've been operating in a congressional mode, not a business mode.'' Having a pope is no guarantee of clear lines of authority. When Bernard Law succeeded to the archbishop's throne in Boston in 1984, he encountered an organization in which 22 corporations and 70 agencies -- a mutual fund, a real estate office, a construction consultancy, a school network, a hospital system, and more -- reported directly to him. Law brought in Paul Devlin, a Harvard MBA who had taught business at Boston College, to be chancellor of the archdiocese, the first layman to hold the post. Devlin and a cadre of Boston businessmen redesigned the chain of command so that only six groups reported directly to the archbishop. Then Devlin went to work. He installed a Wang mainframe and 72 workstations for the chancery's 115 employees, put together a chancery budget -- the first in a decade -- and began deciphering the financial jigsaw puzzle to show each parish church's income and needs. He wrote an administration manual for parish priests. He helped orders of nuns redo their budgets to reflect the actuarial realities that their aging populations would confront. He upgraded staff, put the chancery on a pay-as-you-go basis, inventoried the archdiocese's entire physical plant, and tripled capital spending. Churches aren't businesses, of course. Their goal is to change people's lives, not to sell something. Says Devlin: ''It's not a question of 'Do we spend the money or not?' We're going to spend it all. The question is how.'' And after that, the question is, to what effect? As Peter Drucker points out, , a church's real books are not kept in this life. That fact makes good management more important, not less. Without it, a church can't carry out its real mission.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: Overall church membership has grown about half as fast as the U.S. population, and the market share of specific denominations has shifted drastically. Biggest losers: the bastions of mainline Protestantism. Changing Membership 1970-88 ...IN CHURCHES AND SYNAGOGUES ...AND IN SELECTED CHRISTIAN DENOMINATIONS