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Tipping, its completely out of control…maybe its an opportunity that can benefit everyone.

Tipping.

It used to be applicable mostly for waiters and waitresses, as they are somehow allowed to be paid less then others legally and presumably the customers make up for this disproportionate decrease in minimum pay and rewards them for extra good service if deserved through tipping.

What a brilliant bit of lobbying this must have been, an entire industry gets to pass its very expensive cost of labor to the customer and somehow convinces the employee that if he or she provides excellent service above and beyond the call of duty  to the customer who is really paying their wages maybe they will get a good tip… and then convincing the customers that since the waiters are getting low pay the customer is expected to make it up with a tip…and this gets good service because…

Wow, not a bad deal for the restaurant owner. Low hourly wages and the customers pay the extra. The customer presumably gets super service because that’s the unspoken promise…and the customer pays for it all.

But the plan is not working, because what has happened is tipping has become automatic and expected irrespective of quality of service.

What has happened is exceptional service is the exception…and every waiter expects at least a 15% tip as a matter of course and recently there has been pressure to raise this to 20%. In fact in many instances the management adds the tip onto the bill automatically!!!

In fact the credit card industry adds a special line so the consumer can add the tip to the charge…fantastic!

If this concept remained in the restaurants I may not be writing this post, but the pizza delivery guy expects a tip, the taxicab driver expects a tip, the clerk at the dry cleaner expects a tip and for what,  for doing their job? How can a taxicab driver or pizza delivery man provide extra service or added value above and beyond the call of duty and thus earn the tip. Can’t do it, but they still expect a tip anyway. Thus what has happened is it has become a way to pass the cost of payroll over to the consumer whenever possible.

I see tip jars at the dry cleaner, at the book store, at the coffee shop, on many retail counters, there is a tip jar . Why? I ask, why am I, the customer,  being asked to pay their payroll? I do not get this at all.

Not only that, as even with waiters, they now do not have to perform exceptional service at all and still expect a tip.

I say that this is an opportunity for business owners to change an abusive practise and deliver an important marketing message to your customer base and rectify a political situation that has gotten out of hand.

Additionally I also believe it is important that the employees understand who is paying their payroll and to whom their loyalty and commitment must be to… the boss.

So here is the concept. First get the insulting tip jars off the counter when absolutely no better service can be delivered other then simply doing the job. Then communicate to your market place that tips are not expected as you pay your help adequately. As for better service, any quality business should be able to pay adequately to demand and get quality service as a basic part of the job, there should not be good service only if you pay me extra with a tip. That’s nonsense. The pizza driver does not deserve a tip for successfully delivering a pizza. If Domino’s is advertising three pizza’s for $15.00 I have to interpret this as really being three pizza’s for $20.00. adding the expected tip. It feels to me as though the employee and the national advertising plan is in direct opposition and competition each affecting the marketing and pricing.

I believe people resent the concept these days, as it is being abused and the rational is lacking clarity and logic.

Turn this into a win win situation. Pay your help adequately, stop demanding your customers pay them for you. Take control of the quality of work delivered to your business customers through effective management.

Let the customer base know what you are doing so they understand your commitment to service and results. This also allows the customer to pay what you expected them to pay not an additional 15%. or is it now 20%. The market will appreciate this and will prefer to spend money at your business then at others who allow such bad behavior.

Additionally, people must come to grip with the alleged purpose of tipping, which is to reward superior performance and not for it to be a fee for the privilege of shopping at the business. If a waiter performs above and beyond normal duties and effort, then it is perfectly reasonable to tip. For it to be expected and virtually required is another thing all together.

Why politicians allowed wait staff to be paid less then others and to rationalize passing the burden onto the consumer is beyond me, but since in the end it is voluntary, each one of us can do something about it.

Enough is enough. raise your prices if you need and pay your help what they deserve. I am tired, as are others, of paying someones payroll for them.

I am and will remain a big tipper personally but only when justified.

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6 Responses to Tipping, its completely out of control…maybe its an opportunity that can benefit everyone.

  1. John Hunter says:

    Here is an interesting article on the topic: why tip?. The main story is about a restaurant that eliminated tips.

  2. Thank you John, Its interesting to read about others who are evaluating this issue and doing something creative about it.
    Don

  3. Martin Njuhigu says:

    It makes the recipient of tips not to pay taxes since in Kenya – where I am – such is not taxable. Yet many are crying of being over taxed for Government to get enough resources. I think its high time if it (tip) be run vide credit card, then few coins go to Government. Tax is an issue of helping others burden than leaving to others suffer more.

  4. Thank you Martin for your comments, clearly in the situation you are describing, tipping may play an important role in fighting oppressive taxation, I am unfamiliar with your political scene but I welcome the comment.
    DON

  5. activeyounginvestor says:

    Don,

    I enjoyed this essay greatly. I’ve always been annoyed by the attitudes of servers who think they are being “under tipped”. Obviously they are channeling their anger in the wrong direction, you propose a good solution to this problem.

    The restaurant experience is completely different in Europe, where a server is paid a normal wage and tipping is never required. In fact, some servers I’ve encountered were offended if I left a generous tip. They would even return a portion of my money if they though it was too much!

    I’ve had friends in college deliver food and earn almost $20 hour from tips! This is ridiculous! Delivering food is no harder than what minimum wage workers do in McDonald’s.

    Making my way through the archives Don. I’m almost done with 2007.

    -Peter

  6. Thanks for the note, Peter, I bet many people feel similarly to what we have expressed here, who knows, maybe we can start a change, ‘one farm at a time’

    I am delighted you are enjoying my archives.
    I am publishing the material in book form, and have been inspired to do so by comments from my readers as many seem to be enjoying the material.

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