Chapter 27: Handling Employees Tips
When you pocket your tip change or deposit it into your checking account, have you ever stopped to think that you are participating in a multi-billion-dollar international economic system? Perhaps no other financial transaction is as commonplace or as confusing. Tipping is a paradox for the giver and the receiver — a voluntary transaction that has become compulsory and expected; a gift that is measured and taxed; an informal custom governed by formal government regulations; an interaction based on “social guilt” and an economic necessity; and a routine act filled with confusion and necessity. Tipping is a social puzzle for the giver.
• How much of a tip do I leave?
• Who should be tipped?
• Why should I tip?
Service employees and employers also struggle with questions like:
• Why should I pay taxes on a gift?
• Why should tips reduce my employer’s responsibility to pay a “fair” wage?
• Why should I care how much tips my employees make?
This chapter will help demystify the psychology and economics behind tipping so you can understand why tipping is such a hot topic for food service personnel. You will learn about tipping attitudes, how to increase your tips, and why you should report your tip income.
WHO SHOULD READ THIS CHAPTER
These are some of the people in food service who regularly receive tips for services rendered:
• Waiter/Waitress
• Cocktail server
• Bartender
• Bus person
• Maitre d’
• Wine steward
• Coatroom attendant
• Valet parking attendant
May you discover the key to serving your customers with pride and reap the rewards daily.
WHAT IS A TIP?
The dictionary defines a tip as a gift of money for a service, specifically an amount above what is owed. Also known as a gratuity. But that hardly covers the true definition of a tip which encompasses:
• A loosely regulated multi-billion-dollar economy.
• An economic necessity for millions of service industry employees worldwide.
• A practice based on historical customs, social norms, class status, and psychological distress.
TIPS ARE WAGES
Tips, like your hourly wage, are taxable income. The IRS and the federal court system have spent countless hours instituting tip laws and rulings that target tip earners and the employers who hire them.
TIPS ARE CONTROVERSIAL
Although anti-tipping laws are no longer on the books, many people would like to do away with tipping entirely.
Why not just pay everyone equitably and forget tipping? This question arises periodically when government entities review minimum wage or “living wage” laws. Politicians, business leaders and economists cannot agree on what would be fair for employers, employees, and their communities. Individual states (and even some cities) tackle the issue of minimum wage differently without addressing tipping.
A 1997 economic thesis suggests that raising minimum wages for tipped employees in the restaurant industry could actually increase employment. Trade associations, such as the National Restaurant Association, hold a different view, as noted in a 2004 position paper, “The National Restaurant Association strongly opposes federally-mandated increases in the starting wage. A dramatic increase in labor costs in a recovering economy will mean fewer jobs for entry-level workers, especially in labor intensive industries such as restaurants.”
Eliminating tipping would also require a dramatic shift in thinking, along with minimum wage laws that alter wage structures dependent upon the generosity and “social guilt” of customers. Service companies, which currently are allowed tip credits, would have to increase posted prices or automatically add a service charge to cover the increased direct expense.
Although in theory raising prices equal to the eliminated tips would not significantly alter the customers’ final cost for dining out, the psychological changes would be difficult to absorb. The immediate reaction would be that increasing a $10 item by 15 percent ($11.50) would seem outrageous to customers. However, if they were to order the same $10 meal and leave greater than a 15 percent tip, they would actually be saving money.
Tipping is an emotion-based economic behavior. Changes that affect these behaviors are much more difficult to accomplish successfully.
WHY DO PEOPLE TIP?
Hospitality industry experts agree that isolating the why can be difficult because you are dealing with an emotionally based behavior that people may not want to reveal. The four most common reasons American’s tip are:
• Fear of being socially inappropriate — the internal mechanism of guilt that causes us to tip (even when there are no social observers).
• Economic awareness — a genuine interest in supporting the lower paid “service class.”
• Reward for being helped — gratitude for services rendered.
• Status seekers — using tipping as a way to “show off” or to point out “superior” social status.
MANNERS
Many adults were taught that tipping was a sign of good manners. Tipping is just something you do as a polite person. As children, we watched adult role models discreetly leave money on the table. Inquisitive, we asked why. In our fast food world, many of these dining- and entertainment-related manners have faded away.
GUILT
Guilt is used by parents, schools, and social institutions to regulate behavior. We are guided by guilt, often without even knowing it. Because you are “supposed” to tip the waitress or the bellman, our guilt causes us to act without giving it much thought beyond the mathematical calculation.
ECONOMIC AWARENESS
Closely related to guilty feelings, an awareness that the people who wait on us are among the lowest paid workers in our society drives many people to tip. Affluence does not guarantee this “share the wealth” attitude. Generosity seems more prevalent with “working class” customers— especially those who are or have been service employees.
THANKS
In the United States, tipping has become such an automatic response that the connection between tips and good service has dimmed for many tippers. Foreign visitors often mention their dismay as to why we would tip for good service, as good service should be the accepted standard. Only excellent or special service would warrant a tip in many countries.
However weak the association between rewarding actions and tipping amounts may be, many tippers cling firmly to the “TO INSURE PROMPT SERVICE” motto.
For some, tipping has become so automatic that they figure the tip replaces thanking the person who served them. For servers, a good way to minimize this response is to be an “active thanker.” Take every opportunity to look the customer in the eye and thank him for the change in the tip jar, the extra dollars on the charge, or coins left beside a plate. Be present at the end of the customer-employee interaction and be thankful. You will feel better and be tipped better.
WHAT? NO TIP?
You smiled and greeted everyone cheerfully, no complaints about the service, and everyone seems pleased. So, why no tip or a very small tip? Several researchers, including Michael Lynn, Ph.D. at Cornell’s School of Hotel Administration, have repeatedly found that service quality has limited affect on tips. In Dr. Lynn’s December 2003 report, he reviewed current studies and his own past reports to arrive at the same conclusion: restaurant tip percentages are only slightly affected by average service quality. (Employers should note that Dr. Lynn determined that restaurant turnover rates and even servers thinking about quitting negatively affected tips, which fuels the cycle for dissatisfaction and turnover.)
So why should you care about good customer service? Because it is your job, your personal reputation, your integrity, and your responsibility to contribute to a civilized world. Good customer service is a vital part of a healthy economy and civilized culture.
Making your customers feel good makes you feel good and makes your community feel good. People do notice and will reward you for your excellent service. Remember, these studies are talking about averages mathematically calculated from a small sampling of situations. Your real life experience is what counts, so enjoy your job and your customers and earn great tips.
TIPPING SIGNALS
The 15 percent restaurant tip (while slowly inching up to 20 percent in many regions of the country) is so expected that leaving less is interpreted as a signal of poor service. While some studies show that the quality of service is not the primary reason for good tips, they also note that employers should not use tip size as the sole indicator of customer satisfaction.
WHY SOME PEOPLE DO NOT TIP
Tipping less than what is locally customary or even leaving no tip can be because the customer is:
• Unaware of the average tip rate or other local custom. (Remember, tipping behavior varies from region to region.)
• Uninformed that tipping is common when receiving this type of service.
• Basing their tip on their perception of your service and products received. Perceptions on service quality and customer expectations vary from region to region and from informal to formal establishments.
• Using an internal “fairness” guide. Was it harder to serve one inexpensive meal versus a costly one? Tips, when serving large groups, are especially affected — does he really deserve a $45 tip?
• Rebelling against the concept of tipping. Some people feel that the employer should be paying their employees and that tipping is an outmoded form of payment that has evolved to blackmail.
Poor tippers and non-tippers can be categorized into the uneducated, the rude, the righteous, and the social anarchist. You will probably only be able to influence and improve some tipping responses. Educating a customer would typically be considered rude and should be avoided; dealing with a rude customer, even if handled with tact and courtesy, probably will not result in a generous tip and you will have a hard time dissuading those rebelling against tipping to believe anything else. However, by concentrating on behaviors and attitudes (especially any relating to #3 above), can be worth the effort, both financially and emotionally.
RECEIVING TIPS
As a tip-earner, the issue of tips takes on new importance — your financial well-being. Being at the mercy of people who may not understand the nuances of tipping can be stressful. You must walk an invisible tightrope — do you risk offending someone or do you just hope for the best?
THE ETIQUETTE OF RECEIVING TIPS
Good manners are as important when you receive a tip as when you give one. Much is written for customers on proper tipping (although if you have been stiffed regularly, you are probably certain that no one ever reads Ms. Manners or other etiquette experts).
If a gratuity is a gift, then you are the gift recipient. The basic rules of etiquette are much like when you receive a birthday gift: be thankful. Even if you are not wild about the orange sweater with green polka-dots, good manners means that you acknowledge the gift, thank the giver, and appreciate the thought.
In many tipping encounters, you may not have the opportunity to thank someone directly. The key is not that you are to say, “Gee, thanks for the big tip.” You are thanking them for giving you the opportunity to serve them. By simply acknowledging that you are glad they came in and glad you could assist them, you will be saying, “Thanks for the tip.”
Kitchens and backrooms are filled with servers grousing that so and so stiffed them. While it helps to blow off steam, it also can become emotionally corrosive and affect your ability to enjoy your job.
As Mom says, “If you can’t say something good about someone, don’t say anything at all.” Withholding service, or worse still, blasting someone about the lousy tip, just is not polite. Do you really think that your negative actions or words can change anything? Probably not and you may actually be making matters worse. Chalk it up to being part of a world filled with all kinds of people and concentrate on what you can control: a job well done and the resulting reward from appreciative customers.
TIP JARS
Tip jars were not invented by your local coffee shop. However, their reemergence as a not-so subtle way of asking for a tip really came about in the early 1990s. If tipping confuses people in sit-down restaurants, counter-service tipping can be even worse. So should you or should you not have a conveniently located tip jar in your establishment? Who should receive a share of the tips? The following pros and cons might help you make the right decision for you and your customers.
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TIP JAR PROS AND CONS |
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Con (No Tip Jar) |
Pro (Tip Jar) |
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Etiquette would say that tip jars are asking for a tip, which is considered to be rude behavior. |
Customers, who would like to tip unceremoniously, may appreciate the jar. |
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Tip jars are meant to make customers feel guilty, and “guilt” is the emotional stimulus for tipping. |
A tip jar is a convenient way of gathering tips before dividing them amongst the shift personnel. |
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Funny sayings about tipping karma don’t make it “nicer.” |
Funny sayings are a way for us to diffuse our own embarrassment about having to ask for tips, and customers like them. |
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“If I felt like tipping, I would; I don’t need a visual nag.” |
Tipping etiquette and habits can be confusing. Our goal is to gently remind people that the custom is to tip us. |
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Counter servers barely raise their head to wait on me or don’t say a word other than “That will be $4.95.” |
Many customers do not realize that service personnel (even trained baristas) receive only minimum wage or less. |
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Why should counter servers get tips? |
Poor service = no tip. |
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What’s the difference between someone waiting on me at my favorite coffee shop and someone waiting on me at the pharmacy? |
You’re right that many people are deserving of either tips or a “living wage.” This is a question that probably doesn’t have an answer that satisfies everyone. |
If you choose to have a tip jar on the counter:
• Create an attractive presentation. A recycled pickle jar might not be the image you want to project.
• Add a sign to the jar that fits your store and clientele. Such as “Your tips are greatly appreciated. Thank you from the staff at Bill’s Ice Cream Shop.”
• Make it easy to leave a tip by including small bills when you return their change.
• Smile and look at people when they pay.
• Pause and say, “Thank you!”
EDUCATING CUSTOMERS
Educating your customers may be a solution. As many people still perceive tipping as a “gift,” your good intentions may shout of rude behavior and backfire on you. The tip jar has an educational benefit; however, its use is limited to counter service. Imagine servers walking around with a tip jar.
Subtle reminders such as tip trays and tip lines printed on register tapes are perfectly acceptable. You might stock free tip cards next to the after-dinner mint bowl. Look for ways to make it easy for customers to tip and you will be reminding customers that it is customary.
Studies discussed in this book show that groups traditionally tip less than the local going rate. In response, companies have started to automatically add a service fee or “gratuity” to ensure a minimum tip level for serving groups or for a specific personalized service. This method may prove to be your best solution for dealing with “intense” work situations. The IRS does not consider these mandatory service charges tips. Employers will include the fees in their sales totals, divide the service charge among the appropriate personnel, and add it to their salary as a bonus.
To learn more about tipping etiquette, The Original Tipping Page at www.tipping.org provides a wealth of information on getting and giving tips. Denton Software offers a free tipping guide for Palm-based Personal Digital Assistants at www.dentonsoftware.com/Products/Free/Tipper/Tipper.htm.
WAYS TO INCREASE YOUR TIPS
PERCENTAGE OF SALES
There are only two ways to increase your tip income. The first is to increase your tip percentage. If you currently average 12 percent on products sold, one way to achieve greater income is to increase this percentage. Raising it to 15 percent means an extra $30 per $1,000 in sales. The second way is to sell more. If you write an additional $250 in dessert orders with your same 12 percent tip average, you earn an additional $30 per shift.
Increasing your average tip percentage can be as simple as introducing yourself. Enhancing your sales/service ability requires more training and effort; however, as you can see in the above example, the effort has a greater pay-off.
WHY DO SOME PEOPLE EARN BETTER TIPS?
Some service personnel simply earn more tips than others in their industry. Learning what makes peers successful tip earners is a great way to achieve your own goals.
As the saying goes for building a business: It is location, location, location. Where you work will affect your tip earning potential. No matter where you work you will discover some people simply earn more than their coworkers.
Studies show employees who rate their own service-providing skills higher than average earn more tips. Also those who are best able to assess the appropriateness of their behavior during work situations are better tip earners.
The reasons some people earn greater tips range from physical appearance and service ability to cheerfulness and attitude. Factors such as attractiveness do come into play for women. Women judged “attractive” earned larger tips. Studies show that a man’s looks are not a significant factor for larger tips. You do not have to resort to plastic surgery to increase your tips; attitude and behavior are the most important reasons some people earn more in tips. A broad smile, good disposition, and some interpersonal skills can make all the difference.
LOOK IN THE MIRROR
You have taken the first step to earning larger tips by reading this chapter. The next step is to examine yourself — your physical appearance, your attitude, your behavior, and your skills. Look in the mirror and your heart to see what might be improved.
• Physical appearance — Are you making the most of your appearance? Do you dress appropriately?
• Attitude — Are you mentally and emotionally prepared for a great day? Do you get easily frustrated with customers or coworkers?
• Behavior — Are you aware of how your behavior affects others? Do you exhibit good manners at all times? Do you gossip or chat while customers wait?
• Skills — Are you performing as well as you could? Do you lack some skills? If your employer does not offer training programs, find a mentor, a book, or a program to help you grow.
LITTLE TIPS FOR BIGGER TIPS
Studies on tipping behavior have revealed some interesting ways you might increase your tip income. These, along with your own personal research, can be tested for effectiveness with your customers.
1. Squat down for an eye-to-eye connection. Cornell University studied this action and discovered that when a waiter in a Mexican restaurant squatted down when he introduced himself to his patrons, he increased his average tip from 14.9 percent to 17.5 percent of the bill. This scenario was repeated with a waitress in a Chinese restaurant who increased her tip from 12 percent to 15 percent of the bill by merely squatting down next to her tables. This demeanor would be suitable in a variety of casual restaurants.
2. Tempt them with candy. An experiment conducted randomly with two waiters and a waitress showed that giving diners a piece of candy at the end of the meal increased their tips. In the first experiment, diners were randomly given a single piece of candy which raised tips from 15.1 percent to 17.8 percent of the bill. It seems that customers feel more obligated when they are given a sweet gift. The next experiment had diners randomly receiving no candy, one piece of candy per diner, two pieces of candy per diner, and one piece of candy per diner plus an “impulse offering” of another. Diners who received one candy tipped more than those who were not given any candy. Diners tipped even more when they were given two pieces of candy. The largest tips (23 percent) were given when the waitress offered a single piece of candy, and then before leaving offered another on “impulse.” Large groups of diners were more affected when candy was offered.
3. Touch your customer. Placing your hand on a shoulder in a natural manner or shaking hands are powerful ways to connect with your customers. Research has shown that casual touching of one to two seconds has a significantly positive affect on customer happiness, shopping times, and tipping. Younger customers and women responded best to the touching experiment. The touching was part of the server’s natural behavior, so it did not appear to be anything out of the ordinary. Tips during tests in a restaurant situation increased from an average 11.5 percent of the check to an average of 14.9 percent of the check. Employers who prohibit interpersonal touching for fear of inappropriate contact should review the studies and set “appropriate behavior” guidelines that incorporate casual server/customer touching. Studies show even prolonged touching (4 seconds or more) did not cause negative reactions. The benefits, beyond tipping, can be tremendous for your business as customers develop a bond with your staff. Note: Different cultures may interpret touching differently. To learn more about touching people with different heritages or foreign visitor, read The Do’s and Taboos of Hosting International Visitors by Roger E. Axtell.
4. Take a minute to explain things. Cornell University studied a hotel bellman in a small upscale hotel. When the bellman gave the “normal” level of service, he received an average of $2.40 when escorting guests to their rooms. When he explained how the TV operated, how to adjust the thermostat, opened the drapes, and offered to bring them ice, he doubled his tip ($4.77 on average).
5. Make a parent’s life easier. Dining or shopping with children can be tough. Pay special attention to children. Admire their hair or smile. Tell a silly joke. Quickly provide distractions for toddlers and above — things like crayons and coloring books. Ask if they would like you to bring some veggies or crackers for them to eat while the family is waiting. Ask whether drinks should be served early (children tend to fill up on beverages before the meal arrives). Note: Never touch an infant or small child without a parent’s permission. Many parents have strong opinions about strangers touching their children and you may accidentally create a scene.
6. Learn to read people. Observe your customers’ body language, listen to their tone of voice, and watch how they interact with others. It gives you the opportunity to “tailor” your interaction to suit the situation. Acting a bit silly, when a customer is obviously distressed, can backfire. Your intentions could be misinterpreted and leave you without any tip.
7. Wear something unusual. A flower in your hair, a silly tie, an elegant brooch, or a button with an intriguing saying are all great ice-breakers. Remember, religious, political, or other inflammatory sayings are a no-no.
8. “My name is…” While some people feel that introducing themselves seems pretentious, studies show customers tip more if they feel that connection. Try different deliveries (casual, informal, and formal) until you feel comfortable and your customers respond well.
9. Make them smile. Share a smile, mention something silly or fun, discuss the sunny weather, or draw a smiley face on the check. These are all proactive ways, researchers have discovered, to increase tips.
10. Do not just stand there — sell. New customers, overwhelming menus, great daily specials are all reasons to sell more food and build bigger tips. Other service providers can also increase tips by providing consultive selling. Advise them on special services or extra benefits for buying something else. Buyers do not want to make a bad choice; they often select something “safe” because they are uncertain of the quality, taste, performance, or value of other choices. Tips are your rewards for helping people feel confident about their choices.
11. Discuss delivery charges. Order-takers should explain the added delivery charges and who gets these fees. Create a polite and informative explanation such as, “Our delivery fee covers a small portion of our delivery costs. Tipping your driver would go directly to them and be greatly appreciated.”
12. Repeat the order. Not only can you avoid miscommunications, some people report that they receive better tips when they cheerfully repeat the order back. Some studies even assert that mimicking how the order was given word for word had a positive and significant affect on tips. This method is another that will require your ability to read people and the situation.
13. Say their name. Credit cards give you the customer’s name. Make note of it and when asking for a signature say, “Thank you, Mr. Jones.”
14. Write on the check. Write “thank you” on the back of their check to increase your tips. Other short messages can also have a positive effect on tips. To save time, write your message on your blank checks during a break. Happy faces or big grins also count.
15. Give them tip change. In the age of credit and ATM cards, people do not always have various denominations in their wallet. Because tipping has to do with social manners, not everyone feels comfortable about asking for tip-appropriate bills. Do not hand back a $10 bill — the return change should be a $5 and five singles. That way you know your customer can easily give you the right tip. Sometimes getting shortchanged on a tip is simply because they did not have the right amount handy.
DO YOUR OWN RESEARCH
Informal research on what motivates your customer base to tip can be quite beneficial and easy to implement. You must create some consistent factors and study your resulting tips. Because tips may vary from shift to shift, from day to day, and from month to month, you may have to repeat the test over a period of time. A good way to track your test is to make note of it in your daily tip logbook.
Try some of the suggestions based on the industry studies mentioned previously along with some of your very own:
1. Makeup. Some employers require makeup, others do not. Try wearing a little more make up (or less) than you normally would. Concentrate on natural-looking makeup during daylight hours and a bit more glitter during evening hours. When practicing makeup application, use a makeup mirror that has lights similar to your workplace to get an idea how others will see your smiling face.
2. Hair style. Alter your hair style. If you have been wearing it pulled back from your face, try a looser style (watch out for stray hairs for sanitary reasons).
3. Facial hair. Beards or moustaches can alter your appearance significantly. Go without shaving during a vacation or shave yours off and see how your customers react. Just make certain that your facial hair meets your employer’s dress code and that it is well maintained.
4. Brighter colors. If you are not required to wear a uniform or specific color schemes, try brighter colors. Even if you have to wear black slacks, try adding a bright tie or a blouse in a complementary color.
5. Observe peers. One of the best ways to increase your tips is to see what works for others in your establishment.
6. Improve your attentiveness. The key areas to focus on are your customers’ convenience, comfort, time, privacy, and security. Learn to read signals and ask how you might help them.
• Make it easier for them to do business with you or to dine with you.
• Make them feel at home.
• Create a unique, “better than at home” experience.
• Do not waste their time if they are in a rush.
• Help them relax and enjoy a leisurely pace.
• Seat them near the play area so they can watch their children.
• Seat them where conversations can be private.
• Provide a discreet environment where people will not know that they are seeking your services.
• Provide a secure environment for children or develop habits to protect customer information.
7. Learn new skills. There are plenty of ways you could increase your service (and tip income) with a new skill. It can be a great way to surprise regulars and treat new customers extra special. Learn:
• How to elegantly wrap leftovers.
• A few magic tricks to delight customers.
• To greet foreign-speaking customers in their native tongue.
• How to pour a drink dramatically.
8. Increase your value. Like learning new skills, the more you can do to help your customers the more valuable you will be. Valuable service providers are their customers’ trusted solution and will bring people back again.
9. Ask for advice. Do not be afraid to ask your customer what you can do to serve them. Ask how they would like something or if they need something else. Anticipating their needs is part of superb service.
10. Do not be afraid to say, “I don’t know. Let me see what I can do for you.” Some customer requests may be out of the ordinary or even beyond your authority. Make the customer feel like you are doing everything you can to satisfy her needs. If you can handle the special request, you will be appreciated and, if the answer is no, you will still get points for willingness to try.
11. Include peers in your tests. Have other servers try out your ideas and see what results they get. Each person will have their own personal interpretation so you can observe what works for them also.
12. Get management’s support. Having your supervisor behind you can be a powerful tool. He might have some ideas and can also help you fine-tune your findings. He may also appreciate knowing just why your hair style keeps changing every month.
To learn how to conduct your own tip research, visit The Center for Hospitality Research at Cornell University’s website at www.hotelschool.cornell.edu/chr and download Mega-Tips: Scientifically Tested Techniques to Increase Your Tips by Michael Lynn, Ph.D.
TEAMWORK = BETTER TIPS
Unless you work alone, your service ability is directly related to the activities of others. Slow kitchen = poor tip. Inattentive receptionist = poor tip. It is in your best interest to learn how to work well with others and positively influence their performance. Learn how to partner and work with others by:
• Participating in tip pools. Sharing the wealth can be one way to support the behind-the-scenes personnel.
• Concentrating on good communications. Make certain people understand your needs and expectations.
• Planning ahead. Do not wait until you are in a panic to explain how you would like something done for you and your customers.
• Get them to join you. Tell people who work with you that you want them to help you be successful. People appreciate being valued and letting them know how important they are to your plan does that.
• Recognizing greatness. Be vocal when your peers and/or support personnel do something great. A small gift or recognition during a staff meeting will promote a repeat performance.
• Saying “thank you.” It is amazing how powerful a few kind words can be in creating a partnership with coworkers.
If all else fails, report inferior performance to a supervisor. Sometimes the only solution is to inform management of situations that cannot be fixed without intervention. Just make certain that you have made a real effort to correct a problem before reporting it. There is a difference between tattling and seeking management support.