HARDWICK: Tipping still not an exact science

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Published: August 30,2013

Tags: economic development, Phil Hardwick, Stennis Institute

Tipping, a $40-billion item in the U.S. economy, is a subject about which there is no universal agreement. Although there are guidelines written about in numerous articles, it seems that the issue is getting more confusing. Some businesses have a policy against tipping. Some even say that tipping should be banned.

To illustrate the wide range of views and opinions about this topic, gather your colleagues and discuss the scenario that follows.

Roselyn works as a public relations advisor. She is a news junkie. So much so that she subscribes to three different newspapers. Last Christmas holiday season one newspaper carrier included an unaddressed, non-stamped envelope in her newspaper with a note that read, “Send tips to (carrier’s address).” The second carrier included a signed Christmas card and a self-addressed, stamped envelope. The third carrier did not include anything with the newspaper. Roselyn viewed numerous online articles about tipping and found that the recommended holiday tip for newspaper carriers varied from $10 to $30. What should she do?

a. Determine an amount and tip all three carriers the same.

b. Tip each carrier a different amount.

c. Don’t tip at all.

Money in handIn your discussion did it matter how the request for a tip was made? Is it expected that newspaper carriers should be tipped at the Christmas holiday? Should they be tipped at other times? How much does the level of service determine the amount of tip? Should tipping be banned?

That last question was the title of a recent Freakonomics Radio podcast that shed a lot of light on the subject of tipping. The show’s researchers interviewed people across the country about their observations on the subject. In the opening segment, some of the comments about tipping servers in restaurants included:

“Attractive waitresses get better tips; waiter appearance is not important;” “Blondes get better tips than brunettes;”

“If you see somebody smoking, they’re usually a good tipper;” and “Slender women get better tips than heavier women.” Wow! Those comments should be fodder for discussion.

Dr. Michael Lynn, a professor at the Cornell University School of Hotel Administration, was interviewed. He has written over 40 research publications on the topic of tipping. Additionally, he is also a former busboy, bartender and waiter. Without doubt, he is the expert on the subject.

He has also covered the subject from almost every conceivable angle. Here are titles of some of his papers:

» “Are christian/religious people poor tippers?”

» “Black-White differences in tipping: Moderated by socio-economic status?” “Tipping and service quality: A within-subjects analysis.”

» “Why tip? An empirical test of motivations for tipping car guards.”

» “Tipping and its alternatives: Business considerations and directions for research.” These papers and more can be found on his website at tippingresearch.com.

How to increase a tip makes a difference as Dr. Lynn’s research reveals. For example, one of his papers, “Techniques for Increasing Servers’ Tips: How Generalizable Are They?” reveals that servers can increase the amount of their tips by engaging in one or more of 14 certain behaviors, including repeating the order, calling the customer by name, touching the customer and writing “thank you” on the check.

Tipping does not occur in just restaurants. Customers also tip barbers, taxi drivers, skycaps, porters, housekeepers, newspaper carriers and just about anyone who provides a service.

In order to glean more information about tipping, this writer took to asking service providers about their tipping policies. It was discovered that restaurants, in particular, have a variety of policies, depending on the restaurant. One server at a national chain said that tips were split between the server, the bartender (if a drink was ordered from the bar) and the chef. At another chain restaurant the server told me that all tips were placed in one “bucket” to be shared among the waitstaff and the greeter. At another, the server said that the cook gets a dollar and the server keeps everything else. In local “mom and pop” restaurants it seems that the serves keeps the entire tip. Other places, such as barber shops, hotels, auto repair shops, etc seem to have no policy, meaning that the person providing the service can keep the entire amount of the tip.

The idea of shared tips is not appealing to some patrons, who feel that service provided by the person with whom direct contact was made should be rewarded. It is also not appealing to some Starbucks baristas in New York. Two lawsuits against Starbucks seek to answer, among other things, who is entitled to the money in the tip jar. At issue is the definition of manager, agent and employee. It seems that baristas and shift supervisors are eligible for money in the tip jar, but assistant managers are not. The case is being watched by the restaurant industry because of possible national implications.

One of Dr. Lynn’s findings probably sums it up best, which is that there is no one best policy. For some businesses, it can lower the employee cost, attract talented workers and lower FICA payments. On the other hand, voluntary tipping can result in discrimination, subject the business to tax audits and take away income that could go to the bottom line.

For the consumer, tipping is an expense that one is free to control, or even avoid. Nevertheless, it is a subject that has no set rules, only guidelines.

Phil Hardwick is coordinator of capacity development at the John C. Stennis Institute of Government. Pease contact Hardwick at phil@philhardwick.com.

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