The practice of tipping has long been a subject of debate in the hospitality industry. While proponents argue that tipping provides an incentive for excellent service and allows customers to express gratitude directly to service staff, critics contend that it perpetuates low wages and creates an inequitable system.
From the American point of view, where in many cases there is no minimum wage, tips are what really pays the staff bills. However, the custom of tipping is spreading globally, to places where hospitality staff have a guaranteed decent salary. And that might cause dissatisfaction among customers.
Let’s dive into it.
Pros of Tipping
Incentive for excellent service: One of the primary arguments in favor of tipping is that it encourages service staff to provide exceptional customer service. The possibility of receiving higher tips motivates servers, bartenders, and other hospitality professionals to go above and beyond to ensure customer satisfaction. But why only hospitality? If I would tip a shopkeeper, would the service be better? what about a flight attendant? Hairdresser? Post office staff?
Why is it so ingrained within the hospitality industry?
Flexibility and Control: Tipping offers customers the flexibility to adjust their gratuity based on their perception of the quality of service received. It gives them a sense of control over their dining or hospitality experience and allows them to align their financial rewards with their satisfaction levels….if they are not coerced to pay a «discretionary» 12 or even 17% extra as a tip, as it’s becoming the rule in many restaurants in capitals around the world.
Cons of Tipping
Inequality and Inconsistent Wages: Critics argue that the practice of tipping perpetuates income disparities among hospitality workers. Tipped employees rely on customer generosity to supplement their base wages, which are often set below the minimum wage. This system can lead to inconsistent earnings, making it challenging for employees to predict and budget their income. Also, some outlets do distribute the tips -or part of them- with the kitchen and cleaning staff, while others just keep it individually -waiters-. Is that fair? would the customer tip of the food was not edible, or the toilets dirty?
Unpredictability and Instability: Tipped employees often face unpredictable earnings due to fluctuations in business volume or customer behavior. This uncertainty can make financial planning difficult and exacerbate the challenges of managing personal finances, especially for individuals with fixed expenses or dependents.
If an employee has a guaranteed fair salary from which he or she can live out, then tips can be used for savings or occassional expenses. However -back to the US example- if living expenses have to be covered with tips, that becomes a real problem.
The Impact on low wages
While tipping is not the sole reason for low wages in the hospitality industry, it does play a role in perpetuating the status quo. By relying on customer tips to supplement employees’ income, employers can justify paying lower base wages. This practice allows businesses to keep labor costs down while placing the burden of fair compensation on customers rather than the employer.
However, it is important to note that eliminating tipping does not automatically result in higher wages for workers. In countries where tipping is less prevalent or prohibited, hospitality businesses often compensate by raising menu prices and implementing service charges. The distribution of these additional revenues among staff members can vary, and it may not guarantee a fair and equitable wage for all.
Solution: Fair salary + optional tipping
In my opinion, the best solution should be paying every staff member a fair salary, and then let customers tip if they truly believe they have received a top service. Because as the system is established now, in some cases staff just does not offer a good service knowing that it’s «established» that customers will leave a tip regardless.
However, if the tip is optional, staff will have to overdeliver in order to «qualify» to earn that tip. Then again, businesses have to make it easier for customers to tip. Having lived abroad for many years, I have seen PoS hardware offering the option to tip (adding it on the card charge) for more than 20 years. However, now back in Spain, I struggle to find any business that offers that possibility. In a society where cash tends to disappear, customers need to be offered an easy way to recognize staff’s work.
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