On my return trip from the daily stop, I drove by a restaurant up here in Presque Isle, ME that apparently requires tip pooling. I suddenly found myself really upset at the whole idea of tip pooling, so I thought I’d try to organize and share them [my thoughts about why].
Here are a few reasons why tip pooling is just plain bad for business:
- Tip pooling removes the incentive for excellence. If an employee doesn’t get to reap what he sows, he inevitably won’t sow quite as much. My Uncle used to tell his waitresses that “A glass of water and a smile is a dollar in your pocket.” Tip pooling means a glass of water and a smile is part of a dollar in your pocket and most of it everyone else’s… “Don’t muzzle the ox that treads out the grain.” Servers working at a “less than” level are bad for business.
- Tip pooling allows poor performance to go unchecked. A tip is a commentary on the performance of the server. If she is slacking off, the tip (or lack therof) is a wake-up call. As a business owner, the customer’s experience is vital to success – if my customer isn’t happy with the goods or services they’ve received, I want it to change–and quick. And the incentive should be “Do better, and your tips will improve,” and not “Here, take some of sally-hard-worker’s-tips to make you feel better. Is your self-esteem alright?”
- Tip pooling causes frustration between employees. It’s the 80/20 rule all over again; 80% will be carried by the 20% that are really busting their rears. The thinking ‘well, if we just all do well, we’ll all get good tips from the pool’ just doesn’t work in practice (just ask Russia if you don’t believe me). What incentive does this create for the 20%? “Less than.” If you’re working hard, but others are reaping the majority of the benefit but still won’t shoulder the load, why work at 100% when 85% will do? This, too, is bad for business.
- Tip pooling creates the tempation for dishonesty. If I’ve just busted my tail serving a party of 15, and they recognized that extra effort and rewarded me with a hefty $100 tip, who wouldn’t be at least tempted to only report part of it? ‘That’s stealing from your co-workers!’ one might object – Hold on! Since when were my customers tipping them? Which brings me to my next point.
- Tip pooling is rude to the customer. It robs me of saying thank you how I want to say it, and to whom I want to say it. If I come in to an establishment for a fine meal and am served very well, and if I then choose to give my server a tip, then how the heck is it anyone else’s business? My tip doesn’t factor in to the employer’s operating costs, it isn’t part of his income – I already paid my bill. It’s a tip. This is my hard-earned money that I’m choosing to give to my hard-working server; who invited him to the transaction? This is a tip – it’s not part of the bill. I don’t want my money going to someone else in the building who didn’t help me with anything – this server did well, this server gets my tip. Which leads to my next point…
- Tip pooling results in lower overall tips. If I’m about to hand my server a well-earned tip and someone else jumps in the middle and says ‘whoa there, pal – give us some of that,’ I’m going to put most of it back in my pocket and walk out with a bad taste in my mouth (no matter how good the steak was.) And if I come back, I certainly will be less likely to tip my server the full amount I think she deserves-since I know it won’t go to her anyway.
- Tip pooling encourages macro-thinking when success is in the micro. It’s kind of like Margaret Thatcher’s maxim that “there is no such thing as society.” She’s right – there are only individuals. You want to help ‘society’ as a whole, you must help one individual. A business will be successful when one server helps one customer well, then repeats that. If the server thinks along the lines of ‘averages,’ or leveraging his performance with one customer against the performance of all servers with all their customers, the end result is working a little “less hard” for that particular, individual customer. Thinking “volume” in a customer-service oriented industry (such as non-fast-food restaurants) is deadly. Macro-scale success is dependant on micro-scale success with one, individual customer. (Ayn Rand is excellent on this topic.)
If a server wants to share his tips with others – fine, by all means, let him. But that’s his decision. Just like tipping – or being a customer at all – is mine. Just don’t get in the way.
In summary:
- Dissatisfied servers eventually become less-than-hard-working servers (who eventually become someone else’s servers).
- Dissatisfied servers create dissatisfied customers (who eventually become someone else’s customers).
- Employers without employees, or customers, eventually become someone else’s employees.
For Further Reading:
- Frederic Bastiat, The Law
- Henry Hazlitt, Economics in One Lesson
- Henry Grady Weaver, The Mainspring of Human Progress
- Ayn Rand, Atlas Shrugged
(for the economic principles – read with discernment)
gmail.com
one word: socialism
Exactly.
(The original title for this post was “Tip Pooling is Socialism”)
well said
Aron I love your passion! You’ve inspired me. Coming soon: ‘The reasons I love airports’. The title will be refined and the essay will be written when all of these finals are over. Stay tuned…
Tip pooling is fraud on the public and a violation of our constitution when it is required or mandated by the business owner.
Customers have every right and ability to tip more than one employee if it is their intent to tip several workers, however, employer required tip pooling is fraud when it arbitrarily takes part of the tips away from an individual whom has received a tip so that it may be shared with employees whom the customer had every right and ability to tip but didn’t. Clearly these other employees whom are being given a share of the customer’s tip have no claim to such monies since the tip is being forcably taken away from the person to whom it was presented. Clearly actions by an employer which require that an employee give up part of his tips to other workers who customers had every right and ability to tip but didn’t is fraud on those customers who have presented a tip to an individual.
The 14th amendment of our constitution guarantees that no state shall pass any law which deprives any person of life, liberty or property without due process of law. Requiring or mandating that an employee must give up part of his property, his tips, to other workers is not due process of law. Requiring or mandating that customers must give up their liberty to determine for themselves who will be the recipient of their tip is not due process of law. Customers like tipped employees have constitutional rights which prohibit employer required tip pooling.
Wow….
I was searching the internet for something different when I came upon your essay on forced sharing of tips. I didn’t realize such was possible, and will endeavor to inquire at my favorite restaurants whether such is the case. I agree 1,000% with you – each of your points well made. Quite the eye-opener, for sure; and here it is almost 2 years since you wrote the piece. And George’s comments about being contrary to the 14th amendment hit home as well. Don’t know if it would hold up in court, but it certainly makes sense to me! Thanks.
What about ‘from each according to his ability, to each according to his need’? I think tip pooling is great. It is the only fair way to divy up the tips man. The individual doesn’t matter. Society needs to progress and above all else maintain fairness in everything. It is the only way we can progress as a society.
It is all George Bush’s fault.
It is all global warming’s fault.
Trans fat and foie gras and smoking in all public places needs to be banned. Maybe even private places.
:)
It’s a team effort. Sally may not be smiling when she greets you because she’s been non stop bussing her own tables. As a business owner we put the nicest on the front lines. There’s alot that happens behind the scenes. To not reward those people is just wrong and unfair. A well run business will leave sally to do her job properly resulting in customer satisfaction.
Greg,
Thanks for dropping by, and for leaving a comment. I agree completely: “To not reward those people is just wrong and unfair.” My point, though, is that the employer shouldn’t (oh-so-graciously) reward them with other peoples’ money. If he sees his bus boy doing well, then he ought to reward him–with his (ie, company) money. If, on the other hand, the employer sees Sally-works-a-lot doing Billy-slacks-a-lots’ job, then he ought to reward Sally and fire Billy. Either way, he shouldn’t step between the server and the tipper — as I said above, it’s a tip, not a wage. (It shouldn’t even be factored in to a standard, lower wage for servers.) It’s a property rights issue, really. I’m for liberty, not coercion. (Which is why I also oppose minimum wage laws.) At issue, I guess, is the nature of a “tip” from a satisfied (or dissatisfied) customer, versus a “wage” from a satisfied (or dissatisfied) employer. The line between them is the line between liberty and coercion…
…perhaps I should’ve title this “Why [involuntary] Tip Pooling…”
The final chapter on tip pooling will come when it is realized and understood that tip pooling is a right reserved for the recipient of the customer’s tip.
Currently, it is errantly being assumed that tip pooling is a right reserved for business owners. However, when one anylizes the practice of tip pooling and what such practices actually entail, it becomes quite evident that only an employee who has been given a tip directly is authorized to pool the customer’s tip.
What is realized when one anylizes tip pooling is that tip pooling is the appropriating of the customer’s private proper. Without the customer’s consent, tip pooling is simply an illegal appropriation of the customer’s property. While an employee who is given a tip directly is authorized to appropriate the customer’s tip in any maner the employee chooses, employers have not been authorized to appropriate the customer’s property in such a manner.
Employer mandated tip pooling is no different than employer initiated tip pooling. When employers mandate tip pooling, what they are doing is illegally confiscating and appropriating money that doesn’t belong to them. Eventually this truth will be understood and employers will be prohibited from such acts.
Eventually, tip pooling will become understood as a right of an employee who has personally received tips. Involuntary tip pooling will be acknowledged as an illegal pratice while voluntary tip pooling will remain an option for each employee who has personally been presented tips.
Excellent point, George. Thank you!