March 16, 2010

Tipped employees: the hidden cost of quality labor

Fifteen years ago a friend and I were talking about the future of the web. We mused  that eventually, all businesses would be  conducted on-line. Someday soon it really would be possible to order a pizza for delivery over the Internet.

Last night I did order pizza and I placed the order through a web site.  Of course  that’s not at all unusual now. What I did find somewhat unusual was the option to tip the driver; which appeared as I completed my transaction. How do I know what kind of service I’m going to receive? Suppose I leave a large tip but the driver is very late and I have cold pizza?  On the other hand if leave a small tip, then maybe the service will be intentionally poor.

The whole notion of tipping employees who give you good service is kind of backwards. Maybe employers should pay these workers a higher wage. They could offer an incentive bonus based  on good performance and lack complaints.

Tips are the hidden cost of quality labor. Doing the job is cheap. Doing the job well will cost you. Can you imagine if workers in other occupations were dependent on tips? Think about minimum wage emergency room doctors working for tips. “Sure I could have saved his leg, but he didn’t leave me a tip last time. What a cheap skate”.

I guess you get what you pay for. But, expecting customers to tip seems like a clever way to make a profit from underpaid employees.  If your staff dislikes what they do so much that they only do their jobs well when a customer waves cash in front of their face, then something is fundamentally wrong.

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