Big tip: There’s power in your gratuity,
By Rocky Slaughter

Recall the last time you had horrible service at a restaurant.  You probably found yourself wondering how the waitstaff could sustain themselves by treating their customers so poorly.  Didn’t they want future business?  Didn’t they want a big tip?  Didn’t they have a soul?

I have formed a few opinions about the role of gratuities over the last few years.  I have worked as a tour guide, a tour bus driver, a host at a restaurant, a bartender and a valet/bellhop at a hotel.

You may have thought of tips as an unwritten fixed obligatory service charge that gets tacked onto the price of food so long as the experience did not fall below the bad side of average.  You also may have noticed that your tips, at any percentage or amount, rarely change the service quality, and even more rarely invoke a “thanks” from the tip-ee.

You have more power than you think.

This article will discuss some of the factors that motivate employees in the tipping industry, as well as when, what amount, and who you should tip to maximize your service experience.

How Gratuities Have Tipped Over Time
When gratuities became a mainstream practice in America, the original purpose of the extra monetary bonus was to motivate service employees to excel at their jobs.  As some people even attribute “tips” to be the acronym for “To Insure (sic) Prompt Service,” it is clear that customers gave tips more for their added enjoyment of an experience, than out of concern for the employee or fear of poor and spiteful future service. As tips have become a social standard and a government expectation (mandatory taxes on tips), the correlation between tips and better service has faded, if not completely disappeared.

In general, tips now serve a different purpose.  Instead of leading to better service on a case-by-case micro level, tips have changed the entire market condition.  Since tip positions typically pay a higher net wage, the tip-seeking job market has become increasingly competitive. And as a result, it consistently produces more skilled employees with better backgrounds than other jobs offering similar wages.

Tip positions are also more attractive than other jobs offering similar wages due to their ‘lax tax’ nature.  Tips are reported and taxed sometimes, but never all-the-way, always.

As the underlying purpose of the gratuity has changed, so have the benefits.  Fortunately, the benefits are greater now than when tipping originated.

Contrary to what you probably think, tipping actually causes you to spend less.

Without gratuities — restaurants, hotels, etc., would need to pay higher wages to hire and sustain the quality of workers they currently enjoy.  This would directly affect the price of food or other products and services in proportion to the extra pay.

For example: If the average gratuity for a restaurant is 15 percent on top of food prices, we can assume that food prices would have to increase at least 15 percent for the restaurant to pay enough wages to sustain their higher-quality employees.  In this situation, even a 15-percent increase of food prices would be an extremely conservative estimate.  For every percentage of increase in an employee’s wage, the employee and the employer gain tax liability.  Both the employee and the employer are responsible for paying into the employee’s Social Security and Medicare fund (including state add-ons).  In order for an employee to feel the same benefits of a ‘lax tax’ 15-percent average tip job, an employer would need to increase that employee’s wage by at least 17.25 percent, and increase prices by 19.5 percent to accommodate extra taxes on their end.

In addition to having a 4.5-percent hike in prices in a no-tip world, you would also have more tax liability. If a (nice) hotel room normally costs you $200, the extra 19.5-percent service-costs increase would bring your new price to $239. At $239, you pay more money toward the fixed hotel occupancy tax than you did previously.  At California’s 11.5 percent hotel occupancy tax (higher in some cities and counties), you would now owe a total of $266.49.  This compares to your normal hotel bill, plus occupancy tax at $223.  If you are one of the select benevolent few who give the doorman, valet, bellhop, housekeeping AND the hotel laundry staff a nice $5 tip during your one-night stay, you still save yourself almost $20 by being generous!  You have also probably made a hotel laundry attendant’s day.

With your new perspective on the effective purpose of gratuities, we will explore how to make your tips even more effective on a case by case basis.

Tip Attenuators:  The Profile, The Expectation, and the Pool
To assess how you can use tipping to your direct personal advantage, you must consider the factors that are working against the power of your gratuity.

Recall the experience from the first paragraph.  On this occasion, do you remember other tables getting better service than you?  Maybe another party ordered after you did, got served before you did, and left before you could even smell your food.  In some situations, you may have even noticed the waiter or waitress even explicitly ignore your table.

In this scenario, you probably – and unfortunately – have fallen victim to the curse of Tip Profiling. You are probably a reasonable, generous and warm-hearted person with good intentions.  However, all service industry persons – from taxi drivers to hotel laundry staff (yes, you’re supposed to tip them, too) – see straight through your glowing beams of bounteousness and remember their last few experiences with guests like you.  If you’re unlucky, you might fit the historical description of a particularly crabby set of tightwad guests that plagued that particular service person in the past.

The Tip Profiling Process varies widely from guest to guest, area to area and job to job.  I have noticed different trends in all industries.  When I was a valet, for example, I would make like Michael Johnson for a car if I saw that it was a dark-colored Jeep owned by a suburban mom-like figure.  On the other hand, the valet staff would habitually engage in “hot potato” with a set of BMW keys from the adjourning Harvard Business Club seminar.

This sort of specific profiling, though completely absurd, was the key to success as a valet in Boston at that particular time in the year.  It became most apparent that profiling was fruitful when equal-opportunity rookie valets finished the day with substantially less tip money.

Tip Profiling is not normally a conscious process and is not something that is easy to override with a smile and a wink.  Being a noteworthy and pleasant guest is always a great way to minimize the impact of a profile.

Your gratuity is also not nearly as special as it used to be.  Service employees now expect tips.  Some companies now even add a fixed “gratuity” to your bill, most particularly in situations when you have a large party or an otherwise expensive meal.

The expected tip has ruined the motivating factor of gratuities.  Most employees, especially in restaurants, can continue to give the same mediocre service and expect a certain amount of return every time they head to the tables.  Even the cheapest returning customers will not ignore the expected tip for fear of getting water in their lap on their next appearance.

The “tip pool” has a tendency to work for and against the power of your gratuity.  A tip pool is simply a bucket, physical or imaginary, in which all tips from all employees are deposited on any given work day.  The goal of the tip pool is to level the playing field in the tipping arena so that employees can work together, instead of against each other, in fear of unfair employee practices that lead to “stealing tips.”  A tip pool works especially well when all employees interact regularly.

Hotel valets sometimes use this system so that employees don’t fight over which cars to drive and which guests to help. Everyone will end up getting the same amount when the night is over.  Valets also do not have long interactions with customers, and, thus, cannot build enough character to influence a potential tipper to give more or less.  For valets, the tip pool system works because there is significant oversight between all the employees.  There is also a large correlation between the usual tip amount and the amount of time it takes for valets to turn cars around making it essential for valets to function as a team.

In restaurants, however, there is significantly less oversight between employees, and waiters/waitresses in a pool are inclined to be lazy as no one is looking over their shoulder. Everyone in the restaurant will be served, and all possible tips will be earned and divided equally, regardless of service quality.  Tip pooling causes restaurant employees to be relaxed and dependent on other employees to pick up for their slack.

I think that tip pooling solves staff complaints, but punishes charismatic waiters/waitresses and rewards slow, dependent and careless service.  I’m sure there are many restaurants that perform well with the tip pool system.  I have yet to experience that work environment.

Before divulging the most effective tipping method, it is worth mentioning how not to act in pursuit of getting the most from your gratuity and overall experience.

Back the Baksheesh: Rules of Engagement
Sometimes things may not go your way.  If you feel that a situation is not living up to your expectations, you should follow these guidelines:

Do not get angry!  The employees you are angry at are in ultimate control of your overall enjoyment this time, and next.  Employees can understand fairly quickly when they have botched something, and, if they are reasonable, already feel bad about it.  If you give them a hard time, who knows what they might do to your food?  Your room?  Your car?  Your experience?  An assertive attitude is all that is necessary to inform management personnel to correct problems.  Managers tend to take your future business very seriously.

Always tip!  You should never leave a tipping situation without showing some sort of gratuity, unless you plan to never return or unless you were so peeved that you intend to seek punitive damages against that employee’s wage for that day.  I say “punitive damages” because service employees are often required to pay a certain amount to other employees (non-tip or low-tip positions like runners, bar backs, etc.) or taxes based on the total amount of restaurant revenue (not total tips) that night.  If you don’t tip, you will cause that employee to lose money out of their existing tips.

Always tip! (A reiteration of point No. 2): A bad experience rarely results from the actions of the tip-seeking employee.  If your food is bad, talk to the cook.  If somehow you find that the disgusting experience was the result of the tip-seeking employee, then it is even more effective to make sure you tip, but in small amounts.  If you were a good, attentive and calm customer, a lean tip is the ultimate symbol that you recognized your duty and were courteous, yet at the same time, you wish to alert the employee that they fell short of your expectations.  The ‘bad’ tip also ends speculation that maybe you might have forgotten or not known it was appropriate to tip.  In other words, placed correctly, small tips can be devastating.

Do not use your cell phone tip calculator!  There is nothing more frustrating than a tip calculated down to the appropriate cent.  Not only is it frustrating to employees, but your tip, when calculated to exact percentages, is completely useless.  In this instance, you are paying a service charge instead of a tip.  The employee cannot possibly be motivated by someone who gives them the absolute minimum.  Tips in coins are bad enough already, as they make employees feel that money is being thrown at them as if they were impoverished beggars with a cup on the side of the street.

If, for some reason, you must calculate tips for business or something to that effect, please do so in long-hand on a napkin.  The calculator just makes it seem so cold! Tipping by percentage is also not encouraged. The tipping percentages are supposed to serve as guidelines, not rules.  If you want to get the most out of your tip, it is important to flatly consider the question “How much was the service worth?”  Sometimes you may pay $5 for your deluxe hamburger minus mayonnaise plus deli mustard drop tomato add sauerkraut on freshly picked wheat buns turned to the west for appropriate sun reflection on Tuesdays.  This job requires the waiter/waitress to spend as much effort as he/she would on a table of 20 people. You should tip accordingly.

Try not to tip less than $5.  Sometimes you may not require enough effort to justify a $5 tip.  If you talk to most anyone who has ever been in a tip position within the last five to ten years, they will tell you they regularly pay $5 tips on bills from $0-20.  With the way our economy is today, $1 bills could easily be as good as monopoly money tomorrow.  A tip in a few dollar bills today can sometimes stir up similar emotions to those you had when you received a few dimes for the hours of hard labor in your grandmother’s attic so many years ago.  Maybe in 1976 the industry standard for tipping was $1-2.  Have your wages/salary improved since then?

As there are anti-better-service powers, as mentioned above, there are also tools a tipper can use to his/her advantage.

Employee Motivators: Your Tip’s Wheelhouse
Anticipation of a large tip is the biggest motivator to any service employee.  Anticipation arises from the unbelievably great communication that occurs between staff.  Within minutes of someone getting a large tip from a particular customer, the word will spread through a restaurant, hotel, or other venue like wildfire.  Tip-seeking employees will then zealously attend to that particular customer as geese attend to freshly opened bags of sliced bread.

True appreciation of an employee’s work can also go a long way to help your tip.  Employees, for the most part, like doing their job well, and like being appreciated for their work.  A tip given with a heartfelt compliment, a thank-you letter to the employee’s superior, or in a way that demonstrates that you understand their position, can mean a lot more than the monetary amount you leave.  A simple “been there, done that” story is probably enough to make the employee feel refreshingly important.

One time, in my valet job, I drove a car from the garage to the driveway for a newlywed couple.  As I pulled up, I noticed some Spanish guitar music in the CD player that I really enjoyed.  When I handed the keys over to the new husband, I told him that I really enjoyed their music and, thus, they must be “decent people.”  He chuckled, handed me five dollars, and got in the car.  As he was pulling forward, his new wife told him to stop.  She got out of the car, even on that cold night, reached into her CD changer in the truck, and gave me the CD.

Not only do I remember that particular tip more distinctly than the thousands of other gratuities that I have seen, but I also remember doing everything I could to make their experience better when they returned.  In this situation, the CD tip was more valuable than any of the other “eagles” (my hotel’s valet vernacular for $20 bills) I received that night.

There are many ways to show employees you care.  I have made some pre-printed thank-you letters on business cards.  These cards have been particularly useful as they are fancy, discreet and fit easily in my wallet.  The thank-you cards also have my name and contact information on the back.  When I come across a situation in which I really need things to go my way (airports and banks, most commonly), I seek the employee that will help me the best, and then fill the blank spaces on the card with the date and that particular employee’s name.  Before the service is completed, I hand the card to the employee, which upon reading the positive message on the card, gives it to his/her superior.  The card prompts the manager or supervisor to contact me to “share my experience.”  So far, I have only had to share good experiences because the card has been a very cheap, but effective way to get special service.

Now that you have a degree in Gratuity Ethics, let’s explore the steps you can take that will directly affect your next food, hospitality or other entertainment experience.

Have a Power Tip
The most important variables when tipping are:  who to tip, when to tip, and how to tip.  You might be surprised that why to tip isn’t necessarily something you need to be concerned about.  Tipping is best when you put the service employee under your control by being proactive instead of being reactive to their service quality.

Who to tip: Tip-seeking employees are involved in a network of workers who all accomplish different tasks.  The normal restaurant setup involves a host, waiter, busboy, bartender, bar-back, food runner and maybe a cashier.  Hotels host a variety of employee roles, from valets to the person who puts mints on pillows.  You should tip all persons involved in your services, but you should be selective in who you award the most. In order to build the best tip-anticipation, as mentioned earlier, tip the first, most responsible, full-time employee you see.  In the case of a hotel, this would be the doorman.  In the case of a restaurant, that would be the bartender or cocktail waitress.  In order for your tip to have a significant impact, you will have to make your initial tip large; $10 to $20 and higher.

Who to tip is important for many reasons.  First, some employees, such as doormen, are the most connected men/women in their workplace.  Even the hotel laundry staff five stories up will catch word of a big tipping guest on a lunch break.  Some employees – similar to the  hotel doormen – have special powers that make them a more favorable tipping target than their other fellow employees.  A large initial tip to a doorman upon entering the hotel, for example, may land your 1995 Subaru Outback amidst the Bentley and Mercedes S550 parked between the pillars out front.  You may have thought those spaces were reserved for fancy cars so the hotel could show off its wealthy customers.  Those pillars, believe it or not, are how many doormen make most of their money!  At many hotels, you will not be responsible for the hourly hotel parking costs if you are parked out front.  At parking rates of $20 an hour at some urban or fancy hotels, you could, once again, save tons by being generous.

When to tip: Being unconventional and spontaneous is one of the easiest ways to build a positive tipper’s profile with an establishment.  Tipping early in the game (when you car is being driven away from you, after your drinks are served and food is on the way, when you begin the tour) can build employee anticipation and keep them on their toes.  This is especially important for regulars.  Employees normally see establishment regulars with a dollar sign attached to their forehead because they are consistent.  If you mix it up, you will get better service every time.

An example of the importance of tip timing also comes from my valet experience. We had two well-known regular guests.  Guest A was kind, though boring, and always tipped $1 for any service he required.  He justified the low tip with the fact that he probably tipped $1 many times a day, and over the years, had spent tons of money in tips.

Guest B was funny and suave.  He tipped $20 once or twice a month, and nothing on every other occasion.  Every time B interacted with a valet, he would offer some joking sentiment like “Ah, well, ya win some, and lose some, kid.”  The valet staff liked Guest B for his humor and spontaneity and constantly fought over his keys in anticipation that they would be that month’s lucky $20 winner.  On the other hand, the valet staff hated Guest A, ignored his car, and often gave him overtly poor service.  The irony of the situation is that Guest A probably paid a lot more to the valet staff over time than Guest B.

Tip timing is important.

How to tip: You can tip in many ways.  You can leave money on the table, you can have other staff relay the tips to your employee, you can tell them to “keep the change,” or you can be creative.  Your tip is more powerful when you use it as positive reinforcement.  Give the tip to your helper directly.  If you pair this with a compliment, your next experience in that establishment will be better.  You will gain a good tipper’s reputation.

As a tour guide, I would occasionally get a lively guest who would make a point to exaggerate his/her tip at the end of the tour to inspire others to tip behind him/her.  The public presentation of the tip earned him/her excellent directions and advice for further Northern California entertainment. The more memorable you can be as a tipper, the greater success you will have at an establishment in the future. Even if you don’t plan to come back to a particular place, a good, well-executed deed here and there may earn you a favorable spot in many future dinner conversations, fireside chats, or in my next Pulitzer Prize piece.

I hope this extensive analysis and instruction aides you in your future pursuit of happiness, and that you continue to find joy in making others happy as well.

Rocky Slaughter is a political science student at Northeastern University in Boston, MA.  He is currently a law intern at a local firm and an owner of a web design company. Read his blog at http://blog.rockyslaughter.com

Rocky Slaughter

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