Restaurant Staff: to Tip or not to Tip?

3 Dec. 2018

Tips are crucial for restaurant staff in the US where salaries are generally low, but in Switzerland tips are a form of bonus based on customer satisfaction and not so critical as basic salaries can be around 4,000-5,000 CHF or USD a month.

Tipping has even come into the political spotlight In the UK, where the government – which is currently contending with Brexit – has been reportedly considering introducing legislation to ban restaurant owners from keeping tips earned by waiters.

EHL Assistant Professor of Organizational Behavior Sébastien Fernandez says the UK government’s proposed action is well intentioned but questions the way in which it would tackle the issue.

“For sure, employees who do not receive their fair share of the tips are going to be dissatisfied, but should we really force restaurant owners and managers to do it or should we educate them that if they don’t do it, they’re going to lose the trust of the employees?”

On the plus side, the move should at least make restaurant managers aware that tips belong to the employees and not the restaurant, he says.

Dr. Fernandez believes the Swiss system is good as staff don’t have to rely so heavily on tips as in the US. Tipping motivates waiters and other staff to “give their best”.

In Switzerland, he adds, “there is an issue as to whether the employees should share their tips with each other.” If the staff – including those working in the kitchen – don’t get a share of the tips there’s no incentive to do their jobs as efficiently as possible.

The fairest way might be to have a common pot or pool, Fernandez says, with the waiting staff taking half, the kitchen staff getting perhaps a quarter, and the remaining quarter going to other employees, so “everyone benefits.”

If we really want employees to perceive the management as fair, the management should not receive (any of the tips unless) the manager serves the customers like any other employee. But he should not be entitled to receive more tips just because of the position. That’s the danger.

 

Tipping: A cause of resentment?

A study by an EHL student, Catherina Bosshard, as part of her undergraduate program, highlighted the impact on employee satisfaction if management kept any of the tips. She surveyed some 183 waiters working in 32 restaurants in Switzerland.

“What was interesting was employees or waiters or waitresses tended to be more dissatisfied by their jobs when the management took even a small part of the tips and they were more likely to say they would try to find another job in the next year,” Sébastien Fernandez recalls.

 

 

The reason for the resentment was that management is usually perceived to have higher salaries, so restaurant employees “have the impression their tips are being stolen by the management. It truly creates resentment and dissatisfaction.” In some hotel and restaurant chains, he says, management may even take the biggest share of the tips.

Dr. Fernandez has conducted several studies into tipping behavior in Switzerland. In one study, he coached restaurant staff in Switzerland on how they could get bigger tips by, say, adding a personalized ‘thank you’ note on the bill. When employees used some of these techniques, tips increased on average by a staggering 40 percent. Even if the customers didn’t give larger tips, they complimented the staff more. “So there was really a shift to a more positive direction.”

He is now working on a study comparing tipping behavior in eight European countries, including Sweden, Germany and the Netherlands. “We are currently analyzing the data to see if we find some similarities or huge differences between European countries, knowing that most of the research so far has been done in the US or Canada, because in these countries the employees rely on tips to get decent wages.”

“So far, from the first countries we have analyzed, food quality is again not so important. Service quality is a bit more important in some, but not in other countries.”

It is expected that the analysis of the data will be completed by the end of 2018, with publication of the findings possibly next year.

 

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Mr. Stuart Pallister
About the author

Stuart Pallister, Head of Academic Editorial Content.

After working as a television journalist in Asia and Europe for nearly 20 years, mainly at CNBC, Stuart switched to digital content development at INSEAD business school and the National University of Singapore.

He is currently the Head of Academic Editorial Content at Ecole hôtelière de Lausanne and Editor-in-Chief of Hospitality Insights by EHL.

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