It’s been reported that, yesterday in Illinois, a ‘good samaritan’ having heard three waitresses discussing their daily struggles gave them a $5,000 tip each. A quick search on the web throws up a number of similar stories of big tips, not for great service but seemingly out of a sense of compassion.
It reminds me of a vignette that years ago I used to illustrate the power of cash incentives. I asked the audience to think of a typical Saturday night out with friends at a restaurant. At the end of the meal the waitress presents the bill and may or not be rewarded with a tip. Then I asked them to imagine that on being seated they put a generous tip in the centre of the table and tell the waitress that this could be his based on how good the service is. Would the service be better?
Of course most people believe that with such a cash award on the table the service would improve. And I hoped I’d then get hired to design them a generous incentive scheme.
Unfortunately all the evidence is that incentives don’t work except for the simplest of tasks. Dan Pink’s Ted Talk is a great starting point in researching this topic. The plain fact is that except for the simplest of tasks cash incentives are at best neutral and for more complex, creative tasks they hinder productivity.
So in theory a big tip might help if all is going to plan but if something happens that requires a creative solution, the precise time when you need great service, the tip will worsen the experience.
What seems to really motivate us is meaning. It explains why after writing this I am going to sit and play guitar (badly). Neither pays but both give me satisfaction and a sense of achievement. Another Dan, Dan Ariely has a great Ted talk on this subject too.
The great news is that it seems to be very easy to give meaning to work, it mostly comes down to making a few changes and improving management and leadership.
A lot of this is counter intuitive and runs against long held dogma, there will always be those who simply deny the scientific evidence.
Frequently I get into a debate around this that boils down to ‘if we take away the incentives everyone will be underpaid and so leave and if we simply add the old variable pay into fixed pay then we’ll be potentially increasing costs.’. Both are serious concerns. I don’t necessarily advocate taking away all of the ‘incentives’. We do live in a market economy and undoubtedly, unless the overall package is competitive, businesses will struggle to hire.
Linking pay to the overall well being of the business improves employee engagement, which in turn has a strong correlation with future performance. In my view this is because if we feel involved then we find meaning. Small acts of recognition such as a thank you or a small gift have an enormous impact on the engagement of workers again because they create ‘meaning’.
I do believe that we should be honest about what the variable pay is for and what it can achieve. Then rework the total package to ensure that there is fair pay, differentiated by long term performance, recognition of a job well done and links to the overall businesses mission.
Therefore modest tips and other forms of recognition from management will improve the overall experience for all diners.
So to conclude I don’t think that bankers are incentivised by their bonuses, the regulators are right when they argue that they distort performance. I do however think we should recognise the waitress for a job well done. Tip that waitress.Bringing your beverage and your late night bite She remains cheerful, when you’re nasty and tight Makes change for a 50 in dim candle light
Ignoring the groping hoping you might
Come across with a tip and sympathize with her plight
Tip that waitress
She’s getting her masters, supporting her mom
Amidst the confusion she remains cool and calm
She knows exits in case of a fire or bomb
She knows all the words to the 23rd Psalm
She handles her tray with pnash and aplomb
Her brother’s a Quaker, her dad was in Nam
Tip that waitress
Loudon Wainwright III