The hospitality industry in North America has a long history of tipping with full acceptance of the practice starting almost 100 years ago; historical records show tipping started in Europe in the eighteenth century. The acceptance of tipping does not make the ritual conflict-free—from guest’s complaints (especially those from outside North America) to back office challenges with credit cards to your front-of-house staff whispering about what is ‘fair’—there is rarely a respite from hearing about tipping.
Laws on tipping are ever evolving too. BC’s Employment Standards Act (ESA) changed to have expanded definitions and rules regarding tipping (closely mimicking Ontario’s changes). The succinct—quite bureaucratic—summary of the ESA about tipping comes from the ESA website:
Employers can require that tips are redistributed in a tip pool. Employers may not share in tips unless they do similar work to the employees who receive the tips. Employers cannot withhold tips or force employees to give up tips unless it’s required by law (e.g. they have a court order to garnish wages).
Knowing what leaders can do is not an effective guide to the best practices of how to do it. There are ample opportunities to reduce the employee challenges that often surround tipping, tip outs, and sharing of tips.
First, we always recommend determining what outcome you are hoping to accomplish. Adjusting the approach to tipping can be done for many reasons: employee retention, employee morale, perceived fairness and equity issue, or promoting teamwork.
“A well designed tip pool can be a significant part of helping employees share a common guest experience goal.”
Teamwork in the hospitality industry—especially restaurants and bars—is not particularly hard to describe. The sharing of common goals across the front and back-of-house can be very positive for both the business and employees. Think back to great customer experiences you have had in hospitality; it is extremely likely that that experience was a team effort including those in the kitchen, the bar, and the service staff. It is not a stretch to imagine that a well designed tip pool can be a significant part of helping employees share a common guest experience goal.
Done well, using tip pools/sharing to promote teamwork can also assist with several positive employee relations issues like retention and morale. While legislation in BC allows employers to require a tip pool, the word “require” can clash with the concept of positive employee relations.
“Employee participation gains buy-in to the plan that a top-down approach does not.”
There are several approaches that allow employers to avoid the negatives of “require.” Building consensus around a new or revised tip pool with employee input is a very employee-friendly path to finding the best tip pool for your business. Using employee participation gains buy-in into the plan that a top-down approach does not garner. Be prepared to set aside some of your predictions, and enjoy the surprise of some of the great information and suggestions your employees will share with you.
Regardless of how you engage your employees in the conversation, there are several core questions to consider. Some of the common ones are:
- Who should be in your tip pool? Front-of-house, back-of-house, sales and promotion employees, support staff? Who should be in each of the groups? Do not make it about actual people, it is about the position.
- If you’re excluding certain employee groups, why? Is it about a certain personality in a group (the wrong reason to exclude a group of employees) or about the actual position? Having people explain why they support inclusion or exclusion of different positions helps build understanding when the final plan is developed.
- What should be the size (in percentage terms of tips) of the pool? Why?
- What should the division of tips be amongst the different employee groups? Why?
- Do you know (from friends in the industry or previous work experience) what has worked and not worked for tip pools?
Note the number of times “why” appears in the list above. Asking “Why?” is an incredibly powerful tool to use when coaching employees and will help you truly understand the best tip pool for your business and your employees.
How you ask employees can be approached multiple ways. Depending on the size of the group, having a series of short one-on-one meetings with all impacted employees may be the most efficient and effective way to get the information you need.
A simple one page questionnaire (or a web-based version of a questionnaire) can help with gathering information from a larger group. In addition to choice questions like “what percentage,” make sure that the form gets employees to answer open ended “why” questions.
Another method could be to have team meetings—either one or two large groups or several small groups, possibly split by position or front-of-house/back-of-house. The key in those meetings is to allow for as many voices to be heard as possible. Be prepared with questions for both vocal employees and those less likely to speak out in a group setting. Have a little checklist nearby when conducting the meeting to make sure that you capture ideas and feedback from each employee group, and all the questions you need to have answered have several contributors.
Once you have consensus (or what appears to be consensus) it is time to make sure you have a few supporting materials. A short written summary document of the tip pool plan is important. In addition to the expected data points—percentages, timing, etc.—try to include elements like the shared service goal(s) you have and some of the “why” captured from your employees. Additionally, make sure you have the administrative supports ready so that the payments from the tip pool are done well, on time, and as promised in your summary document.
“Listen to your employees, watch for industry trends in tipping, and adjust.”
Finally, make sure that you continue to listen to your employees, watch for industry trends in tipping, and adjust when necessary. The practice has lasted centuries and is apt to continue to change and evolve; your business will be best served if you and your employees stay with the latest trends (and avoid conflicts with the legislation).