The practice of tipping has emerged as a major method of compensating the wait personnel as it improves their performance with zero costs. In terms of an organizational structure, tipping refers to the method of rewarding individuals (Mandy, 2016). Since one of the fundamental problems that every organization faces is that decision-makers do not have appropriate incentives, the practice of tipping provides the wait staff with such an incentive.
From an economic point of view, tipping is beneficial for all the three parties, namely, the managerial staff of a restaurant, the wait staff, and customers. To earn more tips, workers will do their best to provide high-quality service to their clients. Moreover, the wait staff is motivated to sell more since the tip depends on the total sum of the bill. As the sum of the tip is not fixed and depends on the customer, it is expected that waiters will be encouraged to improve their performance to get a larger tip.
Customers, in turn, will be more satisfied with the quality of service, provided that the wait staff has an incentive in that. Restaurants also benefit from the practice of tipping since it allows for enhancing the performance of the wait staff at the cost of customers (Tung & Reyes, 2018).
If customers are satisfied with the service, the odds are they will come to the restaurant once again and recommend it to their friends. It should also be stated that such a method of rewarding may significantly eliminate the number of conflicts between waiters arising from the system of rewarding since it is not managers but clients who decide on tips. Therefore, the organizational architecture of restaurants promotes the excellent performance of the wait staff.
It is customers who typically decide on the amount of the tip because they are the recipients of the service. It is considered that only the customer can adequately evaluate the quality of the service and whether a waiter did a good or bad job. Since there is no standard metrics of the quality of a waiter’s performance and the customer experience is mostly a subjective matter, the choice of how much tips to pay is given to customers.
Restaurants want every waiter to be rewarded with tips. This complies with an organizational architecture and allows the managerial staff to save money on employee rewards. When an individual visits a restaurant, he or she eagerly gives tips to a waiter. However, when a group of individuals comes to a restaurant, they may be reluctant to give tips. If every person pays his or her share of the bill, the amount collected may appear to be less than the sum of the bill and tips. As a result, a waiter has less incentive to provide customers with high-quality service. Restaurants require tips from large parties for waiters to be compensated for their service.
References
Mandy, D. M. (2016). Producers, consumers, and partial equilibrium. Amsterdam, Netherlands: Academic Press.
Tung, I., & Reyes, T. (2018). Wait staff and bartenders depend on tips for more than half of their earnings. Web.