Tipping for Customer Service: Is It Helpful or Harmful?

Some of you may have read that, since 1st October, millions of hard working and dedicated UK workers are now benefiting from new laws which will ensure they keep 100% of the money they have earned through tips.

Tipping is a tradition that sparks strong opinions so let me be clear from the outset – I’m a big supporter of tipping.? Ever since my days working in Babettes hairdressers (way back in the late seventies) I quickly realised that, if I went the extra mile for my customers, I’d significantly increase the chances of receiving a gratuity for looking after them during their stay in the salon.?

For me it’s a belief that’s become a habit whenever I receive good or great service however I fully appreciate it’s not a universally held belief.? Whilst some people see it as a way to reward great service, while others view it as an unfair burden on workers and customers. ?

Traditionally associated with restaurants, tipping has started to appear in other industries like cafes, delivery services, and even online tech support. But is it always the right approach?

The Origins of Tipping

Surprisingly, tipping began in England during the Tudor era, where guests would leave a bit of extra money to ensure good service from servants. Over time, this practice spread to the United States, where it became common in restaurants and hotels. Interestingly, Americans initially resisted tipping, seeing it as an elitist practice imported from Europe. However, it eventually became widely accepted.

Nowadays, tipping goes beyond restaurants and hairdressers. You might be asked to tip your Barista, your Uber driver, or even the person helping you on a customer service call. As tipping becomes more common in various sectors, it raises the question: does it still make sense, or is it creating more problems than solutions?

Why Tipping Can Be a Good Thing

1. Encourages Better Service

One of the biggest arguments for tipping is that it motivates employees to give better service. When workers know they can earn more by providing excellent service, they may go out of their way to be friendly and helpful. This gives customers a direct way to reward good service and helps build positive relationships between staff and customers.

In industries like restaurants or hotels, where tipping is common, customers often feel they have the power to reward the level of service they receive. Employees, in turn, may work harder to earn that extra money, which can lead to a better overall experience.

When checking a restaurant bill I’m always careful to check a) is the service charge included and b) does the waiter/waitress ACTUALLY receive the gratuity.? I’m happy if I hear the tip is shared amongst all the staff however, if the answer is no (i.e. it goes to the restaurant first), I’ll have it removed from the total and will pay the tip directly to the individual myself as is my right.?

2. Boosts Income for Low-Wage Workers

For employees, tipping can be a big help financially. In industries where wages are low, tips can make a significant difference. Some workers in restaurants, for example, might make only a few pounds per hour in wages, but tips can push their earnings up to a more liveable amount.

This extra income can be crucial for people working in roles that rely heavily on customer service, especially in countries where the minimum wage isn’t always enough to cover living expenses. Tipping helps bridge the gap, allowing workers to earn more than their base salary.

3. Saves Employers Money

From the employer’s point of view, tipping can reduce labour costs. Instead of paying higher wages, businesses in industries that rely on tipping can offer lower base salaries, knowing that their workers will make up the difference in tips. This helps keep prices lower for customers while still giving employees a way to earn decent money.

For businesses that struggle with high turnover rates in customer service roles, the prospect of tips can also attract new workers. Potential employees may prefer jobs that offer tips on top of their salary, making it easier for businesses to find and keep staff without raising wages.

The Problems with Tipping

1. Unpredictable Income

While tipping can boost income, it’s not always reliable. Employees who depend on tips can face uncertainty about how much they’ll earn each day. If business is slow or customers aren’t tipping well, workers may find themselves short on cash. This unpredictability can make it difficult for employees to budget or plan for expenses.

In addition, tipping can create income inequality. For example, workers in high-end restaurants or areas with wealthier customers often earn much more in tips than those in more affordable places, even if they’re doing the same job. This imbalance is a problem because it ties income to external factors like location, even the menu, rather than the quality of service.

2. Opens the Door to Exploitation

Tipping can also lead to exploitation. In some countries, like the United States, there’s a lower minimum wage for tipped employees. This allows employers to pay their workers much less than the regular minimum wage, with the expectation that tips will make up the difference. Unfortunately, this doesn’t always happen, and some workers end up earning less than they should.

3. Emotional Stress and Power Imbalances

Relying on tips can create an extra layer of stress for workers. Since tips are often tied to customer satisfaction, employees might feel pressure to always be cheerful and accommodating, even in difficult situations. This emotional labour can lead to burnout, especially when dealing with demanding or rude customers.

Tipping can also create a power imbalance. Customers know that workers rely on their tips, which can lead some to behave poorly, knowing the employee has little choice but to tolerate it. In extreme cases, this can even lead to harassment or abuse, with workers feeling they must endure bad behaviour to earn their tips.

Finding a Balance

Tipping in customer service is a complex issue with both advantages and drawbacks. On one hand, it can encourage better service and boost workers’ income. On the other, it creates income uncertainty, allows for exploitation, and puts unnecessary emotional pressure on employees.

As tipping expands into more industries, it’s important for businesses to consider whether it’s the right approach for their specific needs. Some industries may benefit from tipping, while others might be better off raising wages and eliminating tips altogether. The goal should be to find a balance that rewards employees fairly and ensures customers receive high-quality service, without putting undue stress on either side.

It'll be interesting to see how the new UK legislation affects the tipping culture so, for the time being, it’s likely to remain a controversial topic. But by taking a thoughtful approach, businesses can create systems that are fair to workers, manageable for customers, and sustainable in the long run.

?For more top tips and ideas we invite you to join our FREE 30 minute training video designed to ensure you and your teams continue to deliver remarkable customer service.? Just click on the link in the comments below.