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Tip Over?

Things to think about before adding a tip jar to your place of business
Magazine Contributor
2 min read

This story appears in the February 2005 issue of Entrepreneur. Subscribe »

Tipping etiquette has long been debated in the service industry, but there's a new source of contention: tip jars.

From Starbucks to independent donut shops, tip jars have popped up to the delight of employees, but what effect does it have on customers? Business psychologist Larina Kase understands the issue from both sides of the counter. Now the president of Performance and Success Coaching, a small-business consulting company in Philadelphia, Kase was also one of the pioneers of the tip-jar era, placing one at her father's ice cream shop in the late 1980s. Patrons were intrigued by the jar. But the tip jar is no longer a novelty, and Kase says that it has psychological effects on patrons. "Patrons can feel uncomfortable when there is a tip jar for services they feel do not deserve a tip," she says.

The first thing customers do is evaluate the tip jar and its worthiness. "They think about how much service they're getting--whether employees are going out of their way to provide great service or whether they're doing what they're already getting paid for," says Kase. Take Starbucks: A customer would be more likely to tip if the barista made a venti half-caf, easy whip, soy latte vs. a plain drip. "It's perceived more as a service," says Kase.

If you're considering adding a tip jar to your place of business, Kase advises, "Be clear on what the specific advantage is for the company." If your aim is to attract and retain higher-quality employees who provide better customer service, consider the service you're providing as well as the experience, says Kase. For example, tipping is the norm for bartenders, even if they're just opening a beer bottle, but experience, ambience and a friendly smile can sometimes outweigh even the simplest of services--and bring out the wallet.

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