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Get rid of tipping? It might help restaurant culture

University of Guelph researchers say a no-tipping policy in restaurants would be ‘great for equity in the food-service business.’

The Associated Press

The Globe's roundup of research from business schools.

On a trip to New York last year, University of Guelph professor Michael von Massow got a first-hand view of how restaurant servers adjust the level of service they provide to customers based on the amount of tip they expect to receive. Dr. von Massow, who was dining with his two teenage sons, said the service was great until he declined to order wine. "Immediately the service changed," he says. "It was painfully obvious."

That's just one of the problems that North America's deeply ingrained culture of tipping presents for restaurateurs. Dr. von Massow and his research partner, Bruce McAdams, both professors at Guelph's College of Business and Economics, conducted interviews with about 100 managers and servers from a range of restaurant styles – family casual to fine dining. Of those, just one had a fixed service charge and didn't accept tips. The average tip collected by those that did was about 15 per cent.

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A majority of managers cited difficulty controlling the quality of service, unequal wage distribution among staff, a lack of control over revenues, trouble managing workload and rivalry among staff as some of the difficulties that arise from tipping. The results of the study are forthcoming in a research paper recently submitted for peer review.

"From the manager's perspective, getting rid of tipping would be a profoundly positive thing," Dr. von Massow says. But, he acknowledges, that's unlikely to happen on a wide scale any time soon. Tipping is "a cultural norm" in North America that dates back well over a century. In Canada the practice generates between $6-billion to $8-billion a year in the food service industry, he estimates.

It isn't just servers who benefit. Some consumers like having control over how much they tip, although research indicates that few of them actually adjust the gratuity to reflect the quality on their dining experience, he says. For restaurants, moving away from tips can also be a challenge since they would have to make up the lost revenue by raising menu prices or imposing a service charge.

Some, though, are trying. Smoke 'N Water, a restaurant on Vancouver Island with a no-tipping policy, made headlines when it opened recently. Dr. von Massow knows of a few others in the United States that ban tipping and says he's heard rumours of restaurants slated to open in Toronto that are contemplating the move.

If the practice does take off, "I think it will be great for equity in the food-service business," he says. Cooks and other kitchen staff, who generally earn little more than minimum wage, could expect to see an increase in pay while servers would see a decline. But, he explains, many restaurants already adjust for this by pooling a portion of the tips earned by the service staff and redistributing the amount among all employees.

Ostracism in the workplace can have devastating consequences

Giving annoying colleagues the silent treatment or excluding them from company gatherings might sound innocuous enough, but new research examining ostracism in the workplace finds that it is "a toxic social behaviour" more common than other overt forms of harassment or bullying – and just as damaging.

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"We know from our analyses that managers tend to view these types of ostracizing behaviours as less harmful and more socially acceptable in the workplace and less likely to lead to negative repercussions for the person engaging in them," says Sandra Robinson, professor at the University of British Columbia's Sauder School of Business in Vancouver. But its impact on the victim's physical and mental well-being is worse, she says. Those who had been ostracized reported lower job commitment, higher psychological withdrawal and were more likely to quit over time.

Using an online survey of 1,300 U.S. participants who worked full time in a variety of occupations, the study found the occurrence of ostracism was significantly higher than that of other types of harassment; 71 per cent of respondents experienced some degree of ostracism in the previous six months compared to almost 49 per cent who had been victims of harassment. In a follow-up survey of more than 1,000 staff members at a large Canadian university, more than twice as many respondents reported being the target of ostracism than harassment.

The findings show that mangers should take ostracism at least as seriously as other, more obvious acts of bullying, says Dr. Robinson, although, she acknowledges, it can be difficult to detect. The study suggests that organizations educate managers and employees about the effects of ostracism, create workplace policies that define and discourage it and help employees develop effective methods of conflict resolution. "I think we have a long way to go toward educating people about this," she says.

Dr. Robinson co-authored the study with Jane O'Reilly, professor at the University of Ottawa's Telfer School of Management, Jennifer Berdahl, professor at the University of Toronto's Rotman School of Management, and Sara Banki, a professor at the Sharif University of Technology in Tehran. It appeared in the online version of the journal Organization Science in April.

Can one company's trash be another's treasure?

As governments move to impose ever more stringent environmental regulations, businesses would do well to explore ways of taking advantage of the business opportunities these changes present, concludes a research paper co-authored by Raymond Paquin, professor at Concordia University's John Molson School of Business in Montreal.

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Dr. Paquin and his co-authors analyzed the economic and environmental outcomes of more than 300 "industrial symbiosis exchanges" that occurred between 2003 and 2007 in Britain at a time when firms faced increasing landfill fees and other waste-disposal costs as a result of tougher environmental regulations. In one such exchange, an animal rendering firm sold its meat and bone meal byproduct to a cement kiln for use as a lower-cost fuel alternative rather than sending it to a landfill.

The authors found that the amount of waste material diverted from a landfill increased the probability of higher sales, lower costs and higher employment. The results likely hold true in other jurisdictions where landfill fees are also on the rise, the authors conclude. Tougher regulations and higher disposal costs might "spur new firms to invest and build capabilities to otherwise manage their materials" in ways that can create jobs, boost profits and reduce waste, they write. The study was published in the journal Long Range Planning.

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