tighten purse strings

Why restaurants are right to levy a service charge: Tipping conventions are often discriminatory

The government statement on service charge being voluntary in India has opened up a debate about the tipping culture in the country.

In March 1984, a waitress working at a New York pizzeria was given, instead of a tip, the offer to split a lottery ticket by a policeman from a nearby precinct. She agreed, and the two picked three numbers each. The policeman ended up winning $6 million and shared the spoils with her.

This real-life incident went on to form the premise of It Could Happen to You, a 1994 film starring Nicholas Cage and Bridget Fonda.

Likewise, in popular American sitcom Friends, Jon Favreau as multi-millionaire Pete Becker gave a $20,000 dollar tip to Monica (Courtney Cox), who worked as a waitress at a diner.

It is hard to think of similar story lines in an Indian movie or television show. It’s harder still to conceive of a person earning a decent income through tips in the country, where tipping rates have traditionally been low – often a few tens or twenties, a fraction of the change tendered.

This is where the recent order by the government’s Department of Consumer Affairs assumes significance. In a statement on January 2, the department clarified that “service charge” levied by restaurants on the bill is optional and that the consumer is at liberty to pay it while dining out. Since it was deemed voluntary, “service charge” it followed, is just a tip by another name.

The order has been met with mixed responses, with diners welcoming it and restaurants strongly objecting to it.

Around the world

Social sensibilities about tipping are quite fuzzy and depend on the prevailing socio-economic-cultural milieu. A case in point is that the Condé Nast Traveler has an entire webpage dedicated to tipping around the world.

Tipping generously (around 15% of the bill) is customary in the US, where it is not uncommon to see people waiting tables to pay their way to a college degree. Perhaps, generous tipping is seen as acknowledgement of dignity of labour and a way of helping out someone in their time of need. Similar customs exist in several Western European countries.

On the other hand, in Japan and Singapore, tips can invite reactions ranging from confusion to umbrage and can even be perceived as a bribe (more on this later). Tipping is not the norm in Australia either.

The case of the US

Even in the tipping utopia that is the US, there are a lot of factors (often discriminatory ones) that influence tipping behaviour.

The research of Proffesor Michael Lynn, from the School of Hotel Administration at Cornell offers fascinating insight into this. A former bartender, busboy, and waiter, Lynn has a PhD in Social Psychology, and studies tipping behaviour. His research findings were featured on the Freakonomics blog, run by Stephen Dubner and Steven Levitt (who authored the book with the same name).

The blogpost, which includes the transcript of a radio podcast Should Tipping be Banned?, talks about the several grey areas regarding gratuity – for instance, how one must tip the the doorman or baggage handler, but not a receptionist or a flight attendant. Particularly revealing were the opinions of people tending tables. A lot of waiters said they could tell whether or not someone would be a good tipper based largely on outward appearance, like the shoes they wore and whether or not they smoked. In many cases, a smile, a friendly countenance and touch often got the waiter or waitress a bigger tip.

Lynn said that in his years of research, he had found that that the appearance of waitresses mattered more than that of than waiters; people tended to tip members of the opposite sex better; education and income levels of the customers were linked to their tipping behaviour; and factors like hair colour, size of a woman’s breasts, body type and posture played a role as well. Predictably, race, skin colour and ethnicity also affected earnings.

His study also showed that racial stereotypes cut both ways: not only did black customers leave smaller tips but also preferred to giving flat tips (a fixed amount, as opposed to a fixed percentage). They also tipped black servers much lesser than white servers for equivalent levels of service.

Perception problem

Besides, Black Americans also suffer from the perception that they are poor tippers. Anecdotal evidence suggests that Indians aboard are also held by some in the service industry to be ungenerous tippers.

Another grey area that has been examined in research is the thin line between the socially accepted “tip” and the frowned upon “bribe”. A study by Harvard Business School’s Professor Magnus Torfason, which used tipping data from 32 countries and matched it to their corruption perception index scores, found a positive link between the two.

The inter-cultural differences and roles played by socio-economic status and attitudes puts the Indian preference for a flat tip in new light. By obfuscation or sleight of hand (or both), the Indian hospitality industry managed to break the culture of poor tipping by propping up a deterrent of social awkwardness. Simply put, they found the tipping point for better tipping practice.

Vyasa Shastry is a materials engineer and a consultant, who aspires to be a polymath in the future. In his spare time, he writes about science, technology, sport and society.

We welcome your comments at letters@scroll.in.
Sponsored Content BY 

What hospitals can do to drive entrepreneurship and enhance patient experience

Hospitals can perform better by partnering with entrepreneurs and encouraging a culture of intrapreneurship focused on customer centricity.

At the Emory University Hospital in Atlanta, visitors don’t have to worry about navigating their way across the complex hospital premises. All they need to do is download wayfinding tools from the installed digital signage onto their smartphone and get step by step directions. Other hospitals have digital signage in surgical waiting rooms that share surgery updates with the anxious families waiting outside, or offer general information to visitors in waiting rooms. Many others use digital registration tools to reduce check-in time or have Smart TVs in patient rooms that serve educational and anxiety alleviating content.

Most of these tech enabled solutions have emerged as hospitals look for better ways to enhance patient experience – one of the top criteria in evaluating hospital performance. Patient experience accounts for 25% of a hospital’s Value-Based Purchasing (VBP) score as per the US government’s Centres for Medicare and Mediaid Services (CMS) programme. As a Mckinsey report says, hospitals need to break down a patient’s journey into various aspects, clinical and non-clinical, and seek ways of improving every touch point in the journey. As hospitals also need to focus on delivering quality healthcare, they are increasingly collaborating with entrepreneurs who offer such patient centric solutions or encouraging innovative intrapreneurship within the organization.

At the Hospital Leadership Summit hosted by Abbott, some of the speakers from diverse industry backgrounds brought up the role of entrepreneurship in order to deliver on patient experience.

Getting the best from collaborations

Speakers such as Dr Naresh Trehan, Chairman and Managing Director - Medanta Hospitals, and Meena Ganesh, CEO and MD - Portea Medical, who spoke at the panel discussion on “Are we fit for the world of new consumers?”, highlighted the importance of collaborating with entrepreneurs to fill the gaps in the patient experience eco system. As Dr Trehan says, “As healthcare service providers we are too steeped in our own work. So even though we may realize there are gaps in customer experience delivery, we don’t want to get distracted from our core job, which is healthcare delivery. We would rather leave the job of filling those gaps to an outsider who can do it well.”

Meena Ganesh shares a similar view when she says that entrepreneurs offer an outsider’s fresh perspective on the existing gaps in healthcare. They are therefore better equipped to offer disruptive technology solutions that put the customer right at the center. Her own venture, Portea Medical, was born out of a need in the hitherto unaddressed area of patient experience – quality home care.

There are enough examples of hospitals that have gained significantly by partnering with or investing in such ventures. For example, the Children’s Medical Centre in Dallas actively invests in tech startups to offer better care to its patients. One such startup produces sensors smaller than a grain of sand, that can be embedded in pills to alert caregivers if a medication has been taken or not. Another app delivers care givers at customers’ door step for check-ups. Providence St Joseph’s Health, that has medical centres across the U.S., has invested in a range of startups that address different patient needs – from patient feedback and wearable monitoring devices to remote video interpretation and surgical blood loss monitoring. UNC Hospital in North Carolina uses a change management platform developed by a startup in order to improve patient experience at its Emergency and Dermatology departments. The platform essentially comes with a friendly and non-intrusive way to gather patient feedback.

When intrapreneurship can lead to patient centric innovation

Hospitals can also encourage a culture of intrapreneurship within the organization. According to Meena Ganesh, this would mean building a ‘listening organization’ because as she says, listening and being open to new ideas leads to innovation. Santosh Desai, MD& CEO - Future Brands Ltd, who was also part of the panel discussion, feels that most innovations are a result of looking at “large cultural shifts, outside the frame of narrow business”. So hospitals will need to encourage enterprising professionals in the organization to observe behavior trends as part of the ideation process. Also, as Dr Ram Narain, Executive Director, Kokilaben Dhirubhai Ambani Hospital, points out, they will need to tell the employees who have the potential to drive innovative initiatives, “Do not fail, but if you fail, we still back you.” Innovative companies such as Google actively follow this practice, allowing employees to pick projects they are passionate about and work on them to deliver fresh solutions.

Realizing the need to encourage new ideas among employees to enhance patient experience, many healthcare enterprises are instituting innovative strategies. Henry Ford System, for example, began a system of rewarding great employee ideas. One internal contest was around clinical applications for wearable technology. The incentive was particularly attractive – a cash prize of $ 10,000 to the winners. Not surprisingly, the employees came up with some very innovative ideas that included: a system to record mobility of acute care patients through wearable trackers, health reminder system for elderly patients and mobile game interface with activity trackers to encourage children towards exercising. The employees admitted later that the exercise was so interesting that they would have participated in it even without a cash prize incentive.

Another example is Penn Medicine in Philadelphia which launched an ‘innovation tournament’ across the organization as part of its efforts to improve patient care. Participants worked with professors from Wharton Business School to prepare for the ideas challenge. More than 1,750 ideas were submitted by 1,400 participants, out of which 10 were selected. The focus was on getting ideas around the front end and some of the submitted ideas included:

  • Check-out management: Exclusive waiting rooms with TV, Internet and other facilities for patients waiting to be discharged so as to reduce space congestion and make their waiting time more comfortable.
  • Space for emotional privacy: An exclusive and friendly space for individuals and families to mourn the loss of dear ones in private.
  • Online patient organizer: A web based app that helps first time patients prepare better for their appointment by providing check lists for documents, medicines, etc to be carried and giving information regarding the hospital navigation, the consulting doctor etc.
  • Help for non-English speakers: Iconography cards to help non-English speaking patients express themselves and seek help in case of emergencies or other situations.

As Arlen Meyers, MD, President and CEO of the Society of Physician Entrepreneurs, says in a report, although many good ideas come from the front line, physicians must also be encouraged to think innovatively about patient experience. An academic study also builds a strong case to encourage intrapreneurship among nurses. Given they comprise a large part of the front-line staff for healthcare delivery, nurses should also be given the freedom to create and design innovative systems for improving patient experience.

According to a Harvard Business Review article quoted in a university study, employees who have the potential to be intrapreneurs, show some marked characteristics. These include a sense of ownership, perseverance, emotional intelligence and the ability to look at the big picture along with the desire, and ideas, to improve it. But trust and support of the management is essential to bringing out and taking the ideas forward.

Creating an environment conducive to innovation is the first step to bringing about innovation-driven outcomes. These were just some of the insights on healthcare management gleaned from the Hospital Leadership Summit hosted by Abbott. In over 150 countries, Abbott, which is among the top 100 global innovator companies, is working with hospitals and healthcare professionals to improve the quality of health services.

To read more content on best practices for hospital leaders, visit Abbott’s Bringing Health to Life portal here.

This article was produced on behalf of Abbott by the Scroll.in marketing team and not by the Scroll.in editorial staff.