The Market Inside a Restaurant: $2 and $4

Not long ago, I had a meal at a restaurant. Since a meal there costs about $12, it is a place I visit often and am generally satisfied with, so I usually leave about a $4 tip each time. But that day, the server was so unfriendly that I paid only about half that amount, around $2. And for the first time that day, I was able to appreciate the usefulness of the tipping system.

In Korea, most restaurants include service in the price of the meal, so people rarely encounter tipping culture domestically. That is why, when people first come to the United States, one of the things they worry about most is how much to tip. Of course, since I was not used to tipping culture either, I also found myself wondering about it often when I had just begun studying abroad.

For those unfamiliar with tipping, let me briefly explain. In the United States, you tip based on the price of the food you ordered. If you were not satisfied with the service, you pay 15%; if it was so-so, 20%; and if you liked it quite a bit, 20%. Also, because tips make up the vast majority of servers’ income, it is considered good manners to leave a tip when you have received service.

Many people will probably say, “What, you have to spend money on that too after paying for the meal?” I felt the same way at first—it seemed unfamiliar and uncomfortable. But after what happened recently, I came to realize the advantages of tipping.

Tips and performance pay are essentially the same thing. Because the size of a tip is determined by the quality of the service one provides, tipping functions as an incentive that encourages employees to work harder. From the consumer’s perspective as well, it feels reasonably fair, since you pay according to how satisfied you were.

The purpose and role of tipping is to create direct interaction between employees and consumers and to continuously improve the quality of service. Given that American society has maintained the tipping system for such a long time, one may infer that it has been fulfilling that role quite effectively.

Linking compensation to performance is highly effective in improving the quality of work. There is little disagreement that Samsung Electronics’ policy of paying differentiated performance bonuses based on each division’s results was one factor that made its growth possible. By now, such a system is accepted as common sense.

But there are still sectors where this common sense does not apply. The public sector, often regarded as the most conservative group, is a representative example. Of course, there have been gradual changes, as seen in KOTRA’s abolition of the seniority-based pay system, but it is still obvious that the sector remains stuck in the past.

Recently, The Chosun Ilbo ran an article pointing out the astonishingly widespread negligence of duty in the civil service. And the article’s comment section was filled with posts criticizing the world of public officials. Of course, given the nature of the administrative branch, which is supposed to pursue the public interest, one cannot simply demand the unconditional adoption of an incentive system. Still, it is also true that some degree of differentiated treatment based on performance is necessary.

It seems that while even small restaurants overseas understand and practice this system, Korea’s administrative branch—which prides itself on belonging to the world’s top 10 economies—still deliberately turns away from it. Before our national competitiveness declines any further due to inefficient government administration, an incentive system must be introduced without delay.

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Original title: 식당 안의 시장: 2달러와 4달러

Author: Jeong-hwan Jo

Date: 2020-01-22

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=free_opinion&pn=16&idx=22312