Tipping is an interesting thing in the United States. Tips are that extra money we provide to a restaurant staff for showing outstanding service and courtesy.  I have always found inconsistencies with the U.S. method in that we base our tip on a percentage of the cost of the meal.  What if I were to receive service worthy of a 20 percent tip in a restaurant where my bill came to $50. The extra $10 may be worth the expression of my gratitude.  However, what if in a more “trendy” or “better” establishment, my bill came to $150 but I had received service of what was expected.  My standard 15 percent or $22.50 exceeds the tip I would provide for better service at a lower cost restaurant. I do not think that is fair.  I would rather see the tips based on a flat dollar amount based on server quality regardless of the cost of the meal.  I won’t even bring up the required 15% for parties even if the service is downright lousy.

In most of Europe, or at least when I last travelled there, a restaurant patron would usually round up to the nearest Euro, Mark, Pound, etc. if the service warranted that. I think that practice is closer to what I envision to be fair.

So what does my ranting about tips have to do with anything?

Tips are the equivalent of bonuses.  Now don’t get me wrong, I believe that good bonuses help keep good people.  I use them all the time to retain good employees. In every case where I have recommended bonuses, the employee has done something to warrant a wonderful customer response, or has enacted a process that has saved money.

The flap over AIG as well as other firms receiving bailout money from the government, then providing millions of dollars to those who “managed” the loss of billions of dollars has prompted my thoughts on “tipping” at a higher level. It is quite possible that the recipients of the bonuses brought in 10 times that amount for the company in the past.  Some of the excuses are that the money was contractually obligated.  That may win the day for the recipients, however, shareholders (in this case the taxpayers) need to hold the company that wrote the contract guaranteeing bonuses regardless of financial performance responsible if in fact it was the taxpayer financing that made the award of the bonuses possible.  Could AIG as well as other firms even have issued the bonuses if the federal government had not provided the means to do so?

Going forward, business leaders as well as government leaders need to make better use of the Virtues of Dr. Franklin.  The two most applicable in this situation are Sincerity and Justice.

SINCERITY
“Use no hurtful deceit; think innocently and justly, and, if you speak, speak accordingly."

One of the primary causes to the mortgage crisis of 2008 was a lack of truthfulness and trust. Lenders and borrowers alike used deceptive practices, and false financial information to acquire mortgages for those who purchased homes beyond their means. In the wake of rampant foreclosure, banks still were unable to trust each other and larger industries thus preventing the ability to provide necessary credit.  Without credit, industry fails and when industry fails, recession takes hold.  All of this happened because many people told little lies.

Within my family, my wife manages the checkbook and day-to-day expenditures while I manage the long-term retirement accounts and share the information between ourselves.  Within any partnership whether it is in business or personal, we build trust from the practice of Sincerity.  Trust is what is required to ensure the success of any financial endeavor. 

In my business, prices for services are open and posted, and customers know exactly what they will pay after I deliver requested services.  If I cannot provide a specific service, I say so, and even recommend competitors.  This, along with delivery of quality services has created a level of trust between my customers and me and has enabled a greater word-of-mouth marketing that has provided business growth.

Sincerity also enables you to be truthful with yourself.  The answers to “Can I afford this”, “Do I really need this”, and “How will my finances be affected by my action” can all be honestly assessed with the practice of Sincerity. Mastering Sincerity is a step towards the practice of Justice. 

JUSTICE
“Wrong none by doing injuries, or omitting the benefits that are your duty."

Justice uses the qualities of trust and truthfulness built with Sincerity to allow us to achieve more for ourselves while operating in an environment of fairness.  That does not mean that everyone should or will have the same successes, but that they should have the same opportunity as anyone else to attempt to do so within the same laws and freedoms.

In a personal sense, Justice is that virtue which we display honesty and integrity in all of our actions.  Personal integrity is always at the heart of any financial transaction, financial oversight, and financial stewardship. As individuals, we must be honest enough to pay our creditors, while lenders have to ensure that those they loan to have the realistic means to follow the terms of any loan.

Business Owners as well as employees also have a responsibility to keep this virtue in practice.  For many businesses, this is the basis for company ethics policies. The fair treatment of employees, coworkers, peers, subordinates, and customers is important for any business to build and maintain trust.  With trust comes loyalty.  Any successful business owner knows that with a foundation of employee and customer loyalty, comes profitability.

Going Forward

In the end, the larger companies that have made the mistake of “over-tipping” for poor service do so at their own peril.  Regardless of any action the government can or will take, investors will be taking a hard look at the companies that have weathered the 2009 financial crisis.  Those who were humbled into having to receive taxpayer help in their survival, and managed to make the company thrive with Humility, and the practice of Sincerity and Justice will have earned the trust of future investors.  Those who feel they are above such virtues may one day find themselves abandoned by investors, and with an opportunity of learning the hard lesson of truly earning a bonus one customer at a time schlepping food between the kitchen and my table.