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Thursday, October 9, 2014

Bill Marriott is wrong

Bill Marriott, recently retired CEO but still Chairman of the Board of Marriott International, is a very good businessman. I respect him and his accomplishments, although my views on politics and religion differ from his. Previously I blogged that I have spent more than a year's worth of nights in a Marriott bed. But when he exhorts his customers to tip the maids who work in his hotels, I object. Essentially he wants me to fill a profound gap in employee compensation that his company's own miserly compensation policy created. In his heart he knows that he isn't paying the maids the full value of their work. Well, Mr. Marriott, don't transfer your guilt to me. Give the maids a raise, instead.

Tipping was meant to reward performance, not to subsidize cheap employers. The underlying problem is that employers' desires to evade full compensation — facilitated by a glut in the low-end of the labor market — has caused tipping everywhere to jump the shark. The standard tip in an American restaurant has climbed from 10% to 17-20%, with a few high-end places now suggesting 22-25%. European restaurants are into the trend, too; it began there as the loose change, then 10%, and now 12% (sometimes on the bill already, sometimes not).

This is crazy. I have managed employees since 1981, and I know the theory of personnel management. Yes, incentivizing employees for high performance can work — but only to the point where diminishing returns set in. I think we're well past that point in tipping (and in the corporate board room, too). On the other hand, experience also shows that it's possible to extract high performance from employees without any tipping at all. If you don't believe me, go to Costco or to any restaurant or hotel in Japan where service is first-rate.

Besides, I rarely see hotel maids. The business traveler who is Marriott's best customer usually leaves the hotel by 8:00 am and checks in (or, in the case of a multi-night stay, returns to the hotel) after 6:00 pm. The maids start after 8:00 and finish by 6:00 — so I'm being asked to tip someone I've never met who performs a strictly standardized function in the hotel. Where does it stop? Should I seek out and tip the people who work in the very unpleasant basement environment of the hotel laundry to clean my towels? The cook who makes my omelette to order? The security guard who keeps evil-doers off my floor? The mechanic who drops by to fix the air conditioning in my room? The front desk clerk, whom I did see at check-in and check-out? (Note: hotels are keen to replace front desk clerks with a completely electronic arrival process. I suppose Marriott won't ask me to tip the hotel Linux server.)

I like to think of myself as generous, and I recognize that hotel maids do back-breaking work. But there is a more important principle here: the notion that a business, and especially a consistently profitable business like Marriott, should compensate its employees fully without expecting customers to chip in. Otherwise, as Immanuel Kant would warn, this situation will get ever more screwy.