“I’ll be on shift with (long term employee) and she’ll disappear for thirty or forty minutes. I’ll be left by myself without any back up. I just don’t think splitting tips equally is fair.”
“When I’m on shift with (new employee) she just hasn’t been here long enough to really have things down. I have to work harder to make up for it.”
“When I’m on shift with (fellow employees), they don’t even try to know what specialty coffees we have or answer the weird questions. They just refer the customer to me- and I’m in the middle of making drinks. It’s stressful.”
I’ve made it a practice to periodically sit down with our staff individually just to get a feel for how things are going. Taking time out to speak to staff and creating an open dialogue at Maeva’s has been essential to our growth- read here (link) if you would like to know more about creating a collaborative environment in our shop.
Working with people you enjoy in a positive environment is worth it's weight in gold, but being among friends is a double edged sword: small issues have a habit of festering, and none of them wanted to risk creating confrontation in a predominantly positive environment. When half of my small staff expressed unhappiness in their work relationship with other staff, it fell on me to resolve the issues my staff couldn’t with each other.
The issues presented appeared to be training or policy related. I took the opportunity to meet with our staff on an individual basis again and remind them of the responsibilities that had been falling by the wayside. When verbal communication failed to create a real result, I issued written warnings for offenses and suspended one of our staff members for a week in accordance to our written policies.
Our best-performing staff became increasingly frustrated, as did I. I have always felt my role at Maeva's should be one of a leader and not a manager (link).
“We have to do something they pay attention to- it needs to be about money.”
As disgruntled staff increasingly took longer to complete basic care and maintenance tasks in the shop, our payroll began to climb. My business partner suggested cutting all wages down to minimum ($8.25 in Illinois) as a wake-up call and to set up some system for re-earning their current wage rates ($8.50-9.75; augmented by tips). However, he is not the day-to-day operating of the shop and his solution put me on the front line of managing a foreseeable disaster. There had to be a better solution that didn’t involve me mitigating an all-out mutiny in the wake of this “let them eat cake” resolution.
I continued to search for a solution after exhausting the options outlined in our employee handbook. Two of our senior employees suggested tip sharing as a way to ease the stress of the knowledge and experience gap between veteran employees and new hires. I began to toy with the idea of creating a tip sharing system which would also work to refocus energy away from negative behaviors and reinforce the efforts of staff who truly invested themselves into our business. All of our employees are paid above minimum wage, allowing us the freedom to create and experiment with a system with these goals.
I needed to create a system to distribute tips that also fit the following criteria:
Based on completely objective achievements
Valued book knowledge and actionable skills equally
Emphasized continued learning and allowed growth over long-term employment
Fairly distributed tips based on time spent on shift
Incentivized new employees to learn quickly, allowing them to catch up to veteran employees
One weekend, I puzzled over a game an acquaintance was playing on Chess.com. It occurred to me how optimistically Chess.com ranks new players at a 1000 level strength out of 3000 point scale. You have to start somewhere, they’ve chosen 1000. As you play more games, your rating deviation is lowered and your resulting level more accurately describes your strength as a player. I began to write out how the Gliko chess ranking system could be adapted to tip sharing. Admittedly, the result looks far from the original, but understanding the Glicko system led to a fair and elegantly simple tip sharing method.
Nine weeks after our staff first voiced their discontent we held a full staff meeting implementing our new tip sharing system. These are my observations after three weeks.
The new system pays 50% of the tips based solely on hours worked in the shop and 50% on weighted rank. Our staff voted that tips would be distributed weekly. When they are available in the shop, the spreadsheet above is also published to ensure transparency.
The first set of numbers disperse half of the total weekly tips among staff per hour.
The second half is dispersed via weight, with total distribution the end. (Note: Justin was a new hire this week and hadn’t yet entered the ranking system- receiving only tips based for his weekly hours in shop and the nominal residual points entered in the ranking system to track seniority).
The second set of numbers show distribution of tips based on ranking weight, which is determined by the following:
Calculating weekly tips takes little effort. The spreadsheets are interlinked so the only values I need to update are the hours each staff member has worked and the total amount of tips being distributed. All of the equations have been built in.
One of the most difficult tasks in creating this system was assigning a point value to different skill levels. With the written/knowledge based exams, I have weighted what information is most important by placing it the lowest exam levels where tests have a higher point value. The first two levels of exams have very little to do with coffee and place an emphasis on directly applicable food safety practices for our business. They include questions such as:
“What temperature do you heat a quiche to before serving it to a customer?”
“How do you know when to change the sanitizer water in the dish sink?”
“At what temperature should the milk be stored?”
The higher level exams dive into the science and history of our industry, encouraging employees to cultivate a solid foundation of knowledge furthering their ability to passionately communicate to our customer base and add to the collective growth of our community’s love for coffee. However, it’s more important to me that our staff isn’t inadvertently giving someone food poisoning than their ability to locate Bali on a map- so lower level tests have a higher point value than higher level tests.
Knowledge isn’t everything. The ten yellow levels are all written exams and comprise 1,190 of available point value. The remaining points are predominantly skill based. Latte art, speed, ability to use a variety of coffee brewing equipment, and the thoughtful cultivation of palate- among other skills- are also weighted into the system. I had hoped to make a system that would be similar to the Gliko chess ranking in which 3000 would be a maximum point allowance, but I did add some categories for obtaining points that may accumulate beyond this.
Some points continually accumulate (i.e. hours spent in shop or tasting entries) while others are only available at certain intervals (i.e. speed testing occurs quarterly).
In the short time we’ve had it in place, I love these three things about this tip sharing system:
It’s completely objective. You either know something or can do something…or you don’t. There is absolute transparency in what you are getting points for and what you can do to improve your score (and therefore your share of the tip pool). There are no subjective points assigned, which takes all of the pressure off of me to evaluate which of our staff are pulling what degree of weight and how that should be rewarded.
With the exception of the speed testing, none of these skills are directly competitive. No one is being pitted against each other. Ideally, everyone would be 10th level ultra baristas, in which case all tips would be distributed equally with only hours worked per week in shop accounted for in difference.
Tracking of tips. Before this, only credit card tips were tracked and, even at that, I didn’t have an easy way of doing so unless I went into each day’s worth of reports via our POS system. Since both credit card and cash tips are pooled together and dispersed, I now know how much our employees are making per hour. This week, our least trained staff member made $11.27/hr and our highest trained staff member made $13.40/h with an average wage of $12.34/hr in shop. This information, as it is collected and averaged over time, will be useful to me as an owner when hiring new staff down the road.
Staff are in control of their wage. With this system, our staff is given a method for improving their skill level, directly affecting their pay in both the short and long term.
As our staff become more knowledgeable, efficient, and skilled they are going to be able to build deeper relationships with our community, attract a wider range of folks into the shop, and accommodate a greater volume of orders in a speedy manner. Logically, this would lead to greater appreciation for our staff’s ability to craft amazing coffee and a greater pool of tips. To put it simply- you want more money per hour? Know more and serve customers better.
Small business is all about being able to custom tailor everything. I’ve read a dozen books about listening and responding to the desires of your customer base, but the last few months have been an exciting challenge of reflecting on the needs of our staff and strengthening our business from within as we continue to grow.
The results: this system was initially met with skepticism and became the catalyst to losing one of our long-term staff members. However, I’ve been approached independently by half of our current staff who have expressed relief at the decreased level of stress in the shop. When laying out the tip system to one of our new hires, he commented, “I’ve never worked anywhere that actually gave you a reason to learn- this is so awesome!” This overwhelmingly positive reaction was enough affirmation for me to believe that, even if it needed to be altered in small ways in the future, we’re on to something.
Stay tuned! I promise a six-month review later this year after more time has lapsed.