Stop Tipping For Better Service: What Tech Companies Can Learn From Danny Meyer

Eeva, an Alfred Client Manager in the field

At the heart of any exceptional service brand are the people who create the last-line experience: The Southwest Airlines crew who make you laugh during in-flight announcements, Zappos’ customer service team who rush shoes in time for your wedding and the Four Seasons staff who remember you like the Wall Street Journal with your morning coffee.

At Hello Alfred, these last-line people are our Alfred Client Managers — and we’ve put them at the center of our business. As described in our last piece for Quartz, Alfred is among a handful of tech companies which employ W-2 workers instead of 1099 contractors, which means we pay more upfront to invest in our people.

When we started Hello Alfred, we felt that the on-demand economy (and specifically our company’s service and hospitality layer) did not need to emulate Uber to be successful. Our decision to provide W-2 employment ran contrary to conventional tech wisdom and was initially met with skepticism by the investment community. Potential investors balked at the added cost and complication of hiring this labor.

But we felt — and still feel — that great service requires quality and consistency. If we had created a platform where contractors quickly came and went, we’d have only increased recruiting costs and limited the availability of our product. Moreover, our customers might have signed up for our service, but left because of inconsistent quality due to lack of employee training.

It was our calculation that the 20–30% cost increase of providing W-2 employment was negated by the ability to acquire great employees and keep them happy. As Hello Alfred has rolled out in substantial markets like Boston and New York, our data shows that this calculation is working — and it seems we’re not the only ones.

Acclaimed restaurateur and hospitality legend Danny Meyer recently announced he would eliminate tipping in all of his restaurants by the end of the year and, instead, raise the hourly wages of his staff.

“We believe hospitality is a team sport, and that it takes an entire team to provide you with the experiences you have come to expect from us,” said Meyer in his press statement. “Unfortunately, many of our colleagues — our cooks, reservationists, and dishwashers to name a few — aren’t able to share in our guests’ generosity.”

By lowering the wage gap between wait staff, chefs, dishwashers and many other Union Square Hospitality Group employees, Meyer believes the company will see major improvements in both quality of talent and staff training (and retaining). As anyone in the hospitality business knows, this is the table stake to create a great customer service experience.

Hospitality brands understand their reputations are based on consistent and reliable service, something an up-and-coming start-up suffers from by definition. In his gesture on tipping, Meyer asserts that we should expect great service, not have to tip for it.

So what can tech companies learn from Danny Meyer? For starters, we should be treating our employees better and paying them fairly; and even if the benefit of doing so doesn’t immediately jump out on a spreadsheet, we can be sure to see positive results over time. That is, the nobility of service appears when people help people, creating genuinely meaningful interactions (not transactions).

While the metric of “How many?” (How many rides? How many deliveries? How many stars?) certainly matters, it’s just as important to remember that it is humans who power these services. The human touch of intuition, empathy and service still has a very welcome and important place in our gadget-filled lives. When paired with great tech and logistics, magical things can happen.

Danny Meyer’s bold move reinforces the idea that there is a new, better way to construct hospitality for the 21st century in a technology-enhanced world. Service can become a more valued profession in our culture, not just a stepping stone to one’s next career. So let’s go out build companies that reinforce and support this, humanely and thoughtfully.

Learn more about us at www.helloalfred.com

This article was originally published on LinkedIn.