Uber, where to?

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UberWheretonowAfter a tumultuous year of corporate scandals at Uber, culminating in the resignation of CEO Travis Kalanick, the ride share company has announced that it will allow driver tipping through its phone app. This functionality is to be rolled out in Australia later this year. It’s a stark turn around for the company, which has been embroiled in a quagmire of controversy around the labour rights and pay conditions of its ‘workforce’ (a term that Uber would steadfastly reject in favour of ‘contractors’).

Most see this as part of a PR campaign to mend broken fences between the company and its main constituency of drivers. It’s a complete 180 turn on its previous stance on tipping. On the surface this appears to be a great example of corporate social responsibility – a policy that benefits customers, workers, and eventually the corporate bottom line. It comes at a point when many users in the USA have abandoned Uber in favour of Lyft and other more socially conscious options (as usual, here in Australia we have far fewer alternatives). So Uber obviously sees this as a way to improve its image all round and recoup some of those lost customers.

So how will customers feel about their newfound ability to reward drivers? There are various studies that show tipping has only a nebulous connection to quality of service, and that it is easily influenced by bias. The ‘customer knows best’ tipping mindset, so entrenched in places like America, may be a flawed strategy for incentivising excellent service. In countries like Japan, where tipping is seen as rude, service standards are exceptionally high. These studies show that diners reward their waiters for arbitrary things. Important factors include the weather, the type of tray the bill is presented on, and most dramatically, the gender and race of the waiter. So much for performance pay!

All this has led us to consider a bit more closely the politics of tipping in Australia. As those who have dined out at any relatively upmarket establishment know, come time to pay the cheque, the etiquette around tipping is mired in uncertainty and rife with potential to show oneself up as ‘uncouth’ or ‘cheap’. There are those that are simply oblivious to the custom, having grown up in a country where the practice was not widespread more than ten years ago. You’ll also come across some who steadfastly refuse to tip on grounds that, in this great socialist country of ours, a worker deserves a fair wage and tipping isn’t part of that. For most though, we think of tipping as a way to optionally demonstrate our appreciation for a job well done and to encourage professional standards in our wait staff (misguided though that may be).

There are no hard or fast rules in Australia around tipping. In the US, the standard is 15 to 20 per cent of the bill. In the UK it’s generally set at around 10% and in many establishments this is added automatically to the bill. Here in Australia, we truly are the wild wild west when it comes to gratuities.

Like it or not though, the tipping culture is here to stay. Will Uber’s strategy pay off by improving its service for both customers and its workforce? Uber itself has voiced fears that introducing tipping will encourage drivers to swarm where those tips may be highest (the wealthiest neighbourhoods), while under-servicing other areas of the community.

For now at least, it remains to be seen how this will play out…

Cheers, Jack and the c word crew

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