Do Employers Have Control Over the Collection and Distribution of Tips? Case Study: Slovenia and Montenegro

Objective: The purpose of this paper was to determine whether tipping could reduce labor costs in the service sector. This research aims to better un­derstand whether employees are more motivated to work because of the tip they receive. Methodology: We will achieve these goals based on the findings of the research from Slovenian and Montenegrin companies in 2019 and 2020. A quantitative survey was implemented on a convenience sample of 107 Slove­nian, and 59 Montenegrin companies, using the non-probability sampling technique. Statistical data analysis was carried out with the help of IBM Sta­tistic Package for Social Science (SPSS) software version 20. We investigated the area of tips from the point of view of the orderliness of the distribution of tips, what are the relations in Slovenia and Montenegro and whether the tip as a motivational activity is sufficiently used in these two countries. Originality: Tipping has received little attention in rewarding and motivat­ing employees. Furthermore, there is no good, national source of guidance to help managers make decisions about tipping policies. This paper addresses these voids in Slovenia and Montenegro. Only a comprehensive discussion will be able to bridge this gap. Results: According to employees, the overall satisfaction with tips is better in Montenegro. Most employees allow the collection of tips, which is more present in Montenegro. In Slovenia, there is a regulated system of distribu­tion of tips, while in Montenegro this system is not clearly defined. Moreover, in Slovenia, there is also an orderly system for the collection and sharing of tips. Due to this fact, in Slovenia, the distribution of tips includes both, the employees who are directly involved in providing services as well as their colleagues. By contract, in Montenegro, only employees directly involved in providing services are entitled to a tip. Practical implications: In order to decrease labor costs, we propose that the management takes control of tipping and integrates tips into the reward system. Also, the employees should be made aware of how tipping improves service and increases their income. Limitations: The sample was formed by the questionnaire that was distrib­uted to various companies in the service sector as a non-probability method based on referrals from initial subjects to get another subject. The question­naire was sent by e-mail directly. The data were obtained by the Chamber of Commerce of Slovenia and the Chamber of Commerce of Montenegro. The main problem with small samples is the interpretation of results. Therefore, the results cannot be fully generalized. This issue should be addressed in fu­ture tipping studies.