This excerpt from “Waiting,” an autobiography by a waitress, illustrates how bonus compensation systems can create perverse incentives:
In this restaurant (part of a chain), all the managers were given year-end bonuses based on the profit margin of their particular unit.
There are several factors affecting profit in any restaurant:
– food cost
“Labor and food cost can be cut only so much if the restaurant is to remain operational. Supplies are a different story.
“Claiming that silverware was being pilfered by the staff (or gremlins), the management of this particular restaurant refused to bring out spoons, forks, or steak knives when these items began running perilously low.
“Despite begging, pleading, and ranting by the waiters and waitresses, management stoically refused. This led to some truly nefarious activities in and around the table.
“Busboys regularly got into fistfights over forks and started hiding them under piles of tablecloths, stacks of menus, or next to garbage cans, where they assumed nobody would look. Ultimately, these busboys forgot where they’d hidden their stashes and raided the tables of other waiters for silverware, which lead to heated arguments between waiters
“(‘Let me see your pockets—I know you have at least four spoons in there!’).
“In the end, however, it was the guests who suffered the most, without even knowing it. Desperate waiters, faced with customers yelling for forks (it is difficult to eat without one), ran to the kitchen, frantically rinsed used forks (which were soaking in dirty water), and dried them with soiled linens. Those forks were then sent to the table.
“The fact that this particular restaurant is so well known and so popular leads me to believe that large restaurants with similar structures might employ the same tactics.”
From “Waiting,” by Debra Ginsberg (2009); Harper Collins. Edited slightly for brevity.