Is that a tip you are paying or is that a bribe?

Too few people see the relationship between tipping and bribing and even fewer understand the difference. Consider this: Research has shown that in places where people tip heavily, bribes are more likely to exchange hands as well. In addition, Countries with higher rates of tipping behavior also tended to have higher rates of corruption.

New research shows that there’s actually a line between the socially acceptable act of tipping and the immoral act of bribing, according to Magnus Thor Torfason, an assistant professor in Harvard Business School’s Entrepreneurial Management Unit. Professor Torfaon’s basic thesis is “It is generally considered a good-natured pro-social thing to tip, but bribing is considered to be antisocial and negative,” Torfason says. “So this relationship between tipping and corruption is counter-intuitive in the United States.” The line between the two is both fuzzy and gray.

This is a complicated area with a lot of “gray” turf. There have been many attempts to legislate proper behavior around the world, with varying success rates. It sure would be nice if there was some sort of globally acceptable standard. But, until the various cultural norms around the world harmonize and until there is a mature and common body of Law, gray areas will remain. The business you work for probably does business all over the word, and we need to adapt to local customs and practices in order to successful and legally manage our business – all the while keeping out of trouble back home in the USA.

I am a simple man, so let me offer some simple guidance. As a professor taught me, keep one eye on the best interests of your client and advocate like a son of a gun for your client, but keep the other eye firmly of the Attorney Discipline Board. Here, keep one eye on getting the job done safely and in a timely manner, and the other eye firmly on controlling law and rules. My simple definition would be: a bribe is a tip before the typical services are rendered and a tip is after the typical services are rendered.

If you do not like that offering, consider this one: Tips express gratitude for a legal service that has been rendered. Bribes are used to receive an illegal service or advantage that should not be rendered or received.

When I put it like this, it seems clear, right? You are probably wondering about some of the gray areas I mentioned, right? Come on, admit you are wondering.

As Torfason points out, the confusion between a tip and a bribe started centuries ago. He points out that in Feudal times payment were made to officials as a way to gain favor and to avoid their homes and belongs from being confiscated or destroyed (above and beyond taxes). At about the same time it became customary for visitors to whom you offered food or shelter to offer a modest payment in exchange for the hospitality.

There is overlap between tipping and bribery in situations where the receiver threatens to withhold service that the give is entitled to. If the building inspector demands a payment to issue a permit even for properly – done work, it’s demand for a bribe, even though it’s a payment for what the inspector doing is supposed to do. If a customs inspector demands a payment to pass equipment through customs, even when everything is in order, it is a demand for a bribe. To me the largest reason these improper payments occur is that there is abuse of power by the person demanding the bribe.

If you check your coat at the Holiday Party, and you see a tip jar, do you feel compelled to put something in it to ensure you get your coat (and all of the contents of the pockets back) at the end of the evening? Or, do you add something only after you get your coat back and check to make sure the contents of the pockets are there?

In business, there are expectations that modest gifts are exchanged at meetings. We have all either faced the situation or heard of the situation, right? What do you do? Do you insult your host and potential business partner by appearing to snub them and show disrespect for their customs and cultural norms? To you feebly try to explain your company’s “Business Practices” policy? Do you attempt to use smaller trinkets and less formal exchanges?

Torfason makes it clear that this can be a dangerous area and a very slippery slope when the line between a tip and a bribe gets blurry.

“Once you start engaging in these informal tit-for-tat exchanges, it may increase your susceptibility to engage in certain acts of informal exchange that may not be acceptable,” said Torfason. “Informal exchanges are trickier to manage than people sometimes think,” Torfason said. “Once you are embedded in a web of informal transactions and favors, it can sometimes become harder to judge what’s appropriate and what’s not.”

There is no simple answer and there is no globally accepted rule. Rely on your training and your good sense. Finally, please keep one eye on the transaction and the other one firmly on your own company’s Business Practices.

Photo credit: thoth92 / Foter.com / CC BY-NC