What is Point Distribution?
Point distribution is a method used to create a ratio for distributing tips among different job codes. When you set up a tip-sharing rule or a tip pool, you can assign a specific number of points to each role that will receive tips. This ensures that tips are shared proportionally based on the ratio you define, regardless of how many employees are working in each role at a given time.
Ratios
In the image below, we see a single rule that is set to distribute 30% of the Server’s tips to the Bartender and Barback. The rule contains point values for each job code receiving tips from the rule, 4 points for each Bartender and 1 point each for each Barback.
This means that no matter how many Barbacks or Bartenders are clocked in, the Bartenders will always get four times as many tips as the Barbacks.
For example, if no one is clocked in as Bartender, then Barbacks will get all the tips.
If no one is clocked into either Bartender or Barback, the Server will retain the tips.
This is different than setting up two different rules that state that Servers tip out 7.5% of tips to Barbacks and a separate rule that says Servers tip out 22.5% to Bartenders.
In that case, there will no longer be a ratio; instead, set percentages will always be given to those respective Job Codes regardless of how many people are using those Job Codes.
If no one is clocked in as a Barback, the Server will retain those tips. If no one is clocked in as a Bartender, the Server will retain those tips.
Setting up two different rules can work well for restaurants that handle staffing and tip distribution more rigidly, such as franchises or multiple locations under a set corporate structure.
The Math Behind Points
The total tips are divided by the total number of points in the pool to calculate the distribution. That amount is then multiplied by the points assigned to each job code. Each time you add a job code to that pool, the math will readjust to ensure the ratio stays intact.
It is important to remember that in a real scenario, this would all be calculated based on minutes worked.
Scenario 1
Servers Points of (3), Bartenders points of (1).
1 Server and 1 Bartender working.
$500.00 tip.
There are 4 total ‘points’ in this pool. So, we would divide 500 into 4 portions and then multiply that number by the points for each job code. 500/4 is 125. Servers get 3 x 125 = 375. Bartenders get 1 x 125 = 125.
As you can see, the individual server is taking 3 times as many tips as the individual bartender.
Scenario 2
Servers points at (3), Bartenders points at (1).
2 Servers and 1 Bartender working.
$500.00 tip.
Now there are 2 servers in the pool each with points of 3, which gives us 7 total points in the pool. Each server gets 3 points, and the bartender gets 1. So, we would divide 500 into 7 portions and then multiply that number by the points for each job code. 500/7 is 71.42. Servers get 3 x 71.42 = 214.28. Bartenders get 1 x 71.42 = 71.42.
As you can see here, each individual server is still taking 3 times as many tips as the individual bartender.
Scenario 3
Servers points of (3), Bartenders points of (1).
3 Servers and 1 Bartender working.
$500.00 tip.
Now there are 3 servers in the pool, each point of 3, which gives us 10 total points in the pool. Each server gets 3 points, and the bartender gets 1. So, we would divide 500 into 10 portions and then multiply that number by the points for each job code. 500/10 is 50. Servers get 3 x 50 = 150. Bartenders get 1 x 50 = 50.
As you can see here, our 3 to 1 ratio still holds true. Each individual server is still taking 3 times as many tips as the individual bartender.
|
Still have questions? Contact our customer success team here or click the Chat icon in the bottom-right corner of your Client Dashboard.