HRM 7600 Module 3 Turnover Cost and Retention Plan Example

One Hundred Twelve Percent: Costing and Cutting Turnover in a Restaurant Group

Student Name

Master of Business Administration, Thomas Edison State University

HRM-7600: Human Resource Management - Talent Management

Mentor Name

Month Day, Year

One Hundred Twelve Percent: Costing and Cutting Turnover in a Restaurant Group

Turnover is usually discussed as a problem to minimize, but DeNisi and Griffin (2020) treat it as something to manage. Some departures help an organization, some cannot be prevented, and the costly ones are those of good performers who leave for reasons the employer could have addressed. This paper measures and costs turnover at Lakeshore Table Group, a composite chain of 14 casual-dining restaurants near Milwaukee with 610 hourly employees, and recommends where to act.

Measuring Turnover

Last year Lakeshore recorded 683 separations against average hourly headcount of 610, a turnover rate of about 112 percent. That is high but not unusual for the industry. Federal data show monthly quits rates of roughly 3 to 4.4 percent in leisure and hospitality during 2025, against about 2 percent for all nonfarm employers (U.S. Bureau of Labor Statistics, 2026), which implies annual quit rates well above 40 percent in restaurants before counting discharges.

The aggregate rate hides the pattern that matters. Exit records and manager notes allow a breakdown by type.

Using the textbook's distinctions, discharges and departures of poor performers are largely functional turnover, which may benefit the restaurants. Departures for school or relocation are unavoidable. The dysfunctional and avoidable turnover, early quits and good performers leaving after the first 90 days, accounts for about 71 percent of separations, 485 people a year.

Costing Turnover

A cost estimate makes the case for action. For one hourly position, the group's records suggest the following: separation processing about $150; overtime and lost sales while the shift is short about $700; advertising, screening and interviewing about $450; onboarding paperwork, uniforms and food-safety certification about $300; and about 60 hours of reduced productivity and trainer time while a new server or cook reaches standard, about $1,500. The total is roughly $3,100 per departure. Applied to 683 separations, the yearly bill for turnover comes to roughly $2.1 million, with the avoidable portion about $1.5 million, nearly 5 percent of the group's $31 million in annual sales.

Why People Leave

Griffeth et al. (2000), in a meta-analysis of turnover research, found that quit intentions, job satisfaction, organizational commitment and perceived job alternatives were among the strongest predictors of leaving, while pay had a smaller effect than many managers assume. Allen et al. (2010) list similar misconceptions, including the beliefs that all turnover is equally harmful and that people leave mainly for money, and recommend tailoring retention to the reasons particular groups leave. Lakeshore's exit data fit those findings. Early leavers most often cited unpredictable schedules and being placed on busy shifts without enough training; experienced employees cited scheduling, a lack of advancement and conflict with particular managers. Pay was mentioned, but less often. Several early leavers also said they never met the general manager before quitting, and three locations with the lowest early turnover were the ones where managers personally trained each new hire's first shift, a pattern worth testing more widely.

Recommendations

Lakeshore should focus on the two avoidable groups rather than on turnover in general.

For the first 90 days, it should post schedules two weeks ahead and guarantee new hires a consistent set of weekly shifts, pair each new employee with a trained buddy who earns $1 an hour more on shared shifts, and keep new staff off the busiest shifts until they pass a skills check. For experienced employees, managers should hold short stay interviews every six months to learn what would make each person stay, and the group should create a shift-lead step with a pay increase. Managers' bonuses should include their location's 90-day retention rate.

The costs are modest compared with the losses: buddy premiums of about $60,000 a year, two days of manager training at about $25,000, and shift-lead raises of about $80,000. The trade-off is reduced scheduling flexibility, since fixed schedules make it harder to match staff to day-to-day demand, and slightly higher labor costs on some shifts. If the plan cuts avoidable departures by a quarter, about 120 fewer exits a year, it would save roughly $375,000, more than double its cost.

Measures

The group should report monthly the 90-day retention rate by location, the turnover rate of employees rated as good performers and the number of separations by category, and compare locations that adopt the plan first with those that follow.

Conclusion

Lakeshore's 112 percent turnover rate is less alarming than its composition. Most departures are avoidable early quits and losses of good employees, driven more by scheduling, training and management than by pay. Costing turnover at about $3,100 per departure shows that targeted retention practices are an investment, not an expense.

References

Allen, D. G., Bryant, P. C., & Vardaman, J. M. (2010). Retaining talent: Replacing misconceptions with evidence-based strategies. Academy of Management Perspectives, 24(2), 48-64. https://doi.org/10.5465/amp.24.2.48

DeNisi, A. S., & Griffin, R. W. (2020). HR (5th ed.). Cengage Learning.

Griffeth, R. W., Hom, P. W., & Gaertner, S. (2000). A meta-analysis of antecedents and correlates of employee turnover: Update, moderator tests, and research implications for the next millennium. Journal of Management, 26(3), 463-488. https://doi.org/10.1177/014920630002600305

U.S. Bureau of Labor Statistics. (2026). Job openings and labor turnover survey: Quits rates, total nonfarm and leisure and hospitality [Data set]. U.S. Department of Labor.