This study sought to advance our understanding of the nexus between policy and ambient discrimination experiences of faculty and the intention to stay among graduate students. To accomplish this, we built on theory and research in higher education by leveraging models from the strategic human resource management (HRM) literature. In doing so, we advanced a novel theoretical model relating faculty perceptions of traditional HRM policies and ambient discrimination to department-level shared perceptions of diversity climate. We further theorized how that shared diversity climate relates to evaluations of graduate students' general campus climate and their intent to stay. We tested this model using a unique multisource, multilevel dataset comprised of 266 university faculty and 569 students who were pursuing graduate degrees across 28 departments at a midsized university located in the Midwest. The results supported the hypothesized model and established the important relationship between the diversity-related work environment experienced by faculty and the experiences and highly consequential outcomes for students and higher education. By bridging the gap between faculty work experiences and student perceptions and retention this study provides both new theoretical insights and important practical suggestions.