Final answer:
Diversity and inclusion are key to company retention as they bring innovative solutions and adapt to a global marketplace. Firms have shifted hiring practices to include diverse talents to expand their workforce and retain younger generations by making work meaningful and rewarding.
Step-by-step explanation:
Why diversity and inclusion matter to company retention lies in the fact that a diverse workforce brings in a variety of perspectives, which fosters innovation and drives growth. Research suggests that an organization's focus on hiring for cultural fit, aimed at maintaining the status quo, may inadvertently stifle these benefits, negatively impacting the firm's bottom line. Diverse teams are more likely to devise innovative solutions that wouldn't surface in a homogeneous group.
Recognizing the value of diversity, firms have shifted their hiring practices for several reasons. First, discriminating against potentially excellent applicants based on race or ethnicity limits a company's talent pool. Second, a diverse workforce promotes new ideas and a positive work atmosphere. Third, societal pressure and the growing power of minority groups influence company policies. Finally, with the global nature of business, having employees who understand and relate to diverse markets is crucial for expansion and profitability.
Millennials and Generation X present new retention challenges due to their lack of inherent loyalty to an organization. Therefore, retention strategies must focus on making work meaningful and providing regular positive reinforcement. Ultimately, businesses that can navigate these changes and encourage a diverse and inclusive environment are more likely to retain talent, adapt to changing markets, and maintain a competitive edge.