Supporting Performance, Evaluating Contributions

Facing shifting political and regulatory pressure in opposition to diversity, equity and inclusion (DEI), financial services firms should reframe, not abandon, their efforts, according to expert Paolo Gaudiano. Gaudiano is the founder and chief scientist at Aleria, an organization that helps businesses leverage diversity and inclusion to drive organizational performance and improve outcomes.

He argued that firms should adopt a new framework that links inclusion directly to business performance. Gaudiano calls the concept “Inclusive Meritocracy,” an idea he presented in a recent two-part webinar exclusive to FSI members. His goal is to help firms understand how everyday experiences inside an organization influence opportunity and, ultimately, the accuracy of performance assessments.

“Meritocracy and DEI, which have been painted as being opposites to each other, are really the same thing,” Gaudiano said. “People who say that DEI ruins meritocracy are basing the conclusion on the assumption that opportunities are the same, and that the discrepancies are due to differences in performance.

Gaudiano, who is also an adjunct associate professor at the New York University Stern School of Business, explained that both sides of the national conversation often miss key factors. Supporters of DEI frequently emphasize unequal outcomes, while critics focus on what they view as unfair policies or interventions. Both, he said, overlook the structures inside companies that shape employee experiences and access to opportunity.

Throughout the webinar, he encouraged attendees to look past the surface of unequal outcomes and focus instead on the processes that may be creating them. Many firms invest significant effort in responding to symptoms of inequality, yet pay less attention to the conditions that can lead to those gaps in the first place.

To illustrate the point, Gaudiano walked through a basic example. Onboarding is generally viewed as a routine process, but it can create hidden disadvantages depending on how it is carried out. A new employee is often walked through the office by their manager and given quick introductions.

As Gaudiano noted, “Depending on who is taking the employee for a walkthrough, the new hire might not be introduced to everybody, depending on who the manager has good or bad relationships with.” What appears to be a small, harmless variation can influence early visibility, information flow and access to colleagues.

He said a simple fix is to create a checklist for managers to use during onboarding so that each new employee meets the same people and receives a consistent set of introductions. This type of intervention, while modest, helps ensure that early experiences are not shaped by subjective differences between managers.

A major component of Gaudiano’s Inclusive Meritocracy framework is the role of demographic data. Although collecting demographic information has become more sensitive for employers, he cautioned that removing it altogether makes it impossible to determine whether a firm’s systems truly reflect merit.
“Refusing to measure demographic traits makes it extremely difficult to tell whether unequal outcomes are due to merit or lack of opportunity,” he said. “If you claim that you have a meritocracy, you need to prove that irrelevant factors are not influencing outcomes.”

Without demographic data, he added, business leaders are “operating blind,” unable to detect whether certain groups consistently face barriers others do not. Gaudiano also emphasized the value of gathering short narratives from employees. While traditional surveys can highlight trends, brief accounts of specific experiences can reveal issues that require faster or more targeted responses.

“For example, somebody might say, I did not get invited to a meeting and that impacted me,” Gaudiano explained. “If you see that a lot of people have that problem, then you could instate a policy that says every manager who organizes meetings has to have a checklist of all of the people that should be invited, and we are going to check to make sure that you are doing that.”

He encouraged firms to view these adjustments not as compliance exercises, but as practical steps that support better performance by ensuring people are evaluated on their contributions rather than on uneven access to opportunity.

Gaudiano closed the webinar by urging attendees to rethink how fairness and business results relate to one another.

“Do not throw out the meritocracy baby with the DEI bath water,” he said. “You will never be able to know whether you can improve your company by creating a better, more inclusive meritocracy if you are not measuring the factors that influence outcomes.”

The webinar was part of FSI’s ongoing Thought Leadership Series, which exposes members to expert insights on trends shaping the financial services industry.