Quick, name a business that doesn’t put its values front and center on its website.
Those words telegraph company culture to employees, customers, and other stakeholders. If their first letters form a memorable acronym, even better!
Prologis, the global logistics real estate giant, isno exception. But as cofounder and CEO Hamid Moghadam has learned, articulating values can be tough.
Trust is vital for every business, observes Moghadam, who heads a team of 2,600. “If you trust your leader and you believe in the mission, then you’re prepared to follow the person and help the person be successful.”
In his view, the main impediment to that trust is saying one thing and doing another, especially when the long-term mission doesn’t square with an expedient decision. “The biggest gap between people’s walk and talk I’ve seen happens when they have to make a short-term trade-off, which is negative, to reach a long-term objective.”
Which bring us to values and culture. For Moghadam, a strong culture is a company’s only source of long-term, sustainable competitive advantage. “You start with the mission, then you go to values and then go to the culture.”
Culture is “the set of practices that operationalize the values in the long term,” he adds. “And the values are those sets of beliefs that really support the long-term vision of the company.”
As mission-oriented as he is, Moghadam doesn’t like mission statements. “I think they tend to gravitate toward platitudes.” Fair enough.
What he does like: a differentiated mission. Prologis follows a version of the one developed by its predecessor, AMB Property Corp., which Moghadam cofounded in 1983: “It was to be a global leader in the real estate sector, by building a company of enduring excellence.”
Here’s where the mission/values/culture trifecta gets tricky for Moghadam.
“I’m not in love with the values part,” he admits, noting that like mission statements, values tend to be platitudinous.
After AMB and a larger rival merged in 2011 to become Prologis, leadership decided to craft a new set of values the combined team could buy into. So they traded in AMB’s I CREATE (integrity, customers, results, excellence, accountability, team, and entrepreneurship) for IMPACT: integrity, mentorship, passion, accountability, courage, and teamwork.
But Moghadam isn’t thrilled with the result. He thinks values should be a choice, like making a strategic decision to enter Market A or Market B. If one of your values is integrity, is there really an alternative? Good point.
“The opposite of integrity doesn’t hold,” Moghadam argues. “Nobody comes in and says, ‘That’s my values, I’m going to be a sleazebag.’”
Prologis has since taken a shot at revising its values, Moghadam explains. Under the heading “Be the difference,” it now also has five traits that drive company culture:
1. We are dedicated to our customers’ success.
2. We create the future.
3. We embrace change.
4. We listen, question, then commit to each other.
5. We simplify and sprint.
As important as its values are, Moghadam still wishes Prologis could describe them in a more differentiated way. “This trade-off between the short term and the long term is an unstated value,” he says. “But I think people understand that, because the culture and the steps that we do to operationalize values [are] there.”
Whatever a company’s values are, what’s the best way to communicate them?
“Over and over and over and over again, until you’re sick of hearing yourself, communicate the same idea,” Moghadam says. Then repeat.
Just be sure to match those words with action.
“The biggest contributor to trust is consistently walking the talk internally, externally in your media communication, in everything you do,” Moghadam says. “It’s amazing how good [people] are at figuring out the deviation between the walk and the talk.”
Call it a values judgment.
Nick Rockel
nick.rockel@consultant.fortune.com
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Love for rent
As farewell letters go, it was a doozy. “I have a deep feeling of love for all of you,” Airbnb CEO Brian Chesky wrote in 2020—to 1,900 employees the vacation rental company had laid off. Chesky recently admitted he might have overreached, given that a business isn’t a family. But noting that the best teams trust each other, he said company bonds can run deeper than work arrangements.
Money machines
AI’s next stomping ground: the financial services sector. Generative AI apps could become retail investors’ main source of advice by 2027, Deloitte reckons. One big question is what financial tasks people will trust AI to handle. In a survey by Northwestern Mutual, “helping with a budget” topped the list, while “creating a retirement plan” finished last. But won’t AI push many of us to leave work early?
Shopping channel
Gone are the days when retailers could trust customers not to strip their shelves bare. To combat shoplifting, the parent company of TJ Maxx, Marshalls, and HomeGoods is making some store workers wear body cams. Partly thanks to that move, theft will stay flat this year, TJX predicts. Oh, and smile, you’re on camera.
TRUST EXERCISE
“Earlier this month, Steward Health Care, a major hospital chain, filed for bankruptcy. Like so many other bankruptcies in recent decades, it followed the purchase of the chain in a leveraged buyout by a private equity fund that controlled a large stake in the chain between 2010 and 2020. Meanwhile, the Biden administration, drawing on a trove ofnew data, is concernedthat too many private equity funds exploit investors and treat employees as expendable, hurting them and the economy as a whole.
Together, we represent 4.7 million American workers who both invest in and work for entities controlled by private equity. Our members’ retirement funds have over $4 trillion invested. And those funds rely on a healthy economy and broad-based economic growth to fund our long-term obligations to our participants. We agree with the administration that private equity needs greater transparency, fairer fees, and a business model that grows strong businesses and creates good jobs—not one that exploits workers, loads companies with debt, and sells them off for parts.”
Private equity and organized labor—could two groups be any further apart? Yet as union leaders Randi Weingarten and Sean McGarvey point out, worker pension funds invest in private equity, which also employs many of the members they represent. As investors, those fiduciaries have a right to ask any anyone who manages their money some tough questions.
But for pressing PE firms on fees, performance, labor standards, and other issues, pension funds stand accused of bullying them, Weingarten and McGarvey say. They turn the tables, arguing that the real bullies are private equity players complicit in worker abuse, union busting, and child labor.
Weingarten and McGarvey see a better way forward where pension and PE funds work together for the long haul, boosting the U.S. economy while also ensuring that workers have a secure retirement. For them, holding private capital to account is a matter of public good.
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