Former Prologis CEO, Walt Rakowich’s tips for how to build trust in any organization

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It was 2007 and Prologis, a darling on Wall Street for the previous decade, experienced a rapid decline in stock price from $70 to $2 a share in a matter of months.  In the blink of an eye, the one time investor favorite became the 3rd worst performing stock on the S&P.

What changed?  Why the rapid decline in the company’s previously stellar performance? The Prologis board reached out to Walt Rakowich to answer those questions and turn the company around.

Walt’s answer: trust.  He expands to say that fear and insecurity are all about you, while trust is all about others.  The CEO that leads out of fear and insecurity becomes dictatorial, stops delegating and wants to do it all himself so he can get the credit.

A recent Harvard Business Review Article reported on what CEO’s are afraid of, noting the top three to be incompetence, underachievement, and vulnerability.  These fears can lead to insecurity about not having the right answers, underperforming the market or not staying relevant.  While fear and insecurity cause a leader to focus internally on himself; trust, on the other hand, opens a leader up to be all about others.

So, how do you build trust in an organization?

#1) Transparency.

Walt uses this term not in the sense that politicians may use it today which simply implies openness, but in a much more concrete sense.  To build the kind of transparency that leads to trust, Walt says a leader must “build a window to her soul.”  Let others in, be honest, be human.  Communicate openly even if you don’t have all of the answers or haven’t done the math yet.  Walk others through your thinking even before you know the end result.

Walt cited a town hall meeting he held with Prologis’ worldwide employees when layoffs were looming.  At the time the employees undoubtedly knew the company was in trouble – why make them stand around the water cooler whispering about what management was thinking? He didn’t have the answers yet, didn’t know how many layoffs there would be or when, but he walked the thousands of employees around the globe through the numbers.  He showed them very clearly that without some layoffs the company would go bankrupt and everyone would lose their jobs. While undoubtedly it wasn’t the message the employees wanted to hear, at least they felt connected to the issue and a part of the solution.

#2) Vulnerability.
Admit your weaknesses and insecurities, because when you admit them, you defeat them.  Admitting your weaknesses takes courage, but vulnerability is an extremely powerful tool for building loyalty.

The Prologis finance team had just told Walt that bankruptcy was looming.  It was the fist time he had allowed himself to believe that such a demise was even possible.  Feeling light headed, Walt excused himself from the meeting to get a drink of water.  He didn’t make it far before fainting and hitting his head on the corner of a desk on his way down.  Waking up 5 minutes later in a pool of blood, Walt wasn’t even sure for a few moments where he was.  Moments later, he cleaned off his cut and slowly made his way back to the conference room.  Exacerbated by the blood and fresh cut on his forehead, the team asked Walt what happened.  Walt’s response: “I don’t have the answers, I’m scared.  Can you guys help me?”

The team stepped up, immediately telling Walt not to worry and explaining how they would figure it out.  And they did.  That same management team grew Pologis back to a $35 stock price and an investor favorite with more than $50 billion in real estate assets.  In Walt’s words, “if you can be courageous enough to show your true vulnerability, people will kill themselves to work with you.”

#3) Human Heart.
How do you think of your employees?  As just a number or as a mom or dad that goes home to a family, makes dinner, and cares for loved ones at the end of the day.

Lunchtime for Walt meant waiting in line at the Prologis cafeteria, buying lunch for the employee in front of him and asking whoever it was, whether it was someone in the IT department, accounting or marketing, to eat with him.  The “lucky” recipient of Walt’s invitation was likely scared out of his or her mind to have to spend lunchtime in a serious conversation with the CEO.  But Walt began every conversation with “tell me about your family.”  He got to know them as a person, understood their perspective and what they were dealing with in life outside of the office.  And then he asked about his or her job within Prologis, what was working and what wasn’t.

He found that the employee feedback during these lunchtime chats was a powerful tool for him to understand whether there was a chink in the armor of the organization and gave him a clearer picture of what was happening under each of his direct reports.  Even more powerful, though, was that everyone else in the cafeteria was watching.  The employees saw the CEO as another human being having lunch and getting to know a company employee.

The recipe for creating trust: make this language fluent in your organization.

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