Mission critical Featured

7:00pm EDT February 23, 2010

J. Patrick “Pat” Gallagher Jr., doesn’t like meatballs. But he’s not talking about pasta-complementing Italian cuisine. He’s referring to some quirky advice his father, John P. Gallagher, used for hiring at the family-owned Arthur J. Gallagher & Co.: Avoid “magnetic meatballism.”

“He said, ‘Every meatball has a magnetic force, and they tend to attract another meatball — who then has doubled the magnetic force — who tends to attract more meatballs,’” says the third-generation Gallagher, now serving as chairman, president and CEO. “‘If you’re not careful, before you know it, you’re surrounded with meatballs.’”

Most leaders know how important it is to bring in employees who fit with the company, but it’s especially important in a business like insurance brokerage and risk consulting where people are the business — or where, as the old adage goes, the inventory rides down the elevator every night.

Because he depends on employees, the way they act is crucial. What good is filling the bus with the right people if you don’t build a culture to keep the bus grounded?

“Culture is not like a policy,” he says. “You can’t read it, you can’t touch it, can’t see it. But you can feel it, and it is the reason that people are joining the organizations they’re in — that undefined or untouchable thing that is the quality that attracts people.”

Gallagher’s culture has been successful in finding almost 10,000 employees who fit the mission of the $1.7 billion company.

“If you’re setting out on a journey with a destiny in mind, if you don’t have the right tools and you don’t have the right people, you’re not going to get there,” he says. “People make the difference, and so everything starts from the perspective of ‘Do you have the people on your team that can, in fact, carry out the mission?’”

Here’s how Gallagher gets the right people on his team to drive his company forward.

Develop employees

It started when John Gallagher brought in a couple of men who otherwise would have worked construction. In the 40 years since, the company has honed its internship program to recruit employees who prove their fit through trial. Now, several former Gallagher interns hold management positions in the company — including Pat Gallagher.

One way to find employees who fit is to grow your own.

“We’re not just selling them on joining Gallagher,” he says. “We’re assessing whether or not they have the skills and qualities that would make them successful in our company.”

To be able to make that kind of assessment in an interview, your line of questioning needs to be tough — not so aggressive you’re shouting students out of the room but straightforward enough you’re getting them to open up and explain themselves. In other words, just like you’d be interviewing any other candidate.

“We want people that can communicate well,” Gallagher says. “We grill them. These kids come in and they have four or five interviews that are not softballs. These are senior successful people interviewing hard to see whether or not the kids can stand up to the questioning.”

For example, Gallagher reaps levels of assessment from answers to even the most basic questions, such as why students selected the school they’re attending or the major they’re pursuing, what achievements they’re proud of and which teams they’ve participated in. Then there are the questions more directly related to the job, such as why are you applying, what do you know about the company and what are your goals?

Regardless of what they say, you’re learning about their communication skills and getting glimpses into their personality.

“All that adds together to this elusive thing, which is a personality style fit,” says Gallagher, who uses several managers to conduct interviews and round out the opinion of who fits and who doesn’t.

Unlike hiring someone into a specific position, internships are an opportunity to give your temporary employees a glimpse into all aspects of your business. Gallagher’s 150 annual interns, who come in before their junior year and — if they cut it — get invited back the next year, rotate around the company to lend help and learn through hands-on involvement.

Giving them responsibilities, even if it’s just participating in meetings, is how you turn an internship into a trial for future employment.

“After that first summer, they’re graded every single week: Did they show up on time? Were they groomed properly? Were they respectful? Had they done the studying that they were asked to do before the meeting? Were they able to participate in the meeting? Did they ask good questions after the meeting?” he says, leading to the ultimate question of whether the internship would translate into employment.

But he realized interns who were nervous about the transition were leaving.

“When we went out and interviewed some that had left us, we found that the reason that they thought they had to move on was that they just didn’t know what was next at Gallagher or who to talk to,” Gallagher says.

When Gallagher started working, he had both his father and his uncle, Robert E. Gallagher, to help him find his footing. Remembering their advice and assistance helped him develop the EDGE program, which provides mentors and training courses to assimilate new employees.

“Once we’ve hired them, then we’ve got a whole program that essentially says, ‘Now how do we help you get into this career and be successful like those that you look up to?’” he says.

Ask for sponsor volunteers in the office or department for which the intern will be working, explaining they’ll be expected to help the new employee develop goals and self-evaluate their performance, providing encouragement and support along the way.

“I was lucky enough that I had mentors — we call them sponsors now — that I just enjoyed being around and sucking the knowledge out of their brain, asking them to help me,” Gallagher says. “And that’s what you do for these young people.”

Communicate your culture

You don’t always have the advantage of molding your employees from the ground up. If you’re growing as aggressively as Arthur J. Gallagher & Co., many employees may come in through acquisitions where a certain culture is already ingrained.

When you don’t have years to test employees against your culture, you have to articulate it clearly instead.

“People say, ‘Why do you think you have a different culture?’ and I’ll say, ‘Because, frankly, we believe we do,’” Gallagher says.

He estimates that 99 percent of his due diligence focuses on culture. Finding that match starts with the people and, more specifically, their principles. Gallagher looks at how they do business, which includes both employee and client relationships, as well as the opportunities they provide for training and developing employees.

But culture is a two-way street, so you also have to paint an accurate picture of your culture to the acquired company. To make it dig estible, distill it into small, actionable pieces. Gallagher uses The Gallagher Way, a list of values from professional excellence and mutual respect to trust and empathy.

“They’ll typically come here to our home office. We share (The Gallagher Way) with them and say, ‘These are the 25 tenets as to how we want to run our business. I hope that you agree with those: morality, integrity, ethical behavior, commitment to client and commitment to the development of employees,’” he says. “We’ll talk about that stuff very openly with them.”

Part of that discussion is explaining why your culture matters, not just reading it off of the due diligence script.

“We’re constantly emphasizing the fact that we believe our culture is a strategic advantage because we’re a people business,” Gallagher says. “Don’t get me wrong; this is a competitive world. This isn’t soft and namby-pamby at Gallagher. We work very hard so it’s a huge emphasis on teamwork and openness.”

To help illustrate your environment, offer real-life examples of your values in action. To show the company is the open society it claims to be, where everyone is equally important, Gallagher tells about the decision to freeze the pension plan three years ago.

“Everybody has ‘hollerin’ rights.’ People call me and tell me that we’re making mistakes all the time,” he says. “A branch manager sent me an e-mail and said very simply, ‘I think you’re a good leader. I think you’ve been good for our company, but this is the dumbest decision you ever made.’

“And I wrote back and said, ‘Thanks for your input. I feel pleased that you feel confident that you can say that to me, but we’re freezing the pension plan.’ So it’s a very important part of what we do: We talk about it, emphasize it, work on it, and we train to it.”

Those stories shouldn’t stop after employees come on board. Communicating your culture is an ongoing process, and the key is shaking up how you deliver the message. For example, Gallagher celebrated the 25th anniversary of The Gallagher Way’s creation last year with posters around the office, internal magazine articles, audio vignettes where different employees spoke about the values via e-mail and even a cookbook that emphasized the values between contributed recipes.

But that’s only part of the communication.

“More importantly, you communicate it every day in your behaviors,” Gallagher says. “You just have to live it. I don’t have a magic way to tell you, ‘Come in at 6 in the morning; it will all work itself out.’ That’s not how it works. You’ve got to emphasize it, live it, tell people that’s what it’s all about and let them see you.

“People tend to watch the leader, not listen. So you just have to be someone that actually really does that stuff, and you have to surround yourself with people that believe in it and do it, as well.”

Keep employees on track

Gallagher knows he’s being successful, culturally speaking, if he travels to other locations and new employees tell him they’ve had an overwhelming response of people wanting to help them.

“As long as I can travel around and find out that people are listening to the message of how we want to operate and that that is, in fact, how we’re operating, even in very difficult times, it resonates with folks,” he says.

Because culture is intangible, it’s not always easy to know if employees are aligned. You just have to pay attention to all of the clues.

“Sometimes you ask them. You watch their behaviors,” Gallagher says. “Those that don’t get it, don’t like it, don’t believe in it tend to get pushed out. It’s like being in an organization in college; when so-and-so just didn’t seem to fit, they tend to stop coming. And that’s actually OK.”

But if people don’t weed themselves out, they can drag down the company. Have an evaluation process in place to fuel a performance-driven culture and monitor commitment to your values.

“People love to get a fair review and know that they have a good opportunity,” he says. “That’s probably my biggest piece of advice is make sure your people get good reviews, make sure they’re honest and open and direct and beneficial.”

Let the employee initiate the conversation with a self-evaluation of their progress toward the goals you set together last year. Review everyone against their role in helping achieve business objectives as well as the values they exhibited in the process.

“Was their attitude good? Were they a good teammate? Did they exhibit the qualities that we say are part of our culture?” Gallagher asks. “If you get somebody that [didn’t exhibit the right qualities, you] say, ‘You did a great job; you’re just a pain in the ass in the office.’

“You say, ‘Look, you’re cranky all the time. It just doesn’t work around here. These are my levels of expectation. I need to see improvement in the next quarter. I don’t want you to be here unhappy. If you’re unhappy, go someplace else.’”

That straightforward coaching approach to improve those who are willing keeps employees on track with your culture. If they see that it’s important enough for you to monitor and correct, they’ll know it’s important enough to do.

“People don’t leave jobs that often for pay. The truth is people leave businesses because they don’t feel cared about,” Gallagher says. “So if you’ve got good people on the bus, care about them, mentor them, promote them and then pay them. Give them a chance to have participation in the success of the company. Describe the mission over and over and over again and why it’s going to be fun to accomplish it.”

How to reach: Arthur J. Gallagher & Co., (630) 773-3800 or www.ajg.com