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Today on Map Left Behind, we have Pat Gallagher, chairman and CEO of Gallagher. Gallagher is a global risk management and HR consulting firm. And I'm your host, Mel Diaz. Today's roadmap is about how Pat grew up in the family business.
A family business today that started with just a one-man shop by his grandpa, and today has 70,000 plus employees globally. And Pat is now the CEO, and it's an absolutely incredible roadmap. I got to watch it for the last 14 years of my business career, and I can't wait for all of you to hear this incredible story. So Pat, welcome to Map Left Behind.
Thank you very much, Mel. Glad to be here.
All right. Well, let's go way back, because I love stories like this. It's near and dear to my heart. But the first chapter of the book, The Gallagher Way, I love the title. I was hooked from the beginning. The first title is called The Immigrant Dream, right? And that's what this country is all about. So tell us, Pat, about your family's immigrant story.
Well, it's interesting there, you know, my grandparents didn't speak all that much about their parents, and so as you saw in the book, there's a number of kinds of stories. So I'll take the one that we think is the closest, but it starts with the typical situation where my great-grandfather, middle to late 1800s, looking for opportunity, young man, not an awful lot of opportunity for he and his family in Ireland, and had other relatives that had immigrated, and literally got on a boat as a very young man, found his way to New York, and was taken in by relatives and what have you, and grew up basically with the immigrant dream of trying to make a way for himself. Did a lot of different things, moved from Rochester, New York, finally to Chicago. Got married a little later in life, and my grandfather's one of four children, and the rest is kind of history.
Which is also mirrored by my mother's family and what have you. So it's the typical Irish immigrant story.
Mhm. All right. So let's get down to business with Gallagher, because, you know, this is the part that's so interesting. So tell us the birth of Gallagher, the company.
So my grandfather was born in 1892. Never had a chance to go to college, was good with numbers, and was a bookkeeper. And he was a bookkeeper for a German insurance company here in Chicago when the First World War broke out. So he, in 1917 rather, joined the military and was sent to France. He did two and a half years in France in the trenches. And if any of you have read about World War I, it was a pretty nasty situation. And I still have his diary from those days, and very compelling story. Went over the top three times, right into the face of machine guns and what have you. Received a battlefield commission. What that means essentially is, you know, Gallagher, what's your rank? I'm a corporal, sir. No, you're not, Lieutenant.
Take that hill. And those promotions stick.
Comes back in 1920 as an officer. Again, no college education. The German insurance company he was working for had been nationalized and was not there. And he went to work for the largest insurance brokerage in Chicago called More Case Lyman at Hubard, and he was a bookkeeper there as well. Married my grandmother, and as a bookkeeper, of course, he found out rather quickly who was making the money in the firm, and it turned out that it's those people who sell. So he went to the partners and said, I'd like to have an opportunity to do this. I think I'd be good at it. And they said, fine, but you got to do both jobs. We want you to keep bookkeeping, but we'll also give you a chance on the street. And he did very, very well. But he also found out that he wasn't being compensated nearly as much as the partners themselves. And that led him to decide to start his own shop. So in 1927, we now are approaching our 100th anniversary, which we're all excited about. He left the firm, started Arthur J. Gallagher Company, himself and one woman. And I can remember growing up when the firm was very small, always expressing the fact it was the greatest business on the planet. He loved it. He loved the whole risk management concept. He loved helping people with their insurance. And if you can imagine, starting in 1927, two years till the crash and the depression.
And all through the depression, helping people realize what insurance they should buy, what insurance they needed to buy, what they didn't need to buy, how to handle it with the depression going on, which at one time I think saw almost 25% of the employable workforce out of work.
And he built a very good firm through the 20s into the 30s, and by 1950 his three sons had joined him.
Wow. Wow. Incredible. Pat, so I know you shared with us when we had lunch with you this past spring that you were reading your grandpa's diary. Is there a particular story that kind of stuck with you about who he was as a person because of your readings?
Yeah, it's kind of emotional actually. It's one of those things where you kind of dwell on it and you realize I never saw any... I was close to my grandfather and I never saw any repercussions of that. He was a great family guy. He had a great sense of humor, loved his friends, loved the business, always had a positive outlook. And yet when I read about his time in the trench, you know, this was a very difficult time. Mustard gas had been introduced, machine guns, these guys had trench foot, what have you. And he talked about going over the top and friends being carted back on gurneys. And it's one of those things where you realize I never heard any of that.
And I don't think that my dad and uncle Knuckles and my aunt did either. It was just kind of somehow he compartmentalized it.
Stayed even in his journaling positive. He was a religious guy. He would talk about having a chance to leave the trench and go to church. Things like that that when I reflect on are pretty impressive for a guy who went on to be very well adjusted, raised four very well adjusted children, and was the patriarch of the firm in our family.
Wow. Thanks for sharing that, Pat. So let's get to you. How did you get started in the family business, Pat?
Well, it was a dining room table thing now. So you end up with a grandfather that stuck me in his chair when I was probably 6 years old and says, "How's it feel?" You know, and I'm spinning around going, "Grandpa, it feels great." But literally it was, you know, living the life of being married, my mom and dad being married, and my mom staying home taking care of kids and my dad out selling insurance. And it was very much get out, get after it every single day, try to tell people how insurance helps them, what he can do to help them with their business. And that's what I grew up with. And he loved the business as well. He almost did not go in the business. He was the youngest son.
And he had a passion for advertising as well. So his two brothers talked him into joining.
He never left, and I got swept along.
And never looked back.
I really liked the on-hand experience the whole time, even when you were a little boy. So let's fast forward a little bit because this is something I know that's really important to you, and you were part of the first class of it, the internship program. Who created it?
So my father created it 1965. His philosophy, which we still feel is true today, is that very few people choose insurance.
They tend to be born into it, as I was, and saw the excitement and the building of the company, and saw my uncles and my dad working with my grandpa, and I got into it.
Or they fall into it. They can't find a job, they answer an ad, the next thing 25 years has gone by and they're loving their career.
And so his whole thing was, there's a lot of really smart kids that are not going to give us a chance.
Today, if I'm not mistaken, the statistics are still less than 5% of the kids on campus will take an interview with insurance. So his whole concept was let's bring someone in for the summer, a paid internship, which in those days in particular was different, not as much as you could make digging ditches, construction, but you know you could make some money, but introduce them to the business world.
And introduce them to insurance, and that started with one young man in 1965. I was there in '72. We had four people.
And this past summer we're over 600 interns.
Unbelievable. Unbelievable. Early on, is there like a really important lesson that you learned early on in your career that you could share with us?
Well, I think that, you know, depending on where you look in my career, there's a lot of lessons.
A couple of my favorite ones to talk about. So, I came to work with my dad in 1966 after 8th grade.
And it was just two weeks.
Yeah.
Put a coat and tie on. Come down. I want you to see what an office in a business is like. And you're going to work for Mabel Pottinger, who is my grandfather's first employee.
