Charles Swanson was used to dealing with challenges. As a youngster whose father was an exploration geologist for Exxon, Swanson had moved so often that he had been enrolled in 12 different schools by the time he was in eighth grade. But the challenge he was facing after a number of years with Ernst & Young LLP was more than new places; it had the peculiar description of being a doughnut phenomenon.
Swanson had helped build E&Y’s relationship with its client Ashland Oil (now Ashland Inc.) while serving at the firm’s Louisville office. He was chosen to lead the oil, gas and energy practice in North and South America at the company’s Houston office.
“We really didn’t have that strong of a core group practice in Houston in energy at that time, and it was kind of a doughnut phenomenon — we had some big clients and capabilities sprinkled all over the world, but we had no center to build around,” Swanson says. “So I was asked by the firm to try to solve that, to try to build the core and the home for the energy operation globally.”
It took the work of many dedicated partners at E&Y, Swanson says, who spent the time to get to know what the clients wanted and developed a vision of where they likely should be going.
The sacrifices and the heavy workloads that the E&Y partners took on paid off. The energy services department has grown by 20 percent each year, and Swanson’s efforts didn’t go unnoticed. He was promoted to his current position of managing partner of the entire $350 million E&Y Houston operation of 1,200 employees.
Here’s how Swanson took on the challenge, grew annual revenue in the energy division from $17 million to $250 million over 15 years and increased the number of energy partners from three to 50.
Talk about what’s going on
If there is one place to start filling in the center of a doughnut, it’s to find out the information necessary to deliver what clients want. Once Swanson realized this was where to begin, he took charge. He called for monthly sessions with partners to determine the energy pulse of clients and the market.
“I think that knowing what clients want is important, which seems so mundane to say that, but it amazes me how many times in the business world you run across managers and leaders who don’t fully appreciate that,” he says. “As the old saying goes, ‘If you are selling something that nobody wants, you go out of business.’ And that is essentially what happens.”
Swanson’s experience had showed him that E&Y was a collegial and collaborative firm, so he met with all the energy partners regularly and listened to them.
“We would talk about what is going on, what we are seeing in the market, what the trends are, what we believe they are. From that, you can come up with a view about what is likely to happen, and then that really drives your actions,” he says.
“I always try to look ahead three to five years, and I say, ‘OK, what kind of service needs are these companies going to have then?’” Swanson says. “Then you need to try to make sure that you are building to intersect with them at that point down the road.”
Staying abreast of ever-changing regulations and compliance with them should play a large part in arriving at a vision. Swanson cites the case of Wall Street reforms.
“A great example is the recent Dodd-Frank Wall Street Reform activity,” he says. “We knew that was coming a while back. While it primarily impacted the financial services industry initially, we knew that it would eventually affect commercial and industrial companies, many of them who are dealing with hedging activity or use of derivatives, and whether it is supply of fuel or whatever it may be, and product.
“So we geared our energy practice to develop the expertise and depth to be able to help our clients come to grips with that new requirement, and sure enough, it is arriving right on schedule as we thought it would.”
Put in the effort needed
It takes enormous effort from current staff to help make an expansion effort — filling the doughnut hole — a success. Indeed, many could be asked to put their personal lives on hold for periods of time. But with the knowledge that there will be light at the end of the proverbial tunnel, that task becomes achievable.
“You have to sacrifice on the part of many, but because as you try to bring in new partners, your existing ones have to carry a bigger load of work because it is a whole lot easier to convince a firm to promote a new partner or bring one in from the outside when there is a book of business already in place for them,” Swanson says.
“Our partners sacrificed quite a bit during those early years in carrying very heavy workloads, knowing that by doing so, it would help us get more people promoted into the partnership in energy, and then we could start off-loading some of that work.”
Once new additions joined the fold and learned the culture, they were expected to do the same: carry a heavy workload for a while.
“That kind of mentality took hold, and we realized 20 percent annual growth rate ever since,” Swanson says.
While that sums up the process, under the surface, you have to account for variations within your team.
“As for our growth and success, I’m often asked why, and I really attribute it to our partners,” Swanson says. “I think they have a very strong market and service orientation. But even with us here, it’s not everybody. I mean some partners are really attuned to that. They tend to be very good service providers, and they can be very effective in the marketplace when it comes to bringing in and tracking new clients and growing our revenue for our people.
“But it’s not true for everybody; that was true when I came to Houston, and it is even still true today. I certainly try to instill in them an awareness and an understanding that serving the market well, serving our clients is paramount, and it is that which will give rise to future growth and financial strength, which creates opportunities for our people.”
Lead by example
To get your team members all on the same page, it is critical to set the tone at the top. By leading by example, a leader can spell out the expectations — and then craft that final piece to fill in the doughnut hole.
“I think each organization has to set for itself what are the priorities that need to be focused on,” Swanson says. “Then whatever those are, the CEO needs to devise different mechanisms to make it clear to the organization that this is what they are defining to be important, and then here are the goals that they set within those priorities.”
To the majority of organizations, revenue growth and financial strength are often those goals.
Building consensus is going to help you implement and realize the goals.
“Ultimately, it is the people who are going to make it happen — the people out in the trenches or in the field — and they have to be engaged and motivated and, more than anything else, respect their leadership to really do that,” Swanson says. “That respect is critical. It is very hard to accomplish much of anything in the long haul without it.”
The leaders who generally are the most effective are those that have a connection with “the trenches.”
“I don’t think leadership comes from the podium or through webcasts,” Swanson says. “You’ve got to be out there, understanding, as Gen. Omar Bradley was always so well known as doing: He ate the same food as his troops because he wanted to know how hard he could push them. That’s a good lesson in many large organizations as well as the business world.”
The lesson learned helps lead to better decisions that can be made to bring about optimum results.
“There are actually processes you can go through to help you make the right decision, but one of them is there is no reason usually to delay in making a decision,” Swanson says.
“Delays rarely work for you,” he says. “I have always followed a philosophy that I am going to make the decision, and I am going to make it quickly. If I am wrong, I will be wrong quickly. It’s not OK, but it is better than being wrong slowly. If you are wrong quick enough, there is often time to change your decision and go another direction.
“Don’t be on cruise control; be ready for change. No matter how good it is right now, times will change again. As the folks say around here, it doesn’t take long to fall from the saddle and hit the ground. And we are always trying to stay in the saddle.” ●
How to reach: Ernst & Young LLP, (713) 750-1500 or www.ey.com
The Swanson File
Charles Swanson
Managing partner
Ernst & Young Houston office
Born: Tulsa, Oklahoma. I grew up primarily in Oklahoma. My father was with Exxon, and we got moved literally every year.
Education: Tulane University. I got my bachelor’s degree and my MBA there. I initially majored in mathematics, but I later focused on political science and economics. They did have a graduate business school, so I was geared toward going to that after my undergraduate years. I went into the MBA program, focused on corporate finance. I did get enough accounting to sit for the CPA exam. And I ended up in the accounting profession, of all places.
What was your first job, and what did you learn from it?
I used to get paid five bucks a day to take care of the Little League fields, water them, rake them and then line them to get ready for the games every evening. I learned responsibility and the importance of dependability. The game was going to start on time every time so field had to be ready, one way or the other.
Who do you admire in business?
I admire a number of our clients. We have the fortunate luck to work with some really capable, bright, innovative people. I admire visionaries and innovators. In Silicon Valley you have a bunch of them, such as Steve Jobs, and a lot who are not as famous, who make new products and come up with these things that really have an impact on our lives.
Then there is what I would call the entrepreneurial innovator visionary. I think we need a lot more of the latter. Since the early and mid-’80s, we have gotten away from that. Too much financial engineering, too much regulatory stuff, and I think that is really one of the big burdens of trying to get our economy going and getting job growth.
What is the best business advice you ever received?
Everything keeps changing, nothing stays the same. Don’t get lulled into thinking that because you are sitting fat and happy right now that it is going to continue. I have seen a lot of our client companies over the years just going great and then five years later they are out of business. They get bought up because they’re about to go out of business.
Things will change; it will be uncomfortable when they change. That’s how we live our lives. Don’t let it scare you, don’t avoid it; try to deal with it in an upfront fashion, and I think it helps you get through it.
What is your definition of business success?
I would say to gain the respect of your colleagues and your clients and customers. I think that’s very important. When you say that, to gain it and maintain it, there is a lot that underlies that. You’re talking about your interpersonal skills with these people, how to communicate with them, the judgments you’ve made that they have seen or not; your technical competence is important, whether you are an engineer or CPA or attorney or whatever it may be. It’s the ability to have vision and connect the dots in a way that other people haven’t yet.
