TERRY DUNN

JE Dunn Construction

Interview with Terry Dunn, CEO of JE Dunn Construction

Please give us a very brief history of the company.
Our business was founded in 1924 by my grandfather J E Dunn and started out as a small business, doing housing and general construction jobs. During WWII, my grandfather took on government contracts on which he had made some significant money; out of respect for the war effort and friends and family serving in the military he elected to give the savings on the job back to the federal government. He returned over hundreds of thousands of dollars…which would be a lot more than millions of dollars today. Consequently, he was acknowledged by the President of the United States. It was not the first time he had donated money as he believed strongly in supporting his community. As a result we have a firm tradition of giving back approximately 10% of our pre-tax earnings each year to ‘not for profits’ in markets that we serve.Our first significant expansion efforts were in the 80’s when we opened up offices in Tulsa and Denver, Colorado. However, both markets got hit by the real estate bubble at the time and unfavorable tax law changes and we elected to close both offices. By 1990, we were still a relatively small company, generating about $150 million a year in revenue. We began an acquisition strategy and during the 90’s we bought six construction companies and grew our operations to about a billion dollars plus. In 2008, we were just under $2.8 billion dollars and although we dipped to $2 billion during the recession, we are starting to see it build back in 2011.

In an industry that was hit hard by the recession—estimated at a 40% decline– how did you remain as stable as you did
We were blessed that just before the recession hit, we had begun a process of rolling up the six operating companies into one construction company. It helped us refocus our energies and develop significant synergies so at the time where we needed to right size we were fortunate that we were ahead of the curve. While it’s always painful to go through cutbacks and revisions, the outcome has been positive and allowed us to reposition ourselves.

Talk about the marketing reposition you implemented.
Well, we became much more focused on what we call vertical markets. Through research we have identified several industries that we think are entering growth cycles. One example is healthcare. Other emerging markets are computer centers/data processing centers, life science investments and also retirement living.

Who engineered the acquisition strategy and market repositioning?
Well, it took place under a group and a team of people. As CEO (I was named CEO in 1989) I felt strong passion for the acquisition approach but I had to sell the passion to a number of other people.

Now that you are approaching $3 billion dollars, where are you size-wise as far as construction firms in the United States that are in the same general business that you are?
We would roughly be probably somewhere between 20 and 25th and probably in the top 100 worldwide.
At the same time we have a long ways to go. We don’t, as you might guess, spend a whole lot of time patting ourselves on the back. It’s a journey and we’re looking to the future and learning from the past.

So, to what extent do you think leadership influences, or impacts performance?
I think it’s very, very strong. In fact, we have developed a profile of the kind of leaders we look for—that will fit with our culture. That’s extremely important as we’ve seen problems in the past when we’ve promoted people that just weren’t a good fit. In our type of business we have to have “servant” leaders. We define that as a person who is very focused on being able to get work, build work extremely well, build teams and retain both clients and employees. Basically it is a leader that puts her or himself second over their commitment to the organization.

Would you describe your own style as a ‘servant’ leader then?
I hope so. Our clarity on the type of leaders we seek didn’t happen overnight and we made some mistakes along the way. Now, we understand the importance of culture fit and having people who can lead into the future.

When you determined that you needed ‘servant’ leaders as the role model for leadership going forward how has that changed your culture in any particular way? Have you changed how you hire, or how you promote, or how you train?
Yes, very much so. Today, before a senior executive even recommends promoting somebody, we evaluate people to see if they touch all the important bases—they can build an organization, put others first and have the kind of entrepreneurial leadership capability that we’re looking for in our senior officer team.

Do you primarily promote from within or do you find that it’s more of a ‘mix’?
It’s a mix. I would say we’re probably 80/20. Eighty percent of the time we promote from within and 20% we’re out looking for particular skill sets. That’s at the senior level.

Who has molded or shaped your leadership beliefs and values?
I’m a Catholic and Christ is a person who is an example. There are many day to day individuals who have served as mentors along the way. I have been fortunate in working closely with several people over my span of leadership who have been an inspiration, including my father and my wife, Peggy. (Peggy Dunn is the current Mayor of Leawood, Kansas).

Can you share an initiative or program that you feel really represents your imprint on the company culturally?
It is hard to pick out one specific program but I think the real understanding is that we’re in business; it’s a journey, not an event. It’s not one particular item that’s going to determine success though one particular item can determine failure. The key is to have the attitude that we have to evolve and change and get better as an organization. After the restructure we have what I call the “One Dunn”. As much as it has benefited us operationally, it has also created synergies and helped break down silos or barriers within the company. Now we have a win-win attitude as a team. Another major step is that we have been a family owned business since our inception and we are in the process of making our first grants to employees in an ESOP. Over a period of time, employee ownership will increase, closer to 20%.

That certainly motivates the team. Tell me what motivates the leader of an industry that seems to be in the hard knock life, to get up every day and to motivate others. Where do you find your motivation?
For me, I spend time in prayer and meditation. As important as that is, I think a person has to be driven; to have a mental toughness that when you get knocked down you have to be able to get back up. A leader has to understand this is a journey and leadership is constant so it requires high energy. It is also important for me to be open, to be able to communicate, and to listen. Probably 90% of my communication is really listening to what is happening within the company and then being able to strategically plan and execute with the senior leadership team.

So, to wrap this up, what would you say is next on the horizon for J.E. Dunn?
I think we’re really positioning ourselves for some unique growth and success. To me success would have to be defined as strategic growth, an energy level that we hit the point of unique momentum to be able to grow, and to be able to develop talent with an excellent succession plan in hand so the next generation of leaders is in better position to lead and take the organization to the next level. I’m 61 and been asked the question when I might retire. I’ve told the senior leadership team it’s probably five or six years out but at the same time I want to make sure that we are bringing on the right energy and leadership and youth to make sure that this company runs at a much higher level and has better leadership than I can provide today. That’s kind of what’s motivating me right now.

Is there another Dunn that the mantle of leadership will transfer to?
We are looking at who will be the best candidate to be honest with you. We hope there are Dunns that are candidates, but in fairness we are going to have several thousand shareholders through our ESOP program and I think we are obligated to make sure we have the best candidate. The last name is not going to dictate who that leadership is…I’m very motivated to get the best talent and give that talent the opportunity to lead.

Biography

Terry joined JE Dunn in 1974 as Contract Officer and was made Vice President and Treasurer in 1978. He was promoted to Senior Vice President in 1979, Executive Vice President in 1980, and President in 1986. Terry assumed the additional role of CEO in 1989 and currently serves as both President and Chief Executive Officer of JE Dunn Construction Company. He participates in all facets of the business with extensive experience in construction operations.