Close this search box.
Close this search box.

Pulte’s Richard Dugas Builds a Better Mousetrap

Richard Dugas, CEO of Atlanta-based builder and developer Pulte Group, took a company that had suffered a significant hit after the 2008 economic downturn and shifted the strategy from owning real estate to building and selling homes. Three years in, the company has paid down $1 billion in debt and reintroduced a dividend to its shareholders, one higher than it has ever paid before.


You took the CEO spot at one of the nation’s largest building companies in 2003. In the runaway real estate market that follows, everything you do turns to gold. Then, the housing bubble pops and it all goes pear-shaped. Between 2008 and 2010, the company’s home-building revenue tumbles 60 percent and you find yourself laying off a whopping 80 percent of your employees. Perhaps worse yet, you’re holding a great deal of land now valued at far less than you paid for it and likely to stay that way for a decade or more.


Atlanta-based Pulte Group builds a variety of home designs, from single-family homes to condos and townhouses, typically buying and developing large parcels of land, then marketing the new construction to home buyers. Like many building companies, historically, the company thrived by relying heavily on appreciating real estate values for its profits. “For a long, long time our focus had been about growth, growth, growth,” explains Richard Dugas, Jr., CEO of Pulte Group, recounting the humbling revelation he experienced in the wake of the downturn. “I remember pounding the table with investors saying land is the asset. The truth is land is an asset—but it’s also a liability if you have too much of it or it’s in the wrong location.”

That epiphany prompted a re-evaluation of the business model. Dugas tapped an internal employee to take a hard look at the business. The result was a strategy shift for the future: Pulte Group would look to profit from what it actually does—building and selling homes.


To his consternation, Dugas soon discovered that Pulte, like many building companies, was actually not all that efficient at building. “We were leaving tens of thousands of dollars on the table per home in terms of inefficient construction, undisciplined pricing practices and simply not operating the day-to-day business as well as we could,” he recounts. For example, on a metric dubbed “throughput per floor plan”—or the number of times a year any given floor plan was actually built and closed upon—Pulte averaged around three compared with a competitor’s range of 70-75. Dugas soon discovered the reason came down to simple math: Pulte offered thousands of floor plans but was only closing on 15,000 to 16,000 homes a year. To realize the efficiencies and benefits of scale, that would have to change.


“Having every location design their own floor plans was not a very efficient way to run a company making $5 billion worth of housing a year,” notes Dugas. Instead, Pulte began leveraging customer feedback on things like the need for more storage or “drop zone” entryways with a place to deposit boots, coats and bags. They needed to develop suites of floor plans suitable for specific areas of the country. Next, the company huddled with subcontractors to find ways to build those homes more efficiently. The result? In the regions where it practices this “commonly managed homes” approach, profitability per floor plan is significantly greater.


Three years in, the strategy has made a big impact. “Over 24 months, we have taken our balance sheet down from a debt-to-capital ratio in the mid-to-high 50 percent—one of the highest in our industry—to 31 percent,” reports Dugas. “We paid down well over $1 billion of debt and reintroduced a dividend to our shareholders, one higher than we’ve ever paid before. Our profitability has mushroomed.”

Perhaps most encouraging of all, the strategy is still playing out. As of last quarter, only 16 percent of Pulte’s homes were commonly managed, which means the company has a lot of runway before it maxes out in the 60-70 percent commonly managed. “I don’t think we have any idea yet how good we can become because we have not—not only as a company, but as an industry—ever operated this way,” says Dugas. “We don’t believe we’ll ever get to 100 percent commonly managed, but there’s an awful lot of efficiency and profitability to be gained just by migrating from 16 percent up to 70 or 80 percent.”


  • Get the CEO Briefing

    Sign up today to get weekly access to the latest issues affecting CEOs in every industry
  • upcoming events


    Strategic Planning Workshop

    1:00 - 5:00 pm

    Over 70% of Executives Surveyed Agree: Many Strategic Planning Efforts Lack Systematic Approach Tips for Enhancing Your Strategic Planning Process

    Executives expressed frustration with their current strategic planning process. Issues include:

    1. Lack of systematic approach (70%)
    2. Laundry lists without prioritization (68%)
    3. Decisions based on personalities rather than facts and information (65%)


    Steve Rutan and Denise Harrison have put together an afternoon workshop that will provide the tools you need to address these concerns.  They have worked with hundreds of executives to develop a systematic approach that will enable your team to make better decisions during strategic planning.  Steve and Denise will walk you through exercises for prioritizing your lists and steps that will reset and reinvigorate your process.  This will be a hands-on workshop that will enable you to think about your business as you use the tools that are being presented.  If you are ready for a Strategic Planning tune-up, select this workshop in your registration form.  The additional fee of $695 will be added to your total.

    To sign up, select this option in your registration form. Additional fee of $695 will be added to your total.

    New York, NY: ​​​Chief Executive's Corporate Citizenship Awards 2017

    Women in Leadership Seminar and Peer Discussion

    2:00 - 5:00 pm

    Female leaders face the same issues all leaders do, but they often face additional challenges too. In this peer session, we will facilitate a discussion of best practices and how to overcome common barriers to help women leaders be more effective within and outside their organizations. 

    Limited space available.

    To sign up, select this option in your registration form. Additional fee of $495 will be added to your total.

    Golf Outing

    10:30 - 5:00 pm
    General’s Retreat at Hermitage Golf Course
    Sponsored by UBS

    General’s Retreat, built in 1986 with architect Gary Roger Baird, has been voted the “Best Golf Course in Nashville” and is a “must play” when visiting the Nashville, Tennessee area. With the beautiful setting along the Cumberland River, golfers of all capabilities will thoroughly enjoy the golf, scenery and hospitality.

    The golf outing fee includes transportation to and from the hotel, greens/cart fees, use of practice facilities, and boxed lunch. The bus will leave the hotel at 10:30 am for a noon shotgun start and return to the hotel after the cocktail reception following the completion of the round.

    To sign up, select this option in your registration form. Additional fee of $295 will be added to your total.