Austin Industries CEO Ron Gafford Values People More Than Profits

As ceo of austin industries, which began as Austin Brothers Bridge Company, Ron Gafford heads one of the largest construction companies in the United States. The employee-owned organization has been a case study for successful ESOPs (employee stock ownership plans) and for developing a unique corporate culture that combines success with human concerns. “Doing well and doing good,” is how Gafford puts it, describing his own life philosophy as well as that of his company.

BUILT TO FILL: Austin Industries CEO Ron Gafford stands before the American Airlines Center, one of the company’s many notable projects. photography by Kris Hundt

Back in the recession of 1987, when Gafford took over Austin Commercial, a division of Austin Industries, the company was at a crossroads. They had only two months of work on the books, a historic low. Today, they have work booked well beyond 2009—and it’s had to wait for the rain to stop. “Rain. We have to accomplish a year’s worth of work in six months because of all the rain,” he says.

There is no question they’ll get it done. People who work there will do anything for Austin Industries and for Ron Gafford, because they know the company and their CEO will do anything for them. “Too many execs focus on profits and fail to build trust and inspire employees,” writes Henry Givray in Business Week, criticizing Blackstone CEO Stephen Schwarzman. Gafford is the polar opposite.

“The first thing to do in your career is figure out how to be nice to people and learn how to treat them, not as a commodity but as people with real feelings who can make a real difference in your organization,” Gafford says. His first mentor was his father, who owned a small construction company in North Texas.  Gafford says, “I saw my dad’s care for the common worker, his concern for wages, for working conditions.” When his father was killed in a freak accident in 1972, Gafford, then 23, finished all his father’s projects to provide for his mother. “I asked all the project superintendents to stay, knowing we would most likely have to liquidate the company, and they all did, every one. Then we helped them find jobs afterwards.”

This attitude would become a hallmark of Gafford’s career. In 1988, a period Gafford calls his “most unfavorite time,” the company underwent unpleasant changes. “We were forced to contract and transform the company,” he says. “The contracting part was not pleasant because Austin has a strong cultural bias to hang on to the talent that built the company. Even when we had to let some people go, we later tried to reemploy them.”

Typical of Gafford, he takes responsibility for the “unpleasant” decisions but insists on giving credit more broadly for the ones that have brought the company success. (Likewise, he wants to make sure credit for his “doing well and doing good” philosophy is given where it’s due—to a book his father-in-law gave him called Doing Well and Doing Good: The Challenge to the Christian Capitalist, by Richard John Neuhaus.) “When I say we had to transform, the traditional projects and markets had literally gone away.  Previously, ‘marketing’ meant answering the phone when a customer called and giving them a price when they wanted to build a building. We had to shift, but it was a group effort. We have Performance Improvement Councils, and they were active when I arrived at Austin. It wasn’t my idea, but I readily embraced them.”

This concept, he explains, “grows out of the ownership culture of Austin. My personality just fit with that existing and evolving culture.”

That culture was carefully cultivated by Dallas legend Bill Solomon, who tapped Gafford to return to Dallas—where he started with the Henry Beck Company and then moved to Atlanta to work for the Trammell Crow Company. Gafford identifies a number of mentors and role models—“In addition to my dad, I was blessed with industry giants as role models”—including Beck, Crow, and Ron Terwilliger, a Crow partner in Atlanta. “Bill Solomon is at the top of the list,” he says. “Even though he’s an extremely private individual, he models what’s important: uncompromising integrity, superior business savvy, family values, and a remarkable work ethic.”

Solomon orchestrated Gafford’s ascension to the CEO slot as well as the unusual transition to an employee-owned company, a process that took a decade and a half.

Jack Welch’s method for choosing a successor at GE has been well-documented. He identified three executives, told them one would be CEO and the other two would leave. It made for great press. Despite having Ram Charan, GE consultant and famous author, on Austin’s board, Gafford says Solomon took a different approach. “Bill was concerned about any fallout,” he says. “We didn’t want people to leave. We wanted to be very careful, and not just in a business sense but in a personal and human sense. We needed to make sure people embraced the decision, and we wanted to allow everyone to land on their feet.”

Paying tribute to Solomon’s reputation as a strong, autocratic leader, Gafford says the times are different, and he’s different:  “I’m more of a consensus builder. I see myself as a player/coach. I value all positions, and I don’t ask anyone to do anything I wouldn’t do.” He recognizes there is a downside to this style. “It takes a lot more time,” he admits.

But, Gafford says, “What better use of time than to invest in your people and in building personal relationships?”—in business, in friends, and in family. John Fulkerson, a business associate of Gafford’s father who is close to Gafford today, confirms that Gafford truly connects with his contacts. Fulkerson says, “He makes lifelong friends. It started with the crew chiefs at Beck. Ronny would treat each of them as if they were head of Bank of America, and he works hard to keep in touch.”

In fact, Gafford—who comes across as affable and low-key—takes this aspect of his life just as seriously as anything else. “Relationships have to be worked. I schedule work, family time, friendship time, quiet time, recreational time. It gives me perspective.” He and his wife of 35 years, Rebecca, even schedule time to go over schedules. “It keeps us from going in different directions,” he explains.

Gafford is quietly but deeply committed to his faith. He is not, he says, “An MEC Christian.” (Mother’s Day, Easter, and Christmas.) He brings up the importance of a spiritual component as a key part of business leadership. “Most companies approach leadership development like the river that’s a mile wide but only an inch deep.” Gafford has an unusual coach, the Reverend Dr. Craig Emerick, formerly of the Perkins School of Theology at SMU. Emerick says only a tiny percent of CEOs have Gafford’s “courage and humility” and want to reflect “on more than the usual things—strategy, organizational culture, and so on. Ron really wants to look at his personal destiny and how it manifests itself in his work. He is driven by a sense of stewardship of life and his responsibility to be a good steward.”

If these don’t seem like the usual comments from a leadership coach, Emerick is no ordinary coach. And Gafford is a very unusual CEO.

Some elements of his personality aren’t a surprise. “No bragging,” says family friend Fulkerson, about Gafford even as a young man. “You could tell he didn’t like it.” And he doesn’t today. Last summer, a new CEO of a Fortune 100 company spoke to the Dallas Chamber of Commerce and was introduced by a senior executive from the same company. Gafford said the introduction was over-the-top, “flowery,” and stuffed with accolades. This same executive also screened the question cards, presumably to remove any challenging issues, so Gafford, whose sense of humor is self-evident, stuck in one of his own. “Is compensation tied to CEO introductions?” he asked.

Gafford favors a more humble style of leadership. His assessment of his best quality as a CEO? “Silence. A CEO can shut people down—by talking, by talking first, by raising one’s voice. Silence is an important quality. It provides time for others to express their opinion. It can make people uncomfortable but it can be healing.”

Merrie Spaeth is one of the pre-eminent crisis management strategists in the world. After serving as President Reagan’s director of media relations, she founded Dallas-based Spaeth Communications in 1987. She is also a lecturer at Southern Methodist University’s Cox School of Business.