Dogs will attack enemy foremen or undesirables when they enter the plot you've placed the dog house on.

Normally I build my factories and public buildings with this in mind.

You can also put one in the yard of your main office to keep thieves out. (Though placement is important. The dog has to emerge from the house and chase after the interloper.)

Just to add on to SapphireBullets post. When placing a kennel, make sure the part where the dog comes out is as close to the left part of the opening as possible (thats where foremen and psychos always start when attacking fences). That way, when a foreman starts working on your fence, the dog will chase him off before any damage gets done.

Also, when placing kennels in residential buildings, you have to use a fence with a 44% defence ability or higher as the tenant will complain the dog will get out an bite someone. The dry stone wall is the first fence you can use with a kennel for example. IIRC, you can use the dry stone wall, monolith, panel fence, brickwall, stone hedge and the brick wall with the rails (I forget the name right now). The railings were a no no however

Edit: Awww sheeeeit, didn't look at the date of the original post