Can The Richards Group recover from a week of catastrophe?

It took less than a week for the country’s largest independent agency—one that Stan Richards spent 44 years building—to begin unraveling, and seven days for the shop’s founder to step down in an effort to save it. It all started October 8 with an utterance during an internal ad review. Richards’ remarks in a meeting with agency staffers that their proposed ads for Motel 6 were “too Black” and could alienate “its white supremacist constituents” set off a string of account losses that tumbled like dominos—Motel 6, Home Depot, Orkin, Keurig Dr Pepper, Advance Auto Parts and H.E.B.—as they moved to distance themselves from the agency. Cracker Barrel also dropped the shop from its review. In the ensuing chaos, the agency world watched to see if Richards, the shop’s founder who turns 88 next month, would leave his post to salvage the agency’s remaining accounts and 596 employees. He finally did, late on October 15, and did it in pure Stan Richards fashion. “If this was a publicly held company, I’d be fired for the comments I made. But we’re not public, so I am firing myself,” said Richards in a statement. “Our employees, first and foremost, deserve that.” A legend in the business Richards is a revered figure in advertising, an American Advertising Federation Hall of Famer whose name emblazons the University of Texas School of Advertising and Public Relations. His Richards Group agency, run out of a 500,000 square foot facility in Dallas, is an institution that defines the market, and Stan Richards is a legend in the business who has built a larger-than-life name for himself and his stubbornly independent agency. That, however, might just have been the problem: A founder too close to his own creation for too long. “It’s like an athlete, you need to go out on top,” says a former employee who recalls his experience there fondly, noting that Richards was “good to me and had a great vision, and that it was a great place to learn the business.” That said, he adds: “Stan overstayed his welcome.” “I’m shocked it took him so long” to step down, says a former local agency exec who knows Richards. “If it were anyone else but the founder, he would be gone sooner.” Richards told Ad Age last year that the only way he planned to leave his agency was feet first (“I’m going to keep doing it until I croak”) and even as the shop bled clients and employees began fearing for their jobs, he hung on. He did not formally step down until October 15, a decision that indisputably pained Richards, who held tight control of the shop since its 1976 founding. 'His way or the highway' Richards did not name his successor, creative director Glenn Dady, now 68 and a veteran of the agency since 1980, until last year when the founder was already halfway through his eighth decade, and still he remained decidedly hands-on. “Stan runs The Richards Group like a dictator,” says a consultant who has worked with Richards. “It’s his way or the highway.” The former employee, referencing a book penned by Richards called “The Peaceable Kingdom: Building a Company,” adds: “It’s a kingdom, but if you have a kingdom you have to have a king.” Yet despite his strict control—or perhaps because of it—Richards is regarded as a paternalistic figure in the industry and within the agency. “The employees talk about him with such reverence,” says the consultant. “There were none of the usual cynical advertising people in this business. It was like they drank the Kool-Aid.” “He’s in charge, he’s revered, he’s a brilliant creative thinker and he’s created this business that is wonderful for so many reasons,” says a second former employee who left in the late 2000s. “But it’s a little bit of an ‘Emperor’s New Clothes’ situation, because there is a culture there where it’s hard to speak out against Stan.” Not for sale Richards’ benevolence was to extend even beyond his death. Richards told Ad Age in 2019 that he had arranged for the shop to remain independent in perpetuity for the sake of his employees. “There are a lot of people who have dedicated their careers to this agency. They have been here a very long time and the last thing I would do to them is to have them suddenly wake up in the morning and find out that they are working for a holding company,” he said. “So I’ve arranged for this company to be donated to a nonprofit that will act as a repository for the stock. They will be prohibited by contract from ever selling the stock. The agency will continue to operate as an independent.” The agency said today that "Stan Richards no longer retains ownership of the agency. Richards’ ownership stock was transferred in early 2020 to an unnamed nonprofit, making good on a commitment made long ago by he and late wife, Betty, to ensure the agency’s independence into perpetuity. The organization benefits from stock but contractually has no oversight or decision-making role." 'God complex' Some have questioned whether Richards was simply paternalistic or whether, as one person who knows him suggested, has a “God complex.” In the 2019 interview with Ad Age, Richards recalled standing in front of the building, watching people arrive. “As I watched all of these cars—there must have been 700 of them—I could not help thinking about the fact that there were all of these people who were buying homes, raising kids, putting them through college and leading really exemplary lives, partly as a result of who we are and what we do,” he said. To be sure, Stan Richards’ agency was run by his rules. Employees are required to be in the office by 8:30 a.m. “If you didn’t want to be disciplined, you should have been a gallery painter,” he told Sports Business Daily in 2013. According to a 2017 Inc. Magazine profile, time spent at the agency has to be accounted for in 15 minute increments; failure to keep strict timesheets results in an employee being docked $8.63. Those arriving late for meetings are kept out, the profile said, adding that early in the agency’s history Richards required blinds “to be adjusted to a uniform angle” and for “the tops of cubicle walls to be kept clear.” There was an unwritten shirt-and-tie rule for men until the early ‘90s, and Margaret Johnson, a partner at Goodby Silverstein & Partners who worked at Richards Group early in her career, recalled in an Ad Age podcast last year that during her tenure there women were required to wear skirts. It should be noted, however, that this rigor worked for Richards. "They have a reputation for being so efficient that they make money on accounts others wouldn't have," says the former local agency executive. Fraying loyalty The Richards Group is known for fealty—according to the Inc. profile, the average group creative head tenure is 17 years. And, in a business where accounts jump frequently, Motel 6 was parked at Richards for more than three decades and Home Depot for more than two. But things seem to have been shifting lately at The Richards Group. According to three people with knowledge of the situation, Motel 6 had been quietly looking for an ad agency for several months before the client officially dismissed it, citing Richards’ remark, suggesting that the chain had been looking for an out. A Motel 6 spokesman would only say that “a review was, and is, in progress.” And two clients listed on Richards’ website until last week, PF Chang’s and Dish, had left the agency before the incident even occurred. Dish said it departed the shop as of October 1, and PF Chang’s left in April. The former agency executive suggested that the fraying client loyalty may have been an outgrowth of Richards overstaying his tenure. “Stan is involved in every part of the business, and clients noticed. He’s [almost] 88. Clients were wondering ‘Why is he still running the show?’” The agency’s output, however, remains solid, if not bleeding-edge. “It’s not a Goodby or a Wieden,” says the second former employee. “But what it does well is help build brands. It is a place filled with smart, deep strategists and great account planning.” What now? Now that Richards has officially left, the hope is that will be enough to satisfy remaining clients and make it safe ground for new ones. But it was not initially clear that this will be the case. The day after Richards stepped down, Olivier Francois, chief marketing officer of client Fiat Chrysler issued a statement saying, “FCA believes hate speech and racism of any kind must never be tolerated. We have reached out to The Richards Group, as one of the many creative agencies on FCA's marketing roster, and we are in the process of evaluating our relationship with them to determine what the partnership will look like moving forward." The immediate question remains whether Richards Group, which reported revenue of $201 million in 2019, is now overstaffed for its diminished roster. A spokeswoman says, "There have been no layoffs this week." It’s not a good time for job-hunting, given that many agencies are cutting back rather than hiring. Just this week, Austin-based McGarrah Jessee trimmed 10% of its staff. “No matter the cause, the fallout for Richards is very sad for a lot of very talented, hard-working people who helped build a legendary advertising agency. We are receiving resumes as a consequence of the account losses at Richards. It's just a real blow for the advertising community in our region,” says Mike Sullivan, president and CEO of The Loomis Agency in Dallas. The other question mark is what happens to The Stan Richards School of Advertising and Public Relations at the University of Texas, for whom Richards delivered a video apology last night, saying “in that moment, I wiped out years of trust.” The institution is currently evaluating its options for the school, which is said to have been half-funded by an endowment from Richards. The agency could not confirm that, saying it is unaware of funding details regarding Richards and the university. “It’s sad,” says the former local agency ad executive who worked with The Richards Group. “A lot of people respect Stan and hate that this is likely to turn into his legacy.” Contributing: Lindsay Rittenhouse, Adrianne Pasquarelli, E.J. Schultz, Jessica Wohl, Jeanine Poggi

Can The Richards Group recover from a week of catastrophe?

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