Ad firm juggles executive losses, relocation plans

State’s top firm evolves with new president, 7 departures

Cranford Johnson Robinson Woods, Arkansas' largest advertising, marketing and public relations company, has been in a state of change in recent months with more changes certain next year.

In February, the firm hired Darin Gray, former publisher of the Northwest Arkansas Business Journal, as its president. He is also on the firm's executive committee and board of directors.

Later that month, the agency announced it would move about six blocks from its longtime office on West Capitol Avenue in downtown Little Rock to the historic Fulk Building at Third and Main streets, as well as another building at the same intersection. The agency also has an office in Northwest Arkansas.

In recent months, four of the firm's top executives have resigned -- Denver Peacock, senior vice president of public affairs; Ross Cranford, vice president of tourism services; Jay Cranford, senior vice president and creative officer; and Chris Cranford, vice president as well as creative director of the firm's Jones Film Video arm. The Cranfords are sons of company founder Wayne Cranford.

Last month, Luis Gonzalez, a senior account executive at the agency, was named as the city of Little Rock's communications and marketing manager.

In August, Rebecca Tennille and Jordan Johnson left the firm and took the prestigious accounts for the Clinton Presidential Center and the William J. Clinton Foundation, among others. Johnson is not related to Jim Johnson, who was one of the firm's founders and serves on its board of directors. Tennille is the wife of Grant Tennille, the executive director of the Arkansas Economic Development Commission.

"Just from the outside looking in, this is the most talent in such a condensed period of time that I've seen a major agency lose," said Skip Rutherford, an executive with the agency from 1993-2006 and now dean of the University of Arkansas Clinton School of Public Service. "They've lost some incredible talent. That doesn't mean they don't have incredible talent. And that does not mean [the departed employees] can't be replaced."

Cranford Johnson Robinson Woods' business model has changed "in a big way" from the time when the firm's clients primarily were Arkansas based, banks that were Arkansas owned and utilities that were Arkansas dominated, Rutherford said.

Now those companies are branches of national banks or branch offices of businesses instead of headquarters, Rutherford said.

"Agencies are becoming leaner," he said. "The whole digital world has had an impact. People are operating in an environment with less overhead."

Ross Cranford, speaking for himself and his brothers, declined to comment about their departures. Peacock and Johnson also declined to comment.

Gray declined to go into detail about the losses.

But, Gray said, Ross Cranford described the departures as being a philosophical difference with the way the agency was being run.

"And I agree with that," Gray said at the agency's Little Rock office. "If they philosophically disagree with me, I'm OK with that. I don't begrudge them. I hope they do well in whatever they do."

STILL HAVE OWNERSHIP

The departed employees still have an ownership in the agency. In 1998, the company adopted an employee stock ownership plan, Gray said. From its founding in 1961 to 1998, Cranford Johnson Robinson Woods was operated by its majority partners.

In an employee-owned situation, all the employees "have a very specific buy-in as to what happens," Gray said.

There is "huge value" for every employee to understand that, Gray said.

But there also are disadvantages to employee-owned businesses, said Chris Crawford, president of Longnecker & Associates of Houston, an executive compensation consulting firm.

Those disadvantages may happen when the value of the company declines, upsetting the employees, or when the stock ownership plan is used as a long-term incentive plan that isn't competitive, Crawford said.

It rarely happens that a company with an employee stock ownership plan has such a "mass exodus" of top executives as Cranford Johnson Robinson Woods has had, Crawford said.

"These companies usually try to keep turnover under 5 percent in any given year," Crawford said. "That way the company is able to afford the payoff of the [departed] employees. You don't want a bunch of nonemployees running around with shares of the company."

The seven employees who left represented about 8 percent of the company.

The agency always has had a large overhead issue, Rutherford said.

"That was probably exacerbated by this cadre of young talent leaving," Rutherford said.

When an employee leaves the agency, the employee has the option of keeping the stock or cashing out, Gray said. The employee typically is paid back over a five-year period, he said.

But one former employee who left the agency several years ago, and who asked to remain anonymous, said he still has not been paid for his stock.

Gray, 49, became publisher of the Northwest Arkansas Business Journal and its related publications in 1997 and bought it in 2004. He was appointed to the Arkansas State Parks, Recreation and Travel Commission in 2007 and served as chairman of the commission in 2012.

He was reappointed to the commission in 2013 but resigned earlier this year. Gray also has experience in economic development and working with local chambers of commerce.

BACKGROUND BENEFICIAL

That background was a factor in the decision to hire Gray, Wayne Woods chairman of the agency, said in February.

By Sept. 30, its fiscal year end, the agency expects to have about $67 million in annual capitalized billings, the total of all business that passes through an agency, Gray said, adding that the figure has been as high as $89 million. The firm's gross revenues this year should be about $9 million, he said.

The agency has 85 employees but has had well over 100 in the past, Gray said.

The agency's tourism accounts are its largest, Gray said. That includes the state Department of Parks and Tourism as well as other tourism accounts, Gray said.

"When I was there, everything revolved around [the state] parks and tourism [account]," Rutherford said. "Everything. But [the agency], to its credit, probably provides parks and tourism with the best service they could be provided."

At any time, an agency could lose any state account, Gray said.

"That could be [for political reasons] or poor performance," Gray said. "Which makes us highly, highly sensitive that we don't ever drop the ball on that account."

The agency is scheduled to move into its new location next year. While the amount of space available will shrink, offices will be laid out in a more efficient way, Gray said.

The younger employees overwhelmingly approved the plan to move to Main Street, Gray said.

"We want to be where everything is happening and that's going to be in that [Main Street] corridor," Gray said.

The move to Main Street is strategic and projects an image that the agency is not what it used to be, Rutherford said. "[It shows the agency] is in the game with the new world of communications," he said.

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