October 18, 2016 – Executive search firm The Oliver Group has been retained by the Kentucky Lottery Corporation to lead its search for a chief executive officer. Marty Gibbs, the Kentucky Lottery’s chief operating officer, is serving as the organization’s acting CEO. Long-time chief executive, Arch Gleason, who spent nearly 23 years at the helm of the Kentucky Lottery serving under five governors, died recently. He was the longest-serving state lottery director in the country.
“Through Arch’s leadership, the Kentucky Lottery has grown to realize nearly $1 billion a year in sales,” said June Hudson, chairman of the Lottery board of directors. “Students all across Kentucky have benefitted from his leadership, as more than $2.5 billion has gone to college scholarship and grant programs under his tenure.” The Kentucky Lottery, consisting of various games of chance, is a government-regulated form of gambling.
Members of the Kentucky Lottery board recently met with Oliver Group representatives to begin the discussion on how to proceed with finding the next CEO. The Louisville-based firm is being paid a base fee of $75,000, plus expenses, to complete the assignment. Lottery spokesman Chip Polston said the board would like to find a new CEO in 90 to 120 days. The new CEO will be named by state Governor Matt Bevin.
The Oliver Group works with organizations ranging from start-ups to Fortune 500 companies, providing a variety of consulting services including executive search, executive coaching, strategic & leader development, and talent acquisition. The firm is led by president and CEO Jennifer Mackin. Ms. Mackin has worked with executives from various industries, including healthcare, hospitality, non-profit, financial, and manufacturing & distribution, among others.
If Succession Planning Is a Business Imperative . . .
Since the 1950s, about half the time a CEO dies unexpectedly, as in the case of the Kentucky Lottery CEO, investors can react favorably and increase a company’s valuation, according to researchers from the University of Notre Dame and the University of Georgia, whose paper on the subject was recently published in the Strategic Management Journal and appeared in a report by Quartz.
Stock in candy company Tootsie Roll Industries rose nearly 13 percent in the week following the sudden death of its CEO Melvin Gordon last year. While in some of these cases it looks like investors might be trying to make fast money on the death of a top executive, for corporate boards mere discussions with headhunters show that developing a clear succession plan is not just increasingly important, it is a business imperative that well-run companies can’t live without.
“Boards should always be in a state of readiness and preparedness for the unexpected. The one thing that is constant in our world is change,” said Dale E. Jones, CEO of Diversified Search, an executive search firm based in Philadelphia. In addition to leading Diversified Search, Mr. Jones also serves as a director on the boards of Kohl’s and Northwestern Mutual. He understands the importance of developing a succession plan from both sides. “The best boards should always have a plan for times of challenge and crisis,” he added. “It’s our job as directors to manage CEO succession and risk.”
. . . Why Are So Many Companies Unprepared?
Even so, CEO succession planning, according to Mr. Jones and other experts in the field, is lagging. ‘The CEO Succession Planning Survey,’ conducted by consulting firm AlixPartners and executive search firm Vardis, reaching this finding. Their report found that more than half of companies do not have a strong candidate prepared in the high risk, and not uncommon event, of a sudden CEO transition. Of all respondents, 31 percent said they had no CEO successors identified, while 20 percent said just one successor identified.
“It is difficult to understand why so many organizations continue to under-assess and under-prepare the individuals they plan to launch into their company’s highest role, especially in light of recent high-profile CEO transition failures,” said Ted Bililies, managing director at AlixPartners and global head of the firm’s leadership & organizational effectiveness practice.
Contributed by Dale M. Zupsansky, Managing Editor, Hunt Scanlon Media