Passing the Torch

Many family business owners hope to pass their companies to the next generation. But bringing that hope to fruition has inherent challenges.

Two young executives with ties to two area companies see a solution in pursuing a master’s in business administration through a program geared toward family-owned companies.

Mike Hamra, the 42-year-old newly named president and CEO of Springfield-based Hamra Enterprises, and Jacob Herschend, 33, a stockholder of Herschend Family Entertainment Corp. with hopes to join the family business, are on track to receive their executive MBAs in May from Kennesaw State University’s Cox Family Enterprise Center of the Coles College of Business.

The program provides family business owners with concepts, tools and research designed to develop leaders for family-owned businesses.

Similarly winding paths
Hamra Enterprises founder Sam Hamra passed his CEO torch to his son, Mike Hamra, on Jan. 23. In 2001, the younger Hamra joined the $150 million company with restaurant, hotel and real estate holdings, and he previously held the title of president and chief operating officer.

Mike Hamra said taking over the leadership of the 3,000-employee family business wasn’t originally in his plans.

“It was talked about when I was growing up, but it was not what I was committed to. I was committed to being involved in public policy,” said Hamra, who worked as an attorney in Washington, D.C., and gained experience in both the public and private sectors.

In the mid-1990s, Hamra worked as chief of staff and legal adviser for the Federal Communications Commission’s Wireless Telecommunications Bureau and as special counsel for the U.S. Department of Commerce National Telecommunications and Information Administration. where he assisted in drafting the 1996 Telecommunications Act. He later represented telecommunications clients for law firm Akin, Gump, Strauss, Hauer & Feld LLP and served as director of governmental and regulatory affairs for Internet provider Metricom Inc.

Herschend delved into politics, the nonprofit sector and restaurants before pursuing a career with his family.

The son of Silver Dollar City co-founders Peter and JoDee Herschend, Jacob Herschend graduated in 2000 from Gordon College in Wenham, Mass., with a bachelor’s in youth ministry and a minor in political science. He went to work on John Ashcroft’s campaign for U.S. Senate, and although Ashcroft lost that bid, Herschend’s experience led to his next position: spokesman for the U.S. Department of Justice Faith Based Community Initiative task force. He later helped raised funds for the Senate campaigns of Jim Talent and Kit Bond, and settled in St. Louis with KidSmart, a nonprofit that collects and distributes office supplies to needy students. While in St. Louis, he opened three restaurants in the mid-2000s before he soured on the idea and sold them in 2009.

“I started looking around at going back to school,” Herschend said. “I love what (my) family does (and) I wanted to find a way where I could one day hopefully come to work for them. The eMBA program is the one that I found.”

Operating out of his Boston office, Hamra will visit the Springfield headquarters every four to six weeks as he manages operations and development in each of the company’s units: Wendy’s of Missouri Inc.’s 25 Wendy’s Old Fashioned Hamburger restaurants; Boston Bread LLC’s 16 Panera Bread cafés in the Boston area; Chicago Bread LLC’s 29 Paneras in the Chicago area; SJH Hotels LLC with a Holiday Inn Express Hotel & Suites in Lewisville, Texas, and co-ownership in the Baymont Inn on South Glenstone Avenue; and Jade Properties’ real estate holdings in Missouri, Illinois, Massachusetts and Texas.

Hamra decided to pursue the eMBA program at Kennesaw State after attending a 2008 seminar by family business expert Joe Astrachan, a fellow member of Young Presidents Organization.

“We needed to start to focus on educational opportunities like that because we were just a company founded by my mother and father, and I was involved. That was it,” Hamra said. “I never looked at it like it was a family business.”

Astrachan, a scholar chair of family business and professor at Kennesaw State, advised Hamra to pursue his eMBA.

“Although I wasn’t willing to do it the first year he did the program, I began to realize that I was getting overwhelmed with dealing with family business issues. It just made sense (to apply to the program),” Hamra said.

Committed to the cause
The 18-month accredited and invitation-only program has a full curriculum, just as any MBA program, said Hamra, whose class started with 15 students and now has 13, including Herschend.

“It’s serious and a big commitment,” Hamra said. “You have case work and projects that you put together that are tied to your business. The intention of the courses is that you are to be educated on how to run your business better and how to do it being within a family business.

“There is also a high level of functional knowledge they teach you. Because most of us are actually running businesses, they want people in the class you can also learn from.”

The class arranges study trips to the regions where students’ families conduct business. Hamra and Herschend visited Germany, Australia, Syria and Ukraine, as well as domestic sites including an October class trip to Big Cedar Lodge south of Branson with stops at Hamra Enterprises and SDC. The class watched “Undercover Boss” featuring HFE chief Joel Mandy, who spoke to the class.

“You begin to see the great things about going to another place,” he said. “You start to understand the different economies of other countries and understand the business cultures.”

The knowledge gained from the program comes not just from instructors but also from student peers, who run family-owned businesses.

“Family businesses are one of the driving forces of the world economy, and everybody that’s a part of the program has a family business,” Herschend added. “We all come together with that understanding, that vision, that unique ability to see the world through the lens of a family business.”

Hamra admits fitting the coursework into his schedule has been challenging.

“It’s a lot of work (and) I am running a company,” he said. “But it’s been great, and I would do it again in a heartbeat.

“We are learning things that 90 percent of CEOs don’t know, and that makes a big difference. Those are the valuable takeaways. Learning from other people and understanding their businesses has made a big difference. It’s so different than reading a piece in the Wall Street Journal or BusinessWeek; here you hear the real stories from people, both successful and not so.”

Fear of failure
About 30 percent of all businesses fail from the first to the second generation, and by the time a third generation enters, the success rate is negative, according to Inc.com, a small-business magazine Web site.

“That’s why I wanted to do this course,” Hamra said. “I wanted to put the pieces in place today that would create the foundation for longstanding success from one generation to the next.”

Although he’s not currently on the Herschend Family Entertainment payroll, company officials are keenly aware of Herschend’s efforts.

“What Jacob has been doing is strengthening his training process by learning outside the company with other corporations,” said Lisa Rau, spokeswoman for HFE-owned Silver Dollar City. “We have to train harder because we have to make sure we don’t fall into the same traps as other family-owned businesses.”

The idea of his son running the family business is encouraging to Sam Hamra.

“The people here in our organization … they highly respect him, so it made my job a lot easier,” Hamra said. “It makes me feel good that of my four children, I have someone making my life a little easier.”

Writer Tanja Kern contributed to this story.[[In-content Ad]]