Scott Kunkel loves to tell the story of the grocery store owner and his two baseball caps. The owner, who had several sons in his business, invited son George over for a swim. After a dip, the father put on a cap emblazoned "Boss" and fired the young man, who was not pulling his own weight at the store. He then donned the "Dad" cap and said, "George, I understand you've just been laid off. Your mother and I will do anything we can to help."

    Kunkel calls the story, which he claims is true, "a wonderful illustration" of a central problem facing family-owned companies: conflicting personal and business roles. "There are a lot of issues in family businesses that people don’t really realize are unique to working with family in the business," says the associate professor of management at the University of San Diego School of Business Administration and director of the USD Family Business Institute (FBI).

    Families are serious business at the FBI, a 6-year-old organization designed to assist San Diego family-owned companies with the myriad issues that stem from combining family and work. One of several institutes across the country specializing in family business assistance, the FBI offers monthly programs for members ranging from nuts-and-bolts discussions of tax issues, succession and wealth transfer to forming boards of directors, preparing family members to join the business and developing codes of business conduct. Most of the programs include an active comment and question-and-answer session after a formal presentation.

    "We attended a few meetings out of curiosity and found that it’s a great program," says Jose (Joe) G. da Rosa, who with his sister, Mary Alice Gonsalves, formed Balboa Travel 26 years ago. "They do a wonderful job in professional terms and in personal terms as well - that is in both dealing with business issues that all businesses have to deal with but then also in dealing with how those issues are handled or mishandled in family businesses. They also discuss ways that businesses can stay healthy and grow and develop whatever family values are relevant and whatever positive family dynamics can work within that context."

    No one knows exactly how many family-owned businesses operate in San Diego County, but FBI estimates that more than 60 percent of local companies are family-owned, including some of San Diego’s largest. Nearly 200 of the Fortune 500 companies have several family members in top management and/or ownership. The FBI has attracted about 20 corporate members including some part-time companies who attend a portion of the 12 meetings each year. Five professional service companies pay hefty annual fees (in most cases, $10,000 a year) as corporate sponsors.

    Kunkel hopes to double the size of the institute's membership which has remained fairly stagnant the last couple of years. The FBI also instituted partial memberships that give companies an opportunity to attend some of the meetings for a smaller fee. Full membership, which includes free attendance for two at monthly events, breakfast roundtable discussions and subscriptions to two family business newsletters, costs $1,500 a year. Partial memberships are offered at $1,000 and $500.

    Brad Benson, the fourth generation of Belt-Bensons to work at the family building material and supply company, Squires-Belt Material, says the FBI programs have "made a big difference in my dad's and my relationship. You know those issues are there but you don’t really deal with them until something comes up," he said. For Benson, one of the main strengths of the FBI program is meeting other family business members and discussing issues with them. "Everybody's got a story to tell. We have lots of good interactions and a lot of mentors available to share ideas."

    Often the founders meet in one group and the younger generation meets in another. "It’s kind of neat to hear the different reactions of the two groups." The meetings help "get some things out in the open that maybe you haven't dealt with but you should." After being full members for about two years, the Bensons are now part-time members of the FBI and attend three or four programs a year. "Some of the topics tended to get a little repetitive," he says. The three meetings a year "is perfect for us."

    Charles Wax, who with his brother, David, represents the third generation of the Wax family in business, still looks forward to the monthly meetings after three years with FBI. "We all need to be stimulated in our thinking, and I know I can get that once a month," he says. Wax says the institute has reinforced some practices already in place at WAXIE Sanitary Supply, a wholesale distributor of cleaning supplies and equipment. The monthly meetings, which Wax says this year have been superior to prior years, also stimulate new ideas both in the presentations and in discussions with other family business executives. "As the head of a business, it can get lonely," he adds. "It’s good to talk to others (who can) relate with a certain kind of problem."

    Although business schools for years tried to solve family issues by condemning nepotism, it is a fact of life - and a plus, family business owners say - in most family-owned companies. But nepotism doesn’t mean sons and daughters of the boss have an easy track to the top (SOB, or son of the boss, is just one of the inside jokes enjoyed by family-owned businesses). The opportunity is there - that’s where the birthright comes in - but children must earn their place in the company, according to family-business executives interviewed by Metropolitan.

    At Lloyd Pest Control, Jim Ogle, company president, is getting a look at both sides of the SOB-to-boss transition. Ogle worked 15 years heading up the company’s termite business (the company also eradicates rats and other rodents) before becoming president in 1975. His dad stayed involved until 1982. Now Ogle's son, Jamie, is in his sixth year running the termite department, and Jim, a fit 60, is finalizing plans to transition out of the company over five years. (Ogle's other son, Bob, is an English teacher in Park City, Utah.) "You’re trained to run a business but you’re not trained how to let go, how to transfer the business," Ogle says. "You can sell it, but to keep it in the family is more difficult." One of Ogle's nephews, Greg Augustine, is a sales manager with the business.

    At 45, Wax finds himself thinking of who will follow in his footsteps. He and his brother each have two children, but David's kids are still quite young. Charles' eldest, Staci, has logged about a year in the telephone sales department. His second daughter, Amy, is a 19-year-old college student, who may join the company after graduation. Discussions of the children's future with the company will take place later on. "We’re taking it one step at a time," Wax says.

    Jose G. da Rosa's daughter and son face a series of tough succession guidelines: each must earn a college degree then spend at least a couple of years successfully working outside the company. Before they join Balboa Travel, "they will come into a real job and have a boss who wouldn't be a family member and have the opportunity to rise based on merit. You can never get away from the fact that if you come in and you’re the children of the founder of the business there may be some opportunities for you that wouldn't be there for other people. But if you’re running a business, you can’t put people in positions where they're going to screw up or you’re being stupid."

    Succession problems aside, family business owners say family connections bring strengths to any company. Recent research cited by Kunkel shows that family companies in general are more successful and more profitable than their non-family counterparts. Instead of the short-range compulsion to increase quarterly profits, family companies take a long-range perspective. "Family business owners run the business to take care of the business rather than to take care of themselves," says Wax.

    Wax uses the words "stewardship and responsibility" to describe his commitment to the "legacy" his uncle and later his father grew from a tiny enterprise purchased in 1945 to a multi-state operation with 500 employees today. WAXIE employees know there are opportunities for advancement even though Wax family members have control, Wax maintains. "In a family business people relate, I think much better," he says. The goal of the descendants is "to try to preserve and enhance what we have."