Kellie A. McElhaney
Founder, Center for Responsible Business, Haas Business School, University of California at Berkeley

Born 1966 in Durham, North Carolina.

Kellie A. McElhaney, PhD, is an adjunct assistant professor, the Margo N. Alexander Faculty Fellow in Corporate Responsibility, and co-faculty director and founder of the Center for Responsible Business at the Haas School of Business, Universit of California at Berkeley. In 2003, she strategically developed, launched, and directed the Center, which now encompasses research, instruction, and experiential learning and outreach programs, including the first-ever student-managed Socially Respons-ible Investment Fund and the Sustainable Products & Solutions Program.

Dr. McElhaney teaches multiple courses on strategic corporate social responsibility in MBA and executive education programs at Berkeley. She has been a visiting professor specializing in strategic corporate social responsibility (CSR) at the University of North Carolina Kenan-Flagler School of Business, as well as Institut d’administration des enterprises, Université de Poitiers in France and Escuela de Alta Dirección y Administración (EADA) in Barcelona, Spain.

On the faculty of the Haas School of Business since 2002, Dr. McElhaney’s consulting and research are focused on corporate social responsibility strategies and aligning CSR with business objectives, core competencies, and business value; linkages between diversity and CSR, specifically using CSR as a hook to re-engage women with business as employees, consumers, and investors; and using social technology for good by advancing companies’ CSR strategies and impact.

Prior to joining the faculty at Haas, Dr. McElhaney introduced corporate strategy to the (now) Ross School of Business at the University of Michigan in Ann Arbor (1993–2001) and taught corporate communication at the University of Cincinnati (1991–1992). She was a visiting professor in international studies at the Sichuan International Studies University in China (1992–1993). From 1989 to 1992, she was a member of the management team at First Third Bancorp in Cincinnati, where she focused on mergers and acquisitions.

Dr. McElhaney received the Aspen Institute and the World Resources Institute’s Faculty Pioneer Award (2005) and the Outstanding Graduate Student Instructor Teaching Award from the University of Michigan (1997). She was nominated three times for the MBA Teaching Excellence Award while at the University of Michigan business school. She was listed among the East Bay Business Times’ “40 Under 40” leaders (2004) and was a finalist in Fast Company’s “Fast 50” list (2004).

She received her BA in political science and English from the University of North Carolina at Chapel Hill (1988); her MA in organizational communication and organizational behavior from Ohio University in Athens, (1989); and her PhD in higher education with a concentration in business from the University of Michigan in Ann Arbor (1998).

Dr. McElhaney is the author of Just Good Business: The Strategic Guide to Aligning Corporate Responsibility and Brand (Berrett-Koehler Publishers, 2008), which highlights the business value and opportunities in branding, communication, and CSR.

Elizabeth Ghaffari: Can you tell me about your early childhood and family influences?

Dr. Kellie McElhaney: I am the youngest of three. I have an older brother who, today, has his own advertising agency and an older sister who is a dentist.

I grew up in a very strong, Italian Catholic family with a strong sense of the need to give back and leave the world a little bit better than we found it.

My father was professionally oriented with high expectations for leadership. He started out on the staff at Duke University as a coach of wrestling and football. He got his master’s degree and ultimately became an athletic director at the collegiate level. We were always in a college setting, surrounded by higher education.

My mother was a traditional 1950s stay-at-home mom and housewife who met my father when she was nineteen, got married at twenty-one, and followed his career rather than attend college herself. That was the era. When I went to high school, she went back and got her college degree, then her master’s degree, and was incredibly successful. You could tell she was a sponge, just thirsty for development and very probably the smartest member of our family. She worked with severely and multi-handicapped children and was exceedingly happy doing so.

We lived in North Carolina for five years, then we moved to Meadville, Pennsylvania, for my first through seventh grades. My father worked at Allegheny College. Next, we moved to Athens, Ohio, where my father was on the staff at Ohio University. That was when I was in seventh grade to high school.

Ghaffari: How did you end up back at University of North Carolina?

McElhaney: I went to University of North Carolina for my undergraduate degree, majoring in political science and English because I thought I wanted to be a lawyer. I learned early on that I had a fair gift for gab. My parents always told me they never won an argument with me.

When we moved to Pennsylvania, I was plucked out of first grade for what they thought was a speech impediment, but it just turned out to be a Southern accent from my first five years in North Carolina. I got that beaten out of me pretty quickly. Ultimately, I do feel I developed strong communication skills.

Ghaffari: Why did you go on immediately to get your master’s rather than pursue the law degree?

McElhaney: I was a junior serving on the UNC student-run judicial system, which supported the school’s honor code. I was still quite focused on the law and was looking at law schools when the first case that came before the student court involved a freshman female from an economically disadvantaged background, on a full academic scholarship, whose father had died just two weeks before finals at the end of her freshman year. She plagiarized two paragraphs on an English paper, which was grounds for suspension from UNC and an F in the course. If the court reached that decision, she would lose her academic scholarship. It was a pretty cut-and-dry case, and we had to do it, but I learned from that experience that I don’t deal well with a black-and-white world.

Once I turned away from the law, I wasn’t really sure what I wanted to do. My father was at Ohio University, so I could get a master’s degree there for free. I went back to Athens, where my folks lived, and got my master’s degree in organizational communication and organizational behavior. I became focused on leadership and how the organization can influence its people.

Ghaffari: You finished the master’s in just one year. That was pretty quick, wasn’t it?

McElhaney: Yes, because going back home after having been on my own for four years wasn’t all that it was cracked up to be, so I decided to just get in and out fast.

Ghaffari: Tell me about your first job after receiving your master’s degree.

McElhaney: Even though I was in the financial community at my first job with Fifth Third Bancorp, I started out more aligned with my communications degree by going into the training and development department. I built and led training seminars for the bank. After about six months, one of the executive VPs took me under his wing and said—I remember this vividly —“You’re too smart to be in human resources. I’d like you to come into my group.” He led the acquisitions-and-mergers component in the bank.

I started buying small mom-and-pop banks throughout the Midwest and on the East Coast. He would go in and make them highly profitable by changing them from neighborhood fixtures into much more corporate operations. But, I felt that he made their lives relatively miserable.

I was there for about three years. It was fantastic management training, and I learned a great deal about management, financials, and operating P&Ls. It was a sharply run business, but I wasn’t very motivated.

Then the University of Cincinnati invited me to teach a course in organizational behavior and communication one evening a week. After just one semester, it became evident that I was uninspired on the mornings of the four days a week that I worked at the bank. But, on the Wednesdays when I taught at University of Cincinnati, I just bounced through the day to get on to my night class.

Also, on Tuesday nights, I worked at a shelter for alcoholics and took on a little sister through the Big Brother and Big Sister program. I realized I was constructing my week so that I filled it with things having nothing to do with finance, but rather with things which helped me get through the week. I had this very split existence with divergent things consuming my energy.

Ghaffari: Were these the things that motivated you more than the business side of banking?

McElhaney: Correct. Also, it was a very difficult time in banking. The Community Reinvestment Act [CRA] had been passed, and banks were having a difficult time figuring out how to buy banks in inner-city areas and operationalize the CRA requirements. Most banks at the time weren’t working on real economic development activities in inner-city Cleveland, but rather were focused on protecting their loan portfolios and their profits. At that time, I didn’t see any way that I could change that from the inside for a couple of really interesting reasons.

First, I lived the classic split existence where work was work and my passion was anything that happened outside of work. I kind of internalized, early on, that they weren’t supposed to be one and the same. And there were very few female leaders—in fact, there was only one—in the bank.

I had a fantastic boss, Bob Niehaus. He and I occasionally would have authentic conversations. I do remember questioning the whole concept of “where are all the women in the bank?” He’d say, “You should go talk to Sandra Lober about being a woman in the bank because obviously I can’t give you that perspective.” So, I did.

You have to remember that this was in the eighties. She was the only woman in the bank. She always wore dark gray suits, shirts buttoned all the way up to the top, and neckties, because that was what was expected in that era. And her hair was always very sharply pulled back into a bun.

Sandra took me to lunch. She was very gracious, kind, and direct. She was married, but opted not to have children for whatever reason. As far as I could see, she didn’t have much going on in her world except for trying to rise up into the C-suite of Fifth Third Bank.

Ghaffari: Did she give you any good advice?

McElhaney: Yes. Her advice was, “You can’t have it all.” I believed she was right, then. Although maybe not so much today.

Growing up as I did in the academic world, my parents often said, “You’d be a fantastic professor.” After I ruled out law as my chosen profession, they thought I’d be great in an academic setting. But—just like the classic third kid—I had to do exactly the opposite of their advice, and banking was as opposite as I could find from being a professor or a teacher. For a while, I resisted going back into academia.

As I realized that banking wasn’t where I belonged, I started to grapple with these two sides of myself—the happier side vs. the dissatisfied side. I reassessed whether maybe higher education might be right for me. I had been a lot happier in the university setting, so I researched PhD programs. I thought of pursuing leadership, just not in the corporate sector. Maybe I could even be a college president.

I had been living in Cincinnati, Ohio, which—at the time—was an extremely conservative and homogeneous city. On top of that, I was working at a bank, the most conservative profession of all. A defining experience for me was the night that Robert Mapplethorpe, the photographer, held an exhibit of his work at the Cincinnati Art Museum. I went with my one other female friend from the bank who really bucked a lot of the corporate conservatism. We went to the exhibit opening on the night the curator got arrested by the Cincinnati police for exhibiting child porn, among other charges. That pretty well convinced me that Cincinnati wasn’t going to be a mind-broadening experience.

I was accepted into the PhD program at Michigan. But, I really had this itch to travel. I had never taken a whole year off to just travel. I think I’d only left the US once to take my grandmother to Ireland for her eightieth birthday. And, too, I had to take on a fair number of college loans. So I decided to defer my PhD and accept the opportunity to go to Sichuan, China, to teach at a university there for a year.

Ghaffari: What was that experience like?

McElhaney: Fantastic, mind-blowing, and—for me—really world-opening. It’s very odd that it was in China that I fell in love with the corporate world. I had sold everything I owned and was just teaching and detoxing from the banking world for a year. I went to the city of Chongqing, quite an industrialized city in China, just to have a “cool experience”—nothing deeper than that. But, also, I wanted to see if teaching full-time was something that I would enjoy. I thoroughly enjoyed teaching there.

It was in China that I became obsessed with the fact that I had wiring for electricity in my flat, but it never worked unless some dignitary from some foreign organization came through Chongqing. Then, magically, the electricity would somehow be switched on. Or, I couldn’t drink the water, but I could buy a Coca-Cola anywhere. I became extremely brand-aware while in China. Companies like Proctor & Gamble and Coke somehow could get their products into the most far-flung mountains and villages inside China on the backs of donkeys, yet the public sector couldn’t get clean drinking water or utilities to operate properly.

I became very interested in the power of the corporation to do things that other sectors could not do successfully. I had a lot of time to think in China. This was before the internet. Obviously, I didn’t have TV or radio, so there was a lot of time to think and write. I began to think about what if you could harness this power of Coca-Cola to also help get clean drinking water in China. It wasn’t that Coca-Cola was inherently bad, but it was the potential to do things that might be a little bit better for society or to meet more of a higher need for China than a sugar-drink carried on the back of a donkey across some far-flung mountain. I felt there was something there in that idea.

Ghaffari: Was it back at Michigan that you developed these ideas further?

McElhaney: I came back and went straight into the PhD program, where my area of concentration was the intersection of education and business. I minored in business within the higher education program. They called it a cognate—a concentration.

There was a lot of happenstance. Early on, I spent more time in the business school than the education school. The classes were more interesting there. It took about a year to finish all of the courses that were required for my PhD, then I became very interested on the educational side of how people construct knowledge. That continues to play heavily into how I teach my own courses today.

One course that was interesting was Women in Work, in the business school. I was interested in a whole range of questions. Do women lead differently than men? Do they have different satisfaction motivations than men? Different challenges than men? It wasn’t a typical gender course in the true sense of, “Woe is me. Here are the difficulties of being a woman at work,” but rather it was much more about what motivates women, what skill set comes more naturally to them. So that course piqued my interest.

I took another course that really brought things together for me. It was taught by Stuart Hart, who was then just becoming a leader in the sustainable development world, but is now a known leader in that field. In his class, I was able to relate back to my vision of looking at the power of the corporation in the world—how in China, Coca-Cola could get through the entire continent so quickly and efficiently. I ended up studying under Stuart for quite a while.

I also studied the AmeriCorps program, which President Clinton had just implemented. Students could learn economics either in the classroom or by working in an inner-city system and get credit for either experience. You could learn about trickle-down economics in the classroom or you could go live and work in the inner city for a semester and realize that the economic cycle doesn’t really reach that far down to inner-city folks at the bottom of the income ladder. I was interested in whether AmeriCorps might be a more effective way of educating kids than just lecturing them in the classroom.

I considered writing my dissertation on it, but it was such a rocky political climate for Clinton that I thought AmeriCorps might die before I finished my dissertation. But I did conclude that this was a far better way to educate students and to make the world a better place. It was a twofer. And I had the opportunity to meet President Clinton and share some of my findings with him.

This was a link back to my banking world—Fifth Third was just super at ratcheting up returns on investment—ROI. We were constantly driven to look at our ROI in everything that we did. When I got into higher ed, in one of my early pedagogical theory courses, I learned this fact: that if you put a kid in a classroom and simply just lecture at him or her, they will retain 10 percent of what they hear. And I remember thinking, “Oh my God. If I had an ROI of 10 percent at Fifth Third, I’d be fired.” So I chose early on never to just go into a classroom and lecture straightaway. I was constantly looking at ways to improve the ROI of learning—actually the ROI of anything.

When I studied the AmeriCorps program, I looked at taking kids out of an economics classroom and putting them into an inner-city setting and then looked at their test scores. I had a control group of kids who just took Econ 101 and another group of kids who took Econ 101, but we added this experience in inner cities or any situation where they could see an economic theory in reality. The latter group scored significantly higher on a test. That is how I learned that, in order to improve ROI in education, we had to do things differently.

I was heavily trained as a banker to improve my primary ROI, which for banking was profit. In education, while teaching the kids, I became much more fascinated by how much the idea of improving ROI could help the inner-city community develop fresh thinking for the benefit of these young minds.

The profound effect of some small initiative—just having a University of Michigan student sit side by side with an inner-city kid who had never even thought about college in his or her future—that was very interesting to me.

Ghaffari: How did you come to teach at Michigan?

McElhaney: Stuart Hart was denied tenure at Michigan and had to leave, so we had no professor to teach sustainable development or corporate responsibility. The dean was in a bind because effectively he had lost his best professor on a topic that was really starting to emerge in response to high student demand. I was just finishing my PhD when the dean said, “Will you stay on and teach the courses that Stuart taught or maybe just talk to these students and find out what they want to do?” It was pretty much “just put out the fire.”

By then, I had gotten married and was pregnant with my first child, so it seemed like a very attractive offer. Michigan is a fantastic university. I stayed on and tried to understand what the students wanted. There were not yet words like “sustainable development” or “corporate responsibility.” Course titles were “nonprofit management” or “philanthropy.” We started a club which we called Net Impact. It is huge today. We started a joint-degree program, an environmental MBA to bring the environmental world and business world together. Then we started a master’s of science program in environmental science, which I ran. That’s how I began doing much more administrative work inside of the university and just a little teaching—one course in business communication.

Somehow, on the side, I was studying ferociously the emerging world of sustainable development, which was much bigger in Europe at the time. I focused on the work of Stuart Hart and John Elkington. There were other pioneers who were really starting to bring all this together—Hunter Lovins and Amory Lovins—those on the vanguard of natural capitalism, “the next industrial revolution.” I wondered to myself, “Could I put a course together that would merge all of these ideas to help us understand ways in which we could harness the power of the corporation to make the world a better place?”

I put a course proposal together, and the dean wouldn’t even let me take it to the curriculum committee. He said, “No way! It seems like you need to be over in social work or go back to the School of Education, but this is not a business topic.” With that, I realized that sustainable development or corporate responsibility wasn’t yet acceptable at a business school.

I was really defeated for a while. I taught my communications courses that no one took really seriously. The joint MBA/MS program, meanwhile, continued to grow significantly every year, so I proposed the course again the next year. The dean said, “I’m going to put you into faculty review, so that you can hear from others.” I met with a small group of faculty from the review committee. They at least let me meet with them and describe the course. Remember, I’m better at talking than writing.

Their interest was piqued. The conversation went like this: “Should we let her teach it one year? Students will never take it. They’ll never want to put this on their transcripts because they’ll never get a job with this kind of a course. What will be the value of this course?” Anyway, they let me teach the course. The first time the course was offered, I was put into the smallest classroom in the Business School, but I had forty sign-ups and a waitlist of fifty-eight students.

It was clear that something big was happening—students were much farther ahead of the faculty or the university. The course was something like Corporate Social Responsibility and Projects. The students would work on a real-life challenge inside of a company. I was lucky to have some great companies surrounding me in Michigan. Dow Chemical Company was an early sponsor, as were Ford Motor Company and Herman Miller. Paul Murray was a fantastic pioneer inside of Herman Miller around the concept of sustainable development. They opted to not use virgin wood or virgin materials, and they recycled chairs once the customer finished with it.

Ghaffari: What made you jump from Michigan to the West Coast?

McElhaney: I had this situation with high student demand, high company demand, and the Business School couldn’t really say no. I’d built a joint-degree program at Michigan and developed a new course around the theory of sustainable development and how to apply it—live—in company projects.

The dean of the Haas School of Business at the University of California at Berkeley at the time was a woman named Laura Tyson. She recruited me to do something similar in corporate social responsibility [CSR] at Haas because there were no formal programs there, but there was a lot of student demand.

I was very drawn to Berkeley. I’m always drawn to people that I like, even more than to opportunities. I was fascinated by a female dean. Up to that point, I had been in business and academia roles and never had worked for a female. A big factor in my coming out here was Laura herself.

She’d heard of me because I had done a little bit of writing, nothing major, but it was a small world—there weren’t a lot of people doing what I was doing. I was well known in a small crowd. Somebody had recommended me to her. It might have been Stuart Hart.

I came out, did the tour, had a great visit, and a terrific interview. Obviously, I loved Berkeley, always loved the city of San Francisco, the energy of San Francisco. I was intimidated by the cost of living and the fact that I’m an East Coaster or Midwesterner with no family out here.

They were interested in me, but I felt fairly immovable. At the time, I was married and had one child. My husband had just started a company, and it wasn’t a good time to move. Berkeley continued to recruit, but didn’t find anybody that interested them. Laura came back with another offer the next year. By that time, two things had happened. I was pregnant with our second child, and my husband’s company had started to show the early signs of dying. His business was a remote data-monitoring company, telemetry they call it—an idea that has absolutely has taken off now. The business was very tied to monitoring chemicals and gases for the auto industry. Then we went through the recession of 2000 and 2001, and the business just didn’t take off because it relied on an industrial economy that was hit first.

Berkeley said, “You’re the person we want to lead us, to build something.” I came back out for interviews. I was newly pregnant with my second child, but didn’t want to tell them. I remember vividly throwing up between each of my interviews due to severe morning sickness.

I took the red eye back, walked into the house at 7 a.m. and threw up in the kitchen sink. When Dave asked, “How did you like it?” I said, “I desperately want to move out there. It’s a great opportunity.”

Laura Tyson was so very understanding. She called me that week, just a couple of days before Christmas, and said, “Have your baby in Michigan and come out here on a one-year leave. I know you have reservations about being far from family with young children.” So, I had my second child and came out the following summer. The bad news was that Laura made her decision to leave Berkeley to head the London Business School. That was a huge factor for me—I wasn’t going to have the opportunity to work for this smart, authentic woman.

Ghaffari: Was your family supportive of your decision?

McElhaney: I took a leave from Michigan, and we came out to Berkeley in July—both the kids and my husband. To my mind, after two weeks here, I definitely wanted to stay permanently. As a family, we made the decision to stay permanently by December of that first year. My husband was unemployed for the first six months, which was difficult. He wanted to be an entrepreneur, stay in the startup area, so he ended up taking a job in tech transfer—but it was suboptimal because he had a long commute, and it wasn’t what he really wanted to do. So, while his career was shaky and maybe moving in a more circular pattern, mine was really taking off.

You couldn’t find a better place than Berkeley to do the kind of work that I’m doing. Michigan had high student demand. Berkeley had higher student demand. Michigan had a few companies that were pioneering. I remember calling my father, who’s always been a strong mentor, saying, “My gosh, Dad, you can’t swing a dead cat in Berkeley without hitting seven companies who just embrace this whole concept of corporate responsibility.” I had a donor, Mike Homer, who had given $1 million to start something, but hadn’t developed a clear vision of what it should be. So I had donor support, student support, corporate support, academic support, and management support.

The new dean, Tom Campbell, came in and was very interested in this topic. I really liked Tom a lot, so even though he “inherited me,” he really helped to create the environment for success here.

But far and away, without a doubt, my absolute best mentor, advisor, and friend was Mike Homer, the donor who initially gave us $1 million and ultimately $2.5 million. He was an entrepreneur who taught me how to build something. It was just a fun ride working with him.

Mike was a Cal undergrad alum. He worked for Steve Jobs at Apple, GO Corporation, and made his millions as an officer at Netscape. He started companies in the tech sector like Loudcloud, Tellme, and Kontiki.

He had written a check for $1 million, but nobody had asked him what he wanted to see happen, so I went to him and said, “Tell me what your vision is.” He said, “I got out of college, was very lucky, worked really hard, made millions, and now I’m thinking about how I want to give back. I would like kids today to get out of college and know that you can do both at the same time—run a good business that makes money and give back from inside the business.”

Ghaffari: So, you were the one who implemented his vision.

McElhaney: Very much so. In a way, I was building a business for Mike. He was extremely helpful, and he was tough. I would get frustrated and discouraged by the challenges of trying to do something new and different at Berkeley. Some of the faculty viewed me as a threat and early on tried to get rid of me. Mike would always say, “Where’s your fight? Are you just going to let them run you out of town?”

The sad thing is that Mike contracted Creutzfeldt-Jakob disease when he was forty-seven, and he died at forty-nine. But at least he had the opportunity to implement his dream. And I would love to name the center for him at some stage. He was the one who planted the seed. I couldn’t have done it without him.

Ghaffari: You were the John C. Whitehead Faculty Fellow and now you are the Margo Alexander Fellow. Who were they? How did these fellowships come your way?

McElhaney: It was Laura Tyson. I had been here for two years and received an offer from University of North Carolina, my alma mater. One of the ways that Laura was able to help Tom Campbell keep me at Haas, even from the London Business School, was to get some funding for the teaching position. I had funding to build a center, but no funding around my own professorship.

Laura was close with Paul Newman and John Whitehead, who were running the Council to Encourage Corporate Philanthropy in New York City. The original money to fund my fellowship came from Paul Newman, but he didn’t think that having a Paul Newman fellowship would do wonders for my academic credibility. So they named it for John Whitehead, a former CEO of Goldman Sachs. When Paul Newman passed away, John Whitehead re-upped the gift, as a way of honoring Paul Newman.

They were always term gifts of three years. With this past iteration of the gift, we ran out of Whitehead money, so then we got funding from Margo Alexander, another Cal undergrad alum and a big philanthropist in New York City. Margo was one of the highest-ranking women in sales and trades on Wall Street, after starting out as a securities analyst with PaineWebber.

I’m proud in many ways, and it’s kind of interesting to close the loop. Now, my fellowship is named after a female banker. Even though Laura came back to Berkeley from London, she’s not active in my program. But, she’s part of my personal network and is still a valued mentor and advisor.

Ghaffari: What do you think she saw in you?

McElhaney: Balls. Guts. Courage. Just the fact that I’d been told “no” so many times, yet just kind of created my own path and didn’t let the frustrations deter me. I always want to be very authentic. There are many times that I thought, “This program is not going to happen. I’m so sick of being told ‘no’ by these old white men who don’t want to do things differently.” There were lots of days I felt as if I were back at the bank, where it was all about ROI and just maximizing profit.

Laura saw that I also could operate in various circles—I had learned that I needed to play the faculty game and also the corporate game. She saw the early signs that we were a public university, but public funds weren’t going to be around forever, so we were privatizing as much as we could. I was able to go into a corporation and sell a concept that they’d get behind and fund. I’ve always been really strong at teaching, so students really loved the concepts and the project work. I bridged academics and the corporate world naturally because it was a better way to teach, but also because we got funding from the corporate world.

Ghaffari: Who were some of the earliest companies that came on board to support your program?

McElhaney: Levi Strauss was a strong early supporter because of Bob Haas and his obvious affiliation with the Haas School, named after his uncle. Levi is a pioneering leader in corporate responsibility. Bob Haas also helped to make sure that I was set up to be successful here.

Ghaffari: Why do you think he wanted you to succeed in particular?

McElhaney: His passion and core belief in corporate responsibility were parts of the equation, but also I think Bob has always, even with his Haas Fund, fought for the underdog or the marginalized. Not that I myself feel that I’m an underdog or marginalized, but certainly what I was trying to do was a bigger challenge than that faced by others.

Ghaffari: There were two very interesting programs that you developed while at Haas. One was the Socially Responsible Investment Fund, a $1.3 million, student-managed fund, and the other was the Sustainable Products and Solutions Program, a $10 million endeavor program. What are they, how did they get started, and what was your involvement?

McElhaney: The student fund began with a conference in 2006 on the topic of sustainable metrics—measuring the impacts of corporate responsibility. What is the return to the company? What sort of return is there to society, and how can you maximize ROI therein? I met another Cal alum, Charlie Michaels, who runs a hedge fund in New York City, and his wife, Doris. They both attended the conference together just out of their sheer love for Haas and Berkeley. The topic was touching on Charlie’s world of investments and what’s the return on investing in an environmental or social strategy. I didn’t know who they were. I sat next to the two of them in the conference, and we just had an interesting conversation about Charlie’s world—hedge fund investing—no focus on social or environmental returns or the conference topic.

I happened to say, “Wouldn’t it be great to kind of do something different?” He had an opinion of what was then socially responsible investing, which was based on a strong negative screen-out process—screening out tobacco, firearms, alcohol. Our conversation suggested that that strategy probably limited the way we look at the whole concept of ROI. I wondered if there might be a different way.

I also said, “It’s my belief that faculty seldom are the pioneers in the higher-ed space or the academic space. It’s typically the students.” We wondered if we could run an experiment to see if students could do it better.

That conversation stuck in his mind, and he came back with an initial gift of $250,000 to start a fund with the goal of trying to develop more innovative investment strategies while also trying to maximize ROI. We used that money to attract two other donors.¹

_________

The fund is very focused on doing things differently and trying to get some metrics and some hard data into Wall Street around this concept of socially responsible investing.

Ghaffari: How are you communicating the concepts of metrics and ROI? Are you publishing them in order to disclose, in a general way, the kinds of metrics you are identifying? Or are you doing it in a proprietary way, communicating your findings to those who are talking with you and donating funds?

McElhaney: Great question. We don’t want to be proprietary at all. We’re really cognizant of the fact that we’re a public institution, and we want to move the needle. In order to do that, you need to be transparent and highly communicative, but we are also incredibly aware that in the investment world, you really can’t start talking about any kind of a track record until you have five years under your belt. We’re just hitting the five-year mark this year.

In fact, we have had very great results. We’ve had strong returns. We’ve beat our indices. And again, I’m the advisor on this, so it’s student-run, student-managed. The students really came together. They had the money, while the vision from the donors and myself was, “invest this money in a way that you obviously focus on financial return, but you also produce a positive social and/or environmental return.”

Ghaffari: Are you able to write about the performance as a research endeavor or before the five years?

McElhaney: We are. We produce an annual report, but we don’t really push it out into the world. It’s open and available on our website, showing the criteria that we developed in terms of what the students are looking for in a company. It shows our investments and our exits, so the students have both invested and divested. And it shows our performance and the indices that we track.

Ghaffari: How do you compare yourselves to other socially responsible investment funds, such as Calvert?

McElhaney: We don’t track to other socially responsible funds. We track to traditional Russell and S&P indices. Unlike those funds, we don’t negatively screen companies out of our fund. We do try to develop a set of criteria for companies in which we want to invest. For example, we have a bucket of criteria around governance structure—like executive compensation, another bucket around transparency and reporting, and another around community engagement or community involvement. Within each bucket are anywhere from ten to fifteen criteria that we’re looking at.

The students invest through Charles Schwab as our investment arm. It’s almost a hedge strategy, but we’re not allowed to use the word “hedge.” We really try to go long on companies who closely match our criteria and short on companies who are very far away from our criteria.

Ghaffari: When and how did the Sustainable Products and Solutions Program start?

McElhaney: I had a pre-existing relationship with Dow because of our collaboration at the University of Michigan. Dave Keppler, another Berkeley alum, is the chief sustainability officer for Dow. In 2009, the Dow Chemical Company Foundation made the largest corporate pledge in the Haas School’s history—a $10 million, five-year grant to provide students with cutting-edge training in sustainable business strategies.

I was talking with Dave Keppler about the problem with academic research, which in general has a very long lag time to market. We wanted to address that problem in the sustainable development field by improving students’ understanding of what it takes to bring socially responsible products to market faster.

Part of the problem is that the academic world is very siloed. For example, a chemist might be working on a great new polymer, but have no concept of how much the cost to produce that polymer might add to the product cycle. So, one thought was to have the chemist collaborate with an economist or a product development person, so they could all benefit from each other’s perspective and potentially speed up the product’s time to market.

Ghaffari: How are the faculty responding to this new approach?

McElhaney: There was a little pushback when I first got the gift because it was Dow Chemical Company and, at Berkeley, there are some challenges about the perception of taking “dirty money.” There are constantly protestors demonstrating at Berkeley who don’t really care what the topic is—they just love a good protest. At the time I got the money, there was a big tree-sitting protest going on because Berkeley was tearing down some trees to retrofit the football stadium. The protestors came down from the trees for a couple of days just to protest our gift because it was more comfortable.

The faculty, at first, were unperturbed. It didn’t really affect them. It was another source of funding for their research. The PhD students have been more substantively multi-disciplinary than the faculty. The social responsibility arena is more a generational phenomenon—the students seem to be naturally more comfortable with cross-disciplinary work. Some of the best work has come from the students—more from the master’s students than even the PhDs.

Ghaffari: You are listed as a co-faculty director for the Center for Responsible Business. Who is the other director and does he/she share your vision for the Center?

McElhaney: Tom Campbell invited Ben Hermalin to co-direct the Center to show that there was a tenured professor in charge. The primary reason I have a co-director is the academic belief that there needs to be a tenured faculty associated with every endeavor at Haas-Berkeley. Ben’s a fantastic guy. He has consistently supported our vision and me, but he’s not involved really in the day to day. It’s more titular. We have a full-time manager now—a woman by the name of Jo Mackness. She is the executive director and really runs the day-to-day maintenance of the Center.

I started the Center and was the executive director. I’m more of a builder than a maintainer. Once the Center was up and running, successfully—at least on a path that I thought was successful, I stepped aside to focus more on my own research, consulting, and teaching.

I’ve always had a bit of pushback from traditional faculty because I’m not on a tenure track. My subject field historically has not been a tenurable topic. I was always told not to focus on sustainability if I wanted to get tenure. Now, we are starting a PhD program. I could probably get tenure focusing on this topic, today.

Ghaffari: Do you regret not getting tenure? Do you think that will limit you in the long run?

McElhaney: Not at all. If I wanted to be 100 percent in academia, it might. But, my number-one passion is teaching—that’s where all my energy is focused. The students don’t really care—they don’t even look at the difference between tenured and non-tenured teachers.

My second passion is influencing corporate behavior, corporate practice, so my consulting and work inside companies are in no way linked to tenure.

Ghaffari: Currently, what’s the mix in your activities among corporate practice, consulting, teaching, and Center administration?

McElhaney: I do very little Center administration, today. I’m more the chief evangelist, getting more corporations engaged. I just recently got ING, the bank, to come on board. I would say my mix is around fifty-fifty teaching or student-driven work and consulting or corporate practice.

I also do a lot of executive education, which is both teaching and corporate practice because executive education takes social responsibility courses directly into the corporate environment. There are several courses, all with the same focus on how to integrate corporate responsibility into a business strategy and how corporate responsibility is linked to value creation for the company.

Ghaffari: Are you finding greater acceptance from the corporate environment today?

McElhaney: Very, very much so. I think that corporations are seeing the business imperative. They’re seeing their raw resources and the rising costs associated with depletion of water or energy or clean air or even human talent—all with direct impacts on their business. They’re seeing the financial reward or punishment of not focusing on the environment and society. They’re seeing employee satisfaction or losing their employees—who today are less interested in the simple focus on profit maximization and more interested in the consequence for society or the environment.

I think we are just at the cusp of having this younger generation of people who are now in management and leadership positions and who really want to use the power of corporations to make the world better.

Ghaffari: You’ve also said elsewhere that your research is exploring the linkage between diversity and CSR—“using CSR as a hook to re-engage women with business as employees, consumers, and investors.”

McElhaney: It is an issue that I’m incredibly passionate about. But I don’t want to force it before its time. In other words, I can’t lead with that as my research interest. I like to go back to this concept of change management. I want to go in there and be seen as somebody who’s helping the company with their business strategy.

ING is a great example of that. They see a big market in women as banking customers and clients. Thus, there’s a business reason that they want to attract women. They also want to attract and retain top female talent inside the bank. The financial services industry historically had a difficult time attracting and retaining females. So they have a two-pronged business imperative to really engage women. One, women have become a significant force for income earners and investors in the US. Two, how can they attract and retain top female talent? I help them see how corporate responsibility or refining their focus on financial literacy to include young girls or the female market can help them attract and retain females as consumers and as employees.

Ghaffari: Are there different drivers—different economic motivators—when you talk about consumers vs. the employees within the organization?

McElhaney: There are, for sure. I think that we sometimes try to silo it too much because, at the end of the day, we’re all consumers and employees at the same time. When I think back to my years at the bank, as an employee, if I could have combined some of my night work—at the shelter or teaching—into parts of my day job, potentially I might have stayed at the bank. It’s this very simple concept of wanting to find meaning in your day work.

I think consumers also want to find meaning in their consumption power or in their ability to influence corporate practices.

Ghaffari: How and why are you moving more into social media?

McElhaney: I’m always looking at ways we can drive corporate behavior more solidly or tell better stories. I guess one of the interesting luxuries for me is that I get to work inside of companies that really are serious about trying to make the world a better place with their corporate power. But in my outside life or when I’m just traveling, sitting on an airplane, I’m consistently surprised by the perception that companies aren’t focused on this. So I think there’s a big gap between reality vs. perception. And I don’t think companies have done a good job of telling their corporate responsibility stories. They’re very fearful to talk about these things in public. In my book,² I talk about how CSR gives a company an effective brand story or just a story to tell the outside world.

I found social media to be a very powerful brand or communication tool. It’s one component in a repertoire of communication tools. Too many companies or people try to make it the be-all-end-all. It shouldn’t be the only tool in one’s toolbox. There certainly could be a lot more depth in their corporate responsibility stories, including their reports, web site, or other communication tools.

Ghaffari: By writing your book, you used another traditional media—the published book—to communicate your concept. Do you use that as a teaching tool?

McElhaney: I do. One reason for the book was that I was getting into a situation of too much demand and not enough supply of just me, so it was a way to get my message out more broadly, globally, and effectively than me as a person. I also wrote the book with the intention of it being a very practical guide for busy managers.

Ghaffari: Do you envision in the long term that you’re going to stay within the academic framework and be able to deliver this, your fundamental message, effectively, or do you see yourself coming up with a different entity, whether it’s private or public or nonprofit entity, to perhaps bring in more collaborations, more people to satisfy the growing demand? Do you see yourself building a company?

__________

McElhaney: You’re catching me right at the nexus of that question—it’s been a question that has been both presented to me and in my mind for quite a while. So I’m trying to decide—I have been trying to decide when is the perfect time. I have a strong desire to build something else. I’m a little bit antsy right now. I am looking at a couple of different ideas and concepts to expand my capabilities and my force, so to speak.

Personally, it’s been a tumultuous time because I went through a divorce, and my kids are still relatively young. They’re almost ten and just turned twelve. They’re a handful. As my mother once said, “You got what you deserved.” I’m so much kinder toward my mother now that I am a mother. I’m convinced that she went back to work full-time because I was driving her crazy at home.

I’m very comfortable and authentic in talking about my divorce. I think the career trajectory was difficult. A big factor was that my career was ascending while his was swirling. Too, I think the concept of my being a successful female was difficult for him.

He’s a fantastic person, and we had a very amicable divorce. This past year, he’s finally settled into a new job and now is on a great trajectory, experiencing some great success. He went through three jobs after we came out here, which was not easy on either of us.

Ghaffari: How you describe your decision-making style?

McElhaney: I tend to be very, very practical and look at the data, but at the end of the day, I would say definitively that my decision-making style goes back to more of an authentic, gut feel. I take in information from multiple sources, and I’m trained to be very data-driven, but I never make a decision based solely on the data. I try to match the data to my intuition and to my quiet, meditative inner-feeling.

There have been times when I consistently bucked the data. If I had listened to the data expressed by my former dean at Michigan and faculty saying, “This course will never fly. No one will ever take it,” then the program would never have happened. But, I had a gut feel that they were wrong.

But I do know that, in both business and academia, I consistently operate in a data-driven world. And certainly the focus on ROI drivers would suggest that.

Ghaffari: How do you define your success?

McElhaney: I think I’ve been successful in large part because I’ve really been successful in motivating and inspiring people, combined with an ability to be solid, logical, and persuasive in presenting arguments about why this will work. But I’m also really good at doing things slightly differently.

I think there’s a strong amount of pent-up desire to change the world, but there’s also a lot of fear that it’s not going to work. Sometimes, the fear wins out. I’ve noticed there’s this kind of group mentality—in big corporations as well as in big academic departments. Some of the most fearful people I encounter are inside those big entities, cowered by a strong group mentality that says, “This is the way it’s always been done. This is the way we have to do it. I can’t speak up. I can’t try it differently. I can’t fail.”

One of the greatest things I learned from Mike Homer, because he was such an entrepreneur, was his focus on the fact that, “So, who cares if you fail? We’ll just figure out another way to do it.”

Ghaffari: Do you see yourself as a leader?

McElhaney: I do. In the academic world, I very much lead by designing new ways to teach. I lead in getting the students out of their traditional classroom settings and into the real corporate world. For example, now at Berkeley, we have a requirement that all our MBA students take an experiential learning course that was modeled after my initial courses here.

I lead inside corporations because I just go in and show them possibilities. I talk a lot about best practices and best-case examples so that they don’t feel like they’re going it alone.

And probably the way I’m most successful is just getting MBA students to come in and experience the joy of combining passion and changing the world at the same time. Once somebody’s seen that, they never want to go back—they’ll never be comfortable again simply focusing on profit alone.

I’m a bit subversive, I guess. Even within companies, I will say, “This corporate social responsibility strategy will help you to be more profitable,” but I really do want to make the world a better place through profit. I just don’t always go in and lead with that.

Ghaffari: Where do you see yourself in five to ten years?

McElhaney: I hate that question because I don’t know where I’m going to be next week. There are so many influences that can change my path. I’m at a stage in my life where I want to work more collaboratively. My path in the academic world has been a little more solo than I’ve been happy with. And now there’s enough of a critical mass of people working on these issues that I want to start working with people who are constantly pressing my ideas and making them better, asking my opinion, and getting input on their ideas. I’m much happier in that kind of setting. So I do see myself still working and very focused on creating change, but there’s something else I need to build. I’m antsy right now to build something.

Ghaffari: There are many social responsibility committees popping up at corporate boards. Do you see yourself in that space?

McElhaney: I’d love to get more into that space. I haven’t made a concerted effort to do that. I work on Dow Chemical Company’s sustainability board. It’s the Sustainability External Advisory Committee, but it is a paid board, and we do report into the C-suite. That’s a real progressive move by Dow, and I think other companies are starting to understand the success therein. That committee is one of the most satisfying things I do in my work life, so I’d love to get more involved at that level inside companies, because that’s when real long-term sustainable change happens.

But, I can’t lie. I’m nervous every now and again. What’s my next move? In some respects, I panic every now and again. I don’t know what my next move is. That’s why the whole five-year question makes my feet shake, because I don’t know what my next move is.

Ghaffari: Do you think your two daughters are supportive of what you’re trying to do?

McElhaney: Very much so. And I’ve learned from them. One of my daughters wrote a letter to a CEO about his product packaging. My other daughter constantly tries to save snails and slugs in her pajama drawer. They both have such passion. I do bring them along with me to keynotes and work and class, so they know what I’m doing and are very supportive of what I do. That makes it easier for them to understand why I sometimes have to be away from home, miss their soccer game or science fair project—because they know what I’m trying to do.

Ghaffari: How have you dealt with negative comments about what you’re doing?

McElhaney: Other than the early days, when I was told there was no place for CSR in the business world, there have been very few negative comments. There have been few negative comments from people who understand what I’m trying to do.

Ghaffari: What’s your advice to women today who are Cal students looking at careers?

McElhaney: Don’t leave the power of a corporation. I see so many women “opting out.” I do have concerns about the opting-out movement. There are so many women leaving the work world right now—losing out on a lot of power and resources.

I see opting out as a dangerous, limiting move. I think we need to look at how we can opt-in. As I look back at my days in banking, I wonder if I could have changed the bank as opposed to just leaving. I know how exhausting it is to work full-time and raise a family. I think we need to create options—ways that we could work less than full-time for, say, five years or so. I think women tend to opt-out as opposed to trying to change their surroundings.

Ghaffari: Is your advice to women significantly different from your advice to men?

McElhaney: Yes, because I think men just naturally think of suggesting a change if they don’t like what’s happening. But I would say the same thing to men: “Don’t leave the power of a corporation just because you want to change the world. Harness it.”