Diane Hessan, a 2005 Winning Workplaces Best Boss, is President and CEO of Communispace, a Massachusetts-based firm that makes consumers “come alive” for brands in a way that renders focus groups obsolete. In this interview, she describes workplace best practices that contribute to the bottom line and what she plans to speak about at our ROI of Great Workplaces Conference in October.

Your company works in one of the hottest spaces right now – social networking. How have you used employee engagement to fuel innovation and distance yourselves from the competition?
From the beginning we’ve had a policy of being very open with our employees about where we are as a company – the good and the bad – and in return we’ve asked people to be open with us about what’s working or not working, what they’re seeing in the marketplace and what they’re hearing from clients.

When I first put that policy in place I just thought it was a good way to run a company, but there have been many times when it has really been a savior for us and had a major impact on the business.

For example, we had a near-death experience in 2001. We are venture-backed and were running out of money and thought that we were going to have to do a major layoff. We sat down with all our employees, ran through the numbers and told them what was going on. Everybody asked a zillion questions and I just said, “Look, we have 36 hours and at the end of that we have to take some action.” Thirty-six hours later we had 52 ideas, and everybody had decided to take a salary cut in return for stock options.

This was in March 2001 and we made it to November just based on the cash flow from those decisions. In November our investors decided to give us more money. So employee engagement was literally a lifesaver for the company, and in fact it’s evolved to affect everything from how we run our intranet site to the frequency of all-staff meetings.

A hot topic in leadership and HR circles right now is flex work arrangements. Communispace has seemed to master this in balancing employee needs with business demands. What’s your secret?
I guess it’s the set of assumptions we have. For instance, we believe that your scarce resource is your energy, not your time. We’ve got a huge service component of our business, and so for us a key to success is employees who are responsive, listening hard, energetic and enthusiastic with clients. So we want people to come to work and be as present as possible, and that’s what we manage to, rather than how many hours a week you worked.

Having said that, everyone around here works really hard, but other than the person who’s at our switchboard, we don’t say, “You must be in at this time and you can leave at this time.” Our people tend to work an average of 50 hours a week, but they pick those hours. It’s worked well to trust that people are going to work hard and take responsibility for what’s going on, but not have the place be a sweatshop.

Which particular workplace best practices would you point to as making the biggest impact on your bottom line?
Creating values for the organization that were relevant to what we do and then taking them seriously and putting teeth in them.

So for instance, in 2004 we realized we were going to be profitable and were going to make it as a company. We spent that summer thinking about what kind of company we wanted to be. We also spent a lot of time thinking about what we had done to get us to that point. That turned into a set of values that are still living and breathing within the organization.

Those values are really critical to how we operate and I would say they’ve paid off for us in being a great recruiting tool, a great source of alignment when managers are making decisions and a point of pride for employees. We’re trying to do a number of things and be great at what we do, but we’re also trying to build an amazing company. To do that it’s not just about what you’re selling.

You are set to speak about “lessons I’ve learned in building an enterprise” at our conference in October. Can you give a preview of some of these?
I think some of the things I’ll talk about will be obvious, like listen to your customers. Some might be less obvious, like five-year plans are totally overrated. I think you have to have a path and a sense of where you want to go, but in this day and age I think your strategy has to be emergent.

I think that passionate people move the business ahead. In most businesses I think I’d rather have two passionate people than three smart ones. I’d rather have people who are jazzed, who see the glass as half full.