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When a sudden drop in demand forced electronic-signature service DocuSign to mull a strategy shift, senior management tapped the wisdom of its staff
Only a few months into his new job as chief executive officer of Seattle-based DocuSign, a Web-based service for secure digital signatures, Matthew Schiltz saw two of the company's primary markets unravel.
It was mid-2007, and already mortgage brokers were bringing in fewer new contracts requiring digital transactions because of fears induced by the unfolding subprime debt crisis (BusinessWeek.com, 12/13/07). Around the same time, the College Cost Reduction & Access Act was passed into law, which constrained the budgets of, or closed down, many student lenders—also major customers of DocuSign. "We were faced with large market shifts in two of our top segments, both out of our control, and both within a 60-day period," recounts Schiltz.
Facing a potential crisis, Schiltz and his senior managers ignored the temptation to keep quiet and try to solve the problem behind closed doors. Instead they invited everyone in the company—some 40 employees—to a town hall meeting, where they laid bare the sobering implications of these new market conditions and asked for direct involvement in adjusting the company's strategy. "We went straight to the people that deal with these customers on a daily basis, and that's our employees," Schiltz explains.
Empowering the People
DocuSign engaged its employees in decision-making in two ways. First, Schiltz instituted monthly, company-wide meetings where workers in different business units share what they have observed about market shifts and come up with new ways to execute and measure the impact of changes. Second, he created subcommittees—groups of employees who meet to brainstorm solutions in specific areas, such as new products.
Less than a year after creating these new channels of employee feedback, the company has experienced what Schiltz calls "dramatic positive change"—both in its performance and the culture of its workforce. In marketing efforts it began to emphasize the environmental impact of the huge amounts of paper its clients save each year by using digital transactions. By signing big new clients such as Wells Fargo Funding (WFC) and Expedia (EXPE), DocuSign made up for the slowdown in mortgage and student lending segments while proving that a variety of industries, such as loan origination and travel booking, can benefit from its product. And it secured a $12.5 million Series C round of venture capital funding that will help the company grow in those new areas.
Now that they have started to take an active role in company strategy, Schiltz says employees are more invested in their everyday work. "You empower these people by telling them the truth and being open and honest with them," he says.
But knowing that it's important to place limits on the voice of lower-level staff in company decisions, Schiltz and his managers have tried to maintain an air of authority. "We don't always want to get into a situation where our employees think that our senior management team doesn't have any input or doesn't have any opinions," he says. "There's a balance there."
More companies should follow DocuSign's example of engaging staff during a crisis, say communications experts Gene Colter and Ted Birkhahn
Crisis strikes. Senior management hides its head in the sand. Employees become uncertain about the future of the company and start looking for new jobs instead of feeling as if they have any stake or say in improving the situation.
It's an all too common scenario—especially during times of economic downturn—and one the executives at DocuSign were wise to avoid, according to Gene Colter and Ted Birkhahn of New York strategic communications firm Peppercom. A lot of companies overlook employees as a key audience to communicate with during a crisis. They look at investors, they look at customers, and they look at other stakeholders outside the company. But they don't look inside," says managing director Birkhahn.
At the very least, companies who are open and honest with their staff about big changes in the market can hope to prevent loss of morale and the departure of talent. "If you're not talking truthfully about the changes the company is facing, its going to be very hard to motivate smart people," says editorial director Colter.
Don't Wait for a Crisis
Under the guidance of its new chief executive officer, Matthew Schiltz, DocuSign even went beyond this first step of transparency and proactively involved its employees in navigating the bumpy road. Birkhahn applauds this kind of engagement, since rank-and-file employees often know better than anyone where new opportunities lie and adjustments can be made.
But he suggests that the feedback channels they opened—including town-hall meetings and employee subcommittees—should have been there all along. "Why wait until a crisis actually takes place?" he asks. "Companies that have these forms of communication in place during good times are able to respond a lot quicker and a lot more effectively when the bad times hit."
While group get-togethers worked well for the three dozen or so staffers of DocuSign, larger companies have turned to Web 2.0 to engage employees—sometimes on a global scale. "Digital has really changed the game. It helps management respond to a wider group of people," says Birkhahn. For example, IBM (IBM) employees log onto an online forum for an annual, three-day, open brainstorming session about new company initiatives called World Jam. And Tribune (TXA) employees participate in a Digg-style intranet forum called IdeaBank, where the best ideas for new TV shows, newspaper sections, and other media ventures get voted to the top by colleagues and considered by head honcho Sam Zell.
Creating Brand Ambassadors
Colter points out that DocuSign did launch a company blog in March, 2007, to encourage interaction among managers, employees, and customers but stopped updating by the year's end. In the midst of a transition, he says, "Whatever communication you're doing, you have to maintain."
When managers actually listen and implement some of the ideas of their reports in company strategy, they often do much more than avoid turnover. They create "brand ambassadors," employees who will go out into the community and stand as proof that their troubled company is taking care of its workers. That's "much more effective than the CEO standing up there and saying it, it's much more effective than putting a press release out there," says Birkhahn. "If you can create a whole army of brand ambassadors, that's going to really help you get through this and make sure that the right messages are getting into the right hands."
During a company crisis, and particularly during a broader economic downturn, workers need to be reassured that their jobs are secure and that their input matters. By doing both, DocuSign was able to pull itself out of rough water.