How to Deal with Company Rumors


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Nature of Company Rumors

“[W]orkplace rumors are systematic and can be spread faster than the organization’s formal communication channels. Mishra (1990) further states, “the grapevine is also capable of penetrating even the tightest security because it cuts across organizational lines and deals directly with people in the know” (p. 52). Organizations should not ignore rumors in the workplace that have the potential to harm its brand/image. This being said, organizations need to take responsibility and address rumors in the workplace before the situation becomes out of control.


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Rumors abound in office conversations. Although 90% of employees are usually passive listeners, 10% take gossip seriously and are said to be active links in the passage of information (Hunter, 1983). Rumors in the company may contain different types of topics. But rumors in the workplace tend to focus on three most prevalent categories: on the quality of someone’s work, tenure (whether or not someone’s keeping their job] and personnel changes. Rumors are outcomes of interpersonal relationships. Research indicates that rumors among employees result from an organizational structure that frequently exposes employees to role conflict and ambiguity. Thus, a company with a “toxic” organizational culture can be prone to office rumors. The higher is level interpersonal conflicts in the company; the higher would the level of office rumors. In addition, employees experience rumors because of conflict between the instrumental and expressive functions that they perform (Rosnow, 1983)” (Akande and Odewale, 1994, p. 28).

Despite its destructive force in the workplace, a major percentage of employees considered the grapevine as the main source of information about organizational affairs. Since it is perceived by employees as a personal type of communication, it frequently has a strong impact on them than formalized channels of communication. The grapevine is much more flexible than formalized channels of communication. It is also a rapid source of informal news. After a “news” event occurs in an organization, the grapevine makes information available almost immediately (Akande and Odewale, 1994, p. 28).

The existence of rumors during crises and uncertainties is a fact of life. “The good news is that preventive and remedial actions are possible, allowing professional communicators to minimize or even to stop the damage from rumors. Effectively preventing or controlling rumors requires an understanding of the psychological and sociological factors that drive people to listen to, pass along and believe rumors” (Doorely & Garcia, 2007).

How to Deal with Rumors in the Company


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There are essentially three ways to manage rumor in a company (Koller, 1992). The first is to try “to wait them out.” Some rumors dissipate over time and do little harm. Only rarely are rumors serious enough to require action. Second, if waiting fails, the rumor must be publicly refuted. When the rumor is refuted and also made to look unreasonable in public it negates its “news value” (Shiburani, 1966). This strategy is the most straightforward and aggressive. The company (or other target) names the specific rumor and discredits its usefulness and the credibility of its source through an advertising campaign, a press conference or highly publicized event such as one used by a company while denying the accusation of promoting Satanism (Pettijohn, 1987). This technique is effective in making people disregard those still interested to pass the rumor along. Third, truth or authentic information should be released or positively advertised as swiftly as possible. The last point strives to associate the target of the rumor with positive features such as the company’s traditional commitment to quality, excellence and consumer satisfaction. For instance, a Canadian brewery has used this strategy in strengthening the link between its company and positive features, while simultaneously at the same time dissociating the company and the rumor that is it owned by a Pakistani shareholder. Kaferer (1990) has suggested alternative, but not empirically acceptable, rebuttal strategies, such as creating counter-rumor and spreading disinformation” (Akande and Odewale, 1994, p. 28).


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If rumors seem to threaten the business organization, there are basically two ways to deal with them. The first is to try to prevent them. The supervisor must recognize that rumors have definite causes, most anchored on the lack of information about things important to employees and on the insecurity and anxiety that go with them. Whatever the cause, it must remember that rumors are received and transmitted by people in terms of their biases. Thus, the general theme of the rumors may be maintained, but the details are often altered to serve vested interests. The second is to try to vanquish rumors if they already affect productivity, community relations, or interdepartmental cooperation (Keith, 1975). “In refuting a rumor, a manager or supervisor should release the truth as quickly as possible. If a rumor is not subdued or quashed quickly, employees will interpret later events in the light of the rumor” (Akande and Odewale, 1994, p. 29).

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The Social Use of Rumors in Business Firms


The prevalence of rumors in a business firm indicates a corporate communication crisis. Rumors are difficult to trace and almost impossible to stop. It takes a concentrated effort to dispel them. If remain unchecked, rumors can undermine company morale and, eventually, productivity.  And the primary weapon in putting an end to unwarranted rumors in the company is effective communications. The company story must be put across in a positive light.  The media appreciates quick, accurate, and thorough responses, which should be provided. Staff members should also be used to spread the truth. Other potential allies can be contacted and persuaded to help. The best way to dispel a rumor is to establish a policy regarding the problem and let everyone involved know about it (Horton, 1983).

 “Rumors are common in any organization. Some rumors are destructive and may cause considerable stress, sidetrack the work of key people, or damage the image of an organization. Associations are as vulnerable to rumors as corporations. The environment is especially vulnerable to rumors because so many meetings are held with results that are not made public” (William, 1985).

Rumors are a form of informal company communication. Studies have shown that informal lines of communication, such as rumors, must be kept open because they are a vital part of any organization. Rumors provide feedback to employees and to management; they also justify feelings about situations and help individuals understand the way they feel about certain things (Schaeffer, 1984).

In his studies of the role of rumors in companies, Larry Hirschhorn concluded that rumors have a strong positive role to play in keeping an organization healthy. When rumors are going around, they provide important clues as to what is happening in the company and act as a safety valve to relieve tensions and worries. If people stop spreading rumors, it implies that the workplace reality is so grim that they build psychological barriers to distance themselves from it.  A lack of rumors is a sign of sharp demoralization of a business organization (Hirchhorn cited in Bensahel, 1982).

Managers should pay attention to rumors. By listening to rumors, it does not always mean that they are true. Rumors deal with the internal affairs of the company. Even if they are false, they often reveal the concerns of insecurity, uncertainty or worry among employees. A good manager can prevent many internal crises if they are addressing the concern reflected in rumors (Adler, 1977).

It has been hypothesized that an organization’s culture may affect the propensity to engage in rumors. “In some organizations, the culture may advocate considerable formal communication while informal communication may, at the same time, be discouraged (Kurland and Pelled, 2000, p. 434). In this case, an anti-rumor or gossip culture may cause individuals to refrain from seeking information from sources other than officially sanctioned ones” (Michelson and Mouly, 2004, p. 195).

An exhaustive review of the literature identified fours motivations for consumers to share rumors in the marketplace. It included anxiety management motivation, information sharing motivation, relationship management motivation and self-enhancement motivation (Sudhir and Unnithan, 2014).

Rumors are always present in a business firm. The role of the manager is not to eliminate them, but to learn from them in order to improve the company’s human resource and information management system in order to achieve corporate goals!


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