By applying theory to practice, managers can avoid the often
costly effects of false rumors.
Reining in Rumors
NICHOLAS DIFONZO
PRASHANT BORDL4
x umors do not just fill up time around the
water fountain. They can drain produc-
tivity, reduce profits, create stress in the work-
place, or sully a company’s image. Some ru-
mors tear at a company’s credibility, with
both personnel and customers. Others have
catapulted firms into financial disaster.
It is imperative that managers know how
to deal with the spread of questionable infor-
mation, but even “experts” give a bewildering
array of mixed signals.
For instance, there is disagreement on
whether a company should deny rumors. So-
ciologist Frederick Koenig, author of Rumor in
the Marketplace (Auburn House, 1985), recom-
mends that, “If a company is the target of a ru-
mor, it should deny it immediately as force-
fully and publicly as possible, showing the
evidence that proves it is unfounded.” But
many public relations experts consider de-
nials counterproductive. Business writer
Owen Edwards stated that “about the only
way not to counter a rumor is to deny it, since
any denial tends to give rumor added clout.
The more vehement the denial, the more
credible the story becomes.”
The authors acknowledge thatfundingfor this research was provided by the Vanderveer Endowment Fund.
RALPH L. ROSNOW
There also is disagreement on something
more basic: whether to comment at all.
Thomas R. Horton, former president of the
American Management Association, advised,
“Above all, avoid having any company repre-
sentative answer any media question with ‘no
comment.“’ If it cannot be answered, then ex-
plain why it cannot be answered to the me-
dia, Horton advised. Some authorities, how-
ever, subscribe to the World War II dictum:
“Keep mum!” Management consultant David
Walke said he believes that “the safest thing
to say is that our company policy is not to
comment on rumors.”
There also is little consensus on the treat-
ment for rumor-plagued organizations. Man-
agers often find themselves forced into a
predicament similar to that of a tribal
medicine man who has at his disposal a vari-
ety of mostly prescientific folk remedies, nos-
trums, and incantations. Often, the reason
managers have so little to rely on is that savvy
intuitions about how to combat rumors may
not take into account recent findings on the
way rumors get generated and transmitted.
Thus, on the whole, efforts to create rumor
47

Nicholas DiFonzo is a doctoral candidate in
the social and organizational psychology
program at Temple University, where he has
taught statistics, research methods, and psy-
chology as a social science. He earned a
master’s degree in counseling from Rider
College and a bachelor’s degree in engi-
neering from Lafayette College. For several
years, he served as executive director of a
non-profit social service agency. DiFonzo’s
current research activities include workplace
absenteeism norms, judgment processes in-
volved in rumor-based securities trading, the
use of probablistic mental models to assess
rumor veracity, rumor intervention strategies,
dissemination of contrived rumors, and con-
ditions under which rumors warrant belief.
48
guidelines have not been based on rumor L&o-
ry. In addition, they have not been tested for
their effectiveness against rumors.
We addressed these shortfalls by review-
ing rumor theory in an organizational context,
and by conducting in-depth interviews with
managers in nine companies in the United
States and India. These interviews explored
actual instances in which these managers con-
fronted rumors. The result was that theory-
based guidelines fared well-managers ad-
hering to them either prevented or
neutralized damaging rumors.
This article updates rumor theory and pro-
poses some guidelines to prevent and confront
rumors that can do harm. Interspersed
throughout are excerpts from the interviews.
Before this presentation, however, consider
the recent case of a company that avoided
harmful rumors-and their detrimental ef-
fects-during a sustained organizational crisis.
KROY, INC.:
A CASE STUDY
The story of how Kroy, Inc., based in Scotts-
dale, Arizona, maintained employee morale
and productivity, as well as vendor loyalty, il-
lustrates the way theory-based guidelines can
powerfully repel damaging rumors that arise
during an organizational crisis. In the case of
Kroy, Inc., a labeling equipment and commer-
cial sign manufacturer, the crisis involved a
struggle to emerge from the U.S. Bankruptcy
Code’s Chapter 11 protection as well as a
change in management. At the beginning of
the crisis period, Suellyn McMillan, director of
marketing services, described Kroy’s 229 em-
ployees as “beleaguered.” A year later, McMil-
lan extolled the success of the company’s “cri-
sis communications program.” Employee
surveys showed that, under the program,
morale rose above what it was before the com-
pany filed for Chapter 11 protection. Employ-
ees were “confident in management’s ability
to weather financial problems,” vendors con-
tinued doing business with the company, and
a 500-member dealer network actually grew.
From the program’s onset, the company
used dramatic, extraordinary, and compre-
hensive measures to demonstrate its strong
commitment to the maintenance of trust and
confidence among organizational constituen-
cies. It removed executives’ office doors, for
instance. The chief executive officer (CEO)
held monthly meetings-open forums-with
all employees, and walked around the firm to
explain “what was going on with the compa-
ny.” The communications program kept em-
ployees abreast of the insolvency, anticipated
staff cuts, and potential cost-cutting strategies.
To answer common questions, the company
prepared special handbooks for employees,
vendors, and dealers, along with video tapes. Prashant Bordia is enrolled in the Ph.D.
And it established a toll-free hotline, staffed by program in social and organizational psy-
senior executives, for employees to obtain im- chology at Temple University, where he has
mediate answers. As we will show, these mea- taught research and quantitative methods
sures are all compatible with rumor theory. and is assisting in program evaluation at the
Institute of Survey Research. He received a
bachelor’s degree in psychology at St.
Xavier’s College and a master’s degree in
THE IMPORTANCE OF social psychology from the University of
EFFECTIVE GUIDELINES: Bombay. He currently is examining cross-
RUMORS CAN DAMAGE cultural perspectives in rumor theory devel-
Not all rumors are so potentially harmful that opment, rumor communication patterns on
they justify as comprehensive a policy as electronic networks, compliance-gaining be-
Kroy’s. But those that can cause damage may havior, dissemination of contrived rumors,
affect both tangible and intangible assets. and psychological aspects of communication
Rumors hindering sales-tangible as- roles within organizational grapevines.
sets-are particularly troublesome. In March
of 1991, for instance, a false rumor circulated
that the Ku Klux Klan manufactured Tropical
Fantasy Soda Pop, and that the beverage
caused sterility in black men. Fantasy’s sales
plummeted by 70 percent, delivery trucks
were attacked, and vendors dropped the
product. In another example, Pop Rocks can-
dy was falsely accused of causing stomachs to
explode when eaten with soda. This caused a
substantial sales loss. And Bubble Yum bubble
gum sales plummeted when rumormongers
claimed (again, falsely) that it was contami-
nated with poisonous spider eggs.
More commonly, rumors impinge on in-
tangible assets, especially trust. In .every inter-
view -we conducted, a depletion of trust was
at the root of the rumors’ harmful conse-
quences. Rumors eat away at people’s faith in
fellow -workers, management, or the corpora-

49
 tion. One manager, facing innuendo that his
consulting firm was incompetent, feared the
consequences brought on by a loss of credibil-
ity: “When credibility is undermined, that un-
dermines just about everything else. Your
clients can’t trust you; they can’t trust your
word, your future activity, nor any dealings
with you whatsoever.”

RUMOR THEORY

Generally defined, rumor is unverified infor-

mation, usually of local or current interest, in-
Ralph L. Rosnow holds the Thaddeus L. tended primarily for belief. In other words, ru-
Bolton Chair and is director of Temple Uni- mors are propositions or allegations colored
versity’s social and organizational psycholo- by various shades of doubt, because they are
gy program. After receiving his B.S. from the not accompanied by corroborative evidence.
University of Maryland, M.A. from The Thus, rumors scamper about organizations
George Washington University, and Ph.D. like some mischievous poltergeist, until skill-
from The American University, he taught at ful managers exorcise the allegations or the
Boston University and Harvard University. allegations vanish into thin air.
He has studied rumor for 25 years and has Excepting their lack of proof, rumors are
written extensively on this and other topics in similar to news. Both explain important
social psychology, research methods, and events, pertain to people or to affairs that
statistics. His recent books include Essen- don’t involve people, and may be positive or
tials of Behavioral Research: Methods and negative. But news is always confirmed,
Data Analysis (2nd ed., McGraw-Hill, 1991), while rumors are, by definition, uncon-
Writing Papers in Psychology (2nd ed., firmed. The eminent sociologist, Tamotsu
Wadsworth, 1992), and Understanding Be- Shibutani, referred to rumors as “improvised
havioral Science: A Conceptual Primer news.”
(Macmillan, 1993). He is a fellow of the A second characteristic of rumors is that
American Association for the Advancement they spring from collective concerns. Impro-
of Science, the American Psychological As- vised news is of interest to group members
sociation, and the American Psychological (the YU~OYpublic). That group interests moti-
Society. vate rumors is indicated by the close connec-
tion between rumors and collective interests.
Exhibit 1 lists some subclasses of organiza-
tional rumors we found, along with the col-
lective interests that spawn them. Turnover,
job-security, and job-quality YU-YZOYSare usually
rooted in worries and ambiguities that stem
from impending changes in management
policy or personnel. Pecking-order YU~ZOYS typ-
ically grow out of employees’ doubts and in-
securities about their position in a firm and
their hope for a promotion. Costly-error ru-
VZOYS reflect concerns about damage caused
by mistakes, Consumer-concern YU~OYSusually
reflect consumer fears about a company

50
 EXHIBIT 1
TYPICALORGANIZATIONAL RUMORS

RUMOR TYPE [LLUSTRATIVE EXAMPLES COLLECTIVE INTEREST

TURNOVER Top-level manager will leave the compa-
ny to start his own business.
Industrial relations manager will resign.
Popular CEO will leave the division and
return to the parent company.
Marketing director will leave the corpo-
ration.
Management and co-workers were in-
terested in how subsequent staff
changes might affect job duties or
advancement opportunities.
Workers were interested in how staff
changes might affect working condi-
tions.
Workers were interested in how staff
changes might affect working condi-
tions.
Management and co-workers were in-
terested in how staff changes might af-
fect working conditions.

PECKING- The chairman of the smaller, more suc- Employees were concerned about their
ORDER cessful subsidiary will replace the parent own job stability; stockholders were in-
company CEO. terested in how new corporate manage-
ment might affect stock prices.

JOB-SECURITY The smaller division will merge with the Sales staff were concerned about job se-
OR JOB- larger division. curity after the merger.
QUALITY A large salary increase is forthcoming. Employees were interested in their com-
pensation.
The company will close a manufacturing Workers were concerned about their job
plant. security.
The company is circumventing sales Sales staff were concerned about their
staff by using direct-mail sales efforts. job security and levels of compensation.
Union leaders are colluding with corpo- Workers were concerned about levels of
rate management. compensation.
The consultant (systems programming) Top and middle management job duties
is incompetent. might be dramatically affected by the
consultant’s tasks.

COSTLY-ERROR A major, costly computer error was com- Stockholders were concerned about stock
mitted. prices; employees and managers were
concerned about corporate reputation.
A major, costly human error was com- Stockholders were concerned about stock
mitted. prices; employees and managers were
concerned about corporate reputation
and job security.

CONSUMER After the merger, product lines may be Retailers were concerned that valued
CONCERN discontinued product lines would be discontinued,
thus affecting retail sales.
The proposed manufacturing plant loca- Area residents were concerned about dele-
tion will be adversely affected. terious environmental and health effects.

51
product or service.
A third characteristic of rumors is that
they are intended primarily for belief, when
reliable information is unavailable. Rumors,
according to the forerunners of rumor re-
search, Harvard Professors Gordon W. All-
port and Leo Postman, are an “effort after
meaning.” They are speculations that arise to
fill knowledge gaps or discrepancies. This
function differentiates rumor from gossip,
which is meant primarily to entertain or con-
vey mores. Gossip is a tasty hors d’oeuvre sa-
vored at a cocktail party; rumor is a morsel
hungrily eaten amid an information famine.
Recent findings lead us to believe that,
when people have interests in situations for
which information is incomplete, practically
all rumors go through three stages. The stages
are as follows:
STAGE 1: Generation
During this stage, people develop a suscepti-
bility to rumor-they are motivated to receive
or transmit a bit of improvised news. Our re-
search and other studies confirm that rumor
susceptibility depends on whether there is an
optimum combination of uncertainty and
anxiety.
Uncertainty refers to the psychological
state of doubt that arises. when unexplained
events occur. Numerous studies show that ru-
mors develop on the heels of ambiguous
events because the unsettled questions are
themselves unsettling. Noted social psychol-
ogist Leon Festinger found that rumors will
arise when events are cognitively unclear
(ambiguous) or unstructured-when they
cannot be understood readily because they
lack a suitable context. Cognitively unclear
events produce discomfort and insecurity be-
cause their effect is unpredictable. Rumors are
explanations that give a “structuring” or
“frame” to the ambiguous events within a
context. Rumors give the events meaning and
predictability, and thus ease the discomfort.
In a recent investigation of the link be-
tween uncertainty and rumor generation, re-
searchers collected rumors about a South
Eastern Pennsylvania Transit Authority (SEP-
52
TA) strike. The rumors clearly afforded pre-
dictability to transit patrons. The rumors in-
cluded “if SEPTA does strike, it will be a long
one,” and “the fare increase would be at least
25 cents.” They also included that “the Red
Arrow line will strike at midnight tonight,”
and “the Route 45 bus will only be running to
City Line Avenue, and no further.”
Other examples abound in everyday life
of the ways that uncertainty spawns rumors.
For instance, rumors of conspiracy and orga-
nized crime connections to John F. Kennedy’s
assassination persist, presumably because the
incident is shrouded in ambiguity. Rumors
that circulate during labor negotiations arise
partly because the talks are secretive. Rumors
also abounded in the Soviet Union during the
cold-war era, when official news was untrust-
worthy.
One of the managers we interviewed,
representing a company in India, told us that
his company’s failure to explain office reno-
vations led to a rumor that a popular execu-
tive was being ousted:
So, the rumor was that there would be
a new person coming in, new people
are coming in, and the organizational
structure was changing and therefore
the current president is making way
for the new man to take over. Now the
fact that the company had not made an
official announcement explaining the
reason why these cabins were being re-
fashioned fueled the uncertainty of the
people.
Our interview with a U.S. manager un-
derscores how a company’s failure to be
forthcoming can fuel a rumor:
One of the biggest mistakes I have
seen is failure to manage the flow of in-
formation, causing upheavals in the
rumor mills. For example, our claims
depa.rtment is backed up, very backed
up_ And the rumor is that we cannot
get any claims solved. Well, it’s not
that bad. It’s blown way out of propor-
tion. What you have to do is to sit
down and say,, “The claims department
 is handling x amount of claims per
day.” They are handling maybe a thou-
sand claims per day and we are send-
ing in eleven hundred. So you have to
explain to them: “Your claim will now
be delayed another week to two weeks
to three weeks until they catch up and
this is the plan for catching up.”
Besides uncertainty, an essential ingredi-
ent of rumor generation is anxiety: the fear
that negative events will likely occur or that
positive events won’t occur. Researchers
have found that anxiety is the factor most
strongly associated with rumor transmission.
In the case of SEPTA, the previously men-
tioned transit authority, anxious patrons
were more apt to spread rumors than those
without anxiety. In fact, the rumormonger-
ing may alleviate anxiety, since often it is
used to determine whether the rumor is true,
and to gain some control over an anticipated
negative event.
Various research studies as well as
the incidents respondents reported during
our interviews produce palpable evidence
of the role anxiety plays during rumor inci-
dents. Most of the rumors in Exhibit 1
are dreaded events, such as changes in
working conditions or threats to security or
compensation. The anxiety associated with
such events can be picked up easily from the
language and emphatic tenor used to de-
scribe them. For example, at a manufactur-
ing plant plagued with layoff rumors, “Anx-
iety still looms large in the minds of the
workmen,” as one respondent put it. There
was rampant fear of another “traumatic”
plant closing.
STAGE 2: Evaluation
Research suggests that people are more in-
clined to spread a rumor they believe is true
than one they believe is false. A study of uni-
versity personnel who anticipated a strike
showed that the reason they are more likely
to pass along rumors that they believe may
stem from the penalties of delivering false
messages. If the false rumor describes a pipe
dream, for example, the messenger may be-
come known as a source of disappointment.
If the rumor excites fears, the messenger is
the creator of undue anxiety. Either way, the
reputation of those who raise false hopes or
trigger false alarms gets tarnished.
How do people judge an idea’s truthful-
ness? Rumors, like prejudices, appear
to be evaluated in light of salient cogni-
tions about the truth. The more a story
agrees with conventional wisdom or readily
available thoughts and presuppositions, the
more likely it will be viewed as probably
true. Two aspects of this process warrant
elaboration.
??Cognitions can be theoretically cate-
gorized by their accessibility (how easily
they come to mind, for example). Frequent
thoughts are described as highly “available.”
Available cognitions may in turn act to mod-
ify rumor propositions so they fit better with
cognitions (i.e., the cognitions modulate the
hearing of the rumor). For example, a racist
maintains a highly available set of negative
racial stereotypes. The racist emphasizes or
deemphasizes events so they are consistent
with these stereotypes-incoming data are
“worked over.” In 1967 and 1968, for exam-
ple, a false rumor circulated in Detroit, Mich.,
alleging that a child using a shopping mall
lavatory had been castrated by a teenage
gang. When the story was repeated in the
white community, the gang was described
as black and the victim as white. In the black
community, the gang was said to be white
and the victim black The assailants’ skin col-
or changed, to match the listeners’ racial
stereotypes.
Those trying to interpret events will rely
more frequently on available cognitions than
unavailable cognitions. Thus, available cog-
nitions predispose rumor evaluation. At the
height of the OPEC oil crisis, rumors circu-
lated that the oil shortage was created by gi-
ant corporations in a massive conspiracy to
boost gasoline prices. The rumors were em-
bellished by tales of heavily loaded oil
tankers secretly waiting outside major U.S.
ports until prices rose, and of aerial pho-
tographs of corporation sites that revealed
53
hidden vats filled to the brim with oil. These
rumors found fertile ground in the minds of
those who were already highly distrustful of
Big Business.
Rumors also tend to make relevant cogni-
tions available. They incite observers to attend
to those events that seem to verify the rumor.
Rumors of a bank’s insolvency, for instance,
may precipitate a panic by focusing stock-
holders attention on loans to developing na-
tions and on recent savings and loan failures.
At Reebok, marketing consultants speculat-
ed that rumors that the company was in-
volved with South Africa may have focused
attention on the British flag printed on
Reebok shoe boxes, or on the company’s
name, which coincidentally sounds like the
name of an African animal. In recent labora-
tory studies, we found that rumors that a
company was about to announce its profits
influenced “investors” to focus on the up-
swings, and away from earlier price trends.
Such positive rumors caused price upswings
to become more salient and led “investors”
to predict continued price hikes. This justi-
fied their purchase of stock when they oth-
erwise would have sold. These investors lost
money.
??Rumors are assessed along a probab-
listic continuum that ranges from very like-
ly to very unlikely to be true. Thus, rumors
need not be 100 percent believed for trans-
mission or reaction.
Herbert A. Simon’s explication of
“bounded rationality” applies here. If hu-
mans are rational creatures, why do they act
in an ostensibly irrational manner? The rea-
son is that rationality has a variety of limita-
tions. One limit involves our ability to deter-
mine whether a statement is true. Because
humans cannot always, or even often, com-
pletely accomplish this, they must be content
with less-than-certainty. Others who consid-
er the statement as improbable will, in turn,
assess any reaction as irrational.
Often, the most perceptible characteris-
tic of rumor recipients is their credulity. For
instance, certain rumor publics believed
“Continental Bank is about to file for Chap-
ter 11 status” and “Coca-Cola is contaminat-
54
ed with carcinogenic food additives,” as well
as “General Motors’ CEO is about to be re-
placed.” Although the Continental rumor
was false, it was plausible to the financial
community, because the bank had loaned
large sums to Third World investors and
many smaller banks had recently become in-
solvent. The Coca-Cola rumor (part of the
Villejuif rumor known throughout Europe)
probably circulated the most readily among
consumer activists who feared food contam-
ination. And GM lost money for years, yet
Chairman Stempel was slow to lay off work-
ers. (Eventually, GM replaced him.) These
rumors were quite plausible to those they
were told to.
STAGE3: Dissemination
Under uncertain and anxiety-provoking cir-
cumstances, a plausible rumor spreads like
wildfire and causes as much damage. Two
aspects of dissemination are particularly
troublesome because they lead to a stronger
belief in the rumor. First, as cognitive
psychologists have shown, repetition fosters
belief. Merely hearing a tale several times in-
creases our confidence in its veracity. Second,
as a rumor circulates, it mutates into a more
plausible proposition. During social inter-
change, rumors don’t merely get relayed, they
get refined according to what the transmitter
believes is true. Sanford Weinberg and his as-
sociates found evidence that people tended to
hear a rumor about a hit-and-run accident two
or three times before they passed it along.
Floyd H. Allport and Milton Lepkin found
that those who had previously heard wartime
rumors about waste and special privilege be-
lieved the rumors more than those who had
never heard them. As we shall see, the signifi-
cance of the two aspects of dissemination is
that timeliness is critical for combatting ru-
mors. Early intervention or a disruption of
rumor circulation slows the rise of a rumor’s
credibility.
Based on what we know about genera-
tion, evaluation, and transmission, we can
suggest some theory-based guidelines for
company managers. There are two critical
 EXHIBIT 2
THEORETICAL
FRAMEWORK
FORPREVENTINGANDNEUTRALIZING
RUMORS

STAGE GENERATION EVALUATION DISSEMINATION

Factors associated with stage UNCERTAINTY

& CREDULITY TIME&
ANXIETY REPETITION

Guidelines addressing stages

PREVENTION
1. REDUCEGENERATION
-explain the unexplained /
-dispel anxiety /
-anticipate rumors
r/ r/
2. REDUCECREDULITY
-hold a rumor workshop /
-establish trust
r/
3. REDUCEDISSEMINATION
-detect early
r/
NEUTRALIZATION
1. IGNOREIMPOTENT
RUMORS r/
2. CONFIRMTHERUMOR /
3. Do COMMENT r/
4. REFUTEEFFECTIVELY
-based on truth /
-with internal consistency
I/
- with appropriate spokesperson r/
- with understandable message
I/
- without repeating rumor
I/
- using town meeting formatA
r/
/IJ

*Assumes that explanatory information is given by an appropriate spokesperson early in the life of a rumor.

55
points at which we can intervene: when the
rumors can be prevented or their harm can be
rendered neutral. Exhibit 2 lists guidelines for
these stages, and the factors they are designed
to reduce.
GUIDELINES FOR
PREVENTING RUMORS
Managers can prevent rumors by reducing
the conditions (uncertainty and anxiety) that
make people susceptible to them, or by re-
ducing the credulity of potential participants.
Reduce Generation
Explain the unexplained. In most situations, un-
certainty is easier to dispel than anxiety be-
cause it requires only an explanation of
events. A common scenario we found is what
we call the “fill-in-the-blank” announcement.
A disclosure that someone is leaving, for in-
stance, without an announcement of who will
fill the position, surely will spawn rumors.
People are naturally concerned about
how staff changes will affect them. And they
will speculate, as recounted by the following
manager:
Our company would typically an-
nounce one move then announce sub-
sequent moves later, so that many peo-
ple would keep a score card, trying to
predict the upcoming move and who
was going where.
DispeEanxiety. It appears that efforts to dis-
pel anxiety in organizations are rare; we found
no instances of such efforts in our study. We
suggest, however, that tactics aimed at dis-
pelling anxiety could be enticing to managers
who are accustomed to weighing procedure
costs and benefits. A procedure that costs noth-
ing, for example, is a relaxed demeanor. Calm
managers send a signal that matters are not so
dire that they warrant anxiety.
Ardicipate mmors. Avoid potential uncer-
tainty or anxiety-producing events. This is
usuaIly easier said than done. How can we
predict how much anxiety or uncertainty a
56
given event will produce? Such predictions
are most difficult at the very times they are
most needed, as recounted by this manager
during a strike:
Well, if there had been a calm observer
who could brainstorm and say, “These
are all the possible rumors that may
come about as consequences of this
lock-out,” rumors might have been an-
ticipated. But it was a situation of tur-
moil, turmoil for the management as
well as turmoil for the workmen. So
people were not really thinking, antic-
ipating, or planning ahead.
Unfortunately, rumor prevention does
seem to require a discerning observer who
can anticipate potential rumors. The follow-
ing manager told how he employed the sen-
sibilities of a “radar man” (not always the
same person):
I trusted him [i.e., the “radar man”] for
having a good sense about what
would generate rumors. He would say,
“You know this could start rumors,” or
“You better watch out,” or “You better
be very discreet about this because
people are watching, people are antic-
ipating this to happen.“ He was always
someone who was kind of plugged
into the grapevine, but he was also one
whose judgment I really trusted. He
was usually a peer or a boss, more or
less like a mentor or a friend.
Reduce Credulity
field u workshop. Encourage skepticism about
rumors in general through rumor workshops.
The workshops involve careful instructions
about the nature of rumors, rumor transmis-
sion, and potential consequences. When done
without forethought, however, such work-
shops in a climate of distrust could backfire.
Without trust, workers may view the work-
shops as the company’s attempt to deter them
from assessing unfair management practices.
Establish trust. Trust not only makes
workshops more effective, it also reduces the
credibility of harmful rumors. Trust predis-
poses interpretations of ambiguous events as
non-antagonistic. Consider how turnover ru-
mors affected promotion decisions at two of
the companies we examined. One company
had a climate of trust; the other, a climate of
cutthroat competition. In the trusting envi-
ronment, the manager ignored the turnover-
based rumor that he was looking for another
job. When asked whether the rumor might
have hurt his chances for a promotion, he said
that his boss’s responsibility was to assess per-
formance based on merit, and he trusted his
boss would ignore the rumors.
This manager explicitly stressed the ne-
cessity of trust within the organization. “Mu-
tual trust is very, very important in an organi-
zation and the higher up you go, the more
important it is that trust be characteristic of
your relationships with people,” he said.
Apparently, this manager’s trust was
well-founded-the company has promoted
him regularly.
In contrast, the manager in the competi-
tive environment dared not rely on such trust.
In fact, his boss had quickly granted credence
to the rumor:
A co-worker had heard that I was leav-
ing the company and that I was starting
my own competitive business. My first
thought was that if this gets to my im-
mediate boss and he is considering me,
among a group of other people, for pro-
motion, this could really hurt my
chances. Also, the rumor had become so
widespread that I was sure that he had
heard it without telling me. And when
I did go to my boss, he was waiting for
me to come to him to tell him that I was
resigning, and he had planned to pro-
mote another person instead of me.
Reduce Dissemination
Harmful rumors get repeated during their dis-
semination. This may raise anxiety, highlight
uncertainties, and focus attention on those pre-
suppositions that heighten people’s belief in
the rumors. Thus, early detection is essential to
curbing the effects of the dissemination. Even
unruly rumors may be tractable if in their ear-
ly stages. One strategy was to recruit a trusted
subordinate to be a “sonar man” who would
report rank and file rumors quickly. “The sonar
man was one whom I could trust to hear ru-
mors and report them faithfully to me,” the
manager said. He continued as follows:
Then I would usually test the rumor
with one or two people by asking, “Did
you hear this?“--1 would see the extent
of it. If it was just a wild thing then I
would probably let it go [ignore it] but
if it was something that people were
concerned about, I would pull them to-
gether and say “Look, from the top
[corporate hierarchy], this is not going
to happen.“
The subordinate should be instructed to
report rumors in a way that doesn’t jeopar-
dize anyone’s job. This is not only ethical, it is
also practical. It prevents the sonar man ar-
rangement from eroding trust.
With no early detection mechanism, ru-
mors may do significant damage by the time
management hears about them, as recollected
by this sales manager: “I lost some ground with
my salespeople because by the time salespeo-
ple reluctantly brought the rumor to you, it
had already damaged morale; they’d been ru-
minating about it for a couple of weeks.”
GUIDELINES FOR
NEUTRALIZING RUMORS
Even the most conscientious prevention ef-
forts fail at times, and a rumor sweeps
through the organizational ranks. There are
methods to treat such rumors, as outlined in
the remaining guidelines. These guidelines,
again aimed at reducing either rumor gener-
ation, belief, or dissemination, are as follows:
Ignore Impotent Rmnors
Ignoring a rumor addresses the issue of dis-
semination, because it does not involve re-
peating the rumor. But it is clearly the weak-
57
est neutralizing tactic. A rumor may be safely
ignored when, given the group’s susceptibili-
ty, the rumor is so implausible that it will die
on its own. Nevertheless, what is incredible to
one person may be believed by another. To
determine the plausibility of a rumor, turn to
the radar and sonar people. If the rumor is in-
credible to organization members, then it may
suffice to disregard it. The ignore-it approach
is a luxury that few managers ever enjoy. An
absolute ignore-it approach is only usable
when there are no queries to management
about the rumors. The manager who had em-
ployed the sonar man held such an option be-
cause he heard the rumors early enough.
Once a question has been asked, however,
management must respond: Either confirm or
deny the rumor, or refuse to comment.
Confirm the Truth
Rumors often contain a grain of truth. And
one way to reduce rumor generation is to con-
firm the part that is true. One bank officer
quickly killed a costly-error rumor with the
truth. The officer explained:
Rumors were everywhere that [a very
large number of] credit cards had been
mailed to incorrect addresses, but the
reality was more like [a much smaller
number]. We got as much information
to the people by the mail, as quickly as
we could. My way of dealing is to tell
the truth. I mean, don’t fool around
here or try to hide. In this case the best
thing to do is give the information out.
Do Comment
A “no comment” response to an inquiry is a
comment-it communicates that “we don’t
want to talk about it,” or worse yet, “we have
something to hide.” These unintended mes-
sages will most likely give more credence to
the rumor. One public relations official stated
that “‘no comment’ by itself is generally taken
as ‘yes.“’ It also introduces another unex-
plained event, adding to the uncertainty.
58
Thus, a plausible reason should be provid-
ed for the refusal to comment so that, even
though the rumor is ignored, the inquiry gets
a response. A particularly effective method is
to ridicule the rumor-dismiss it as so obvi-
ously absurd that it doesn’t warrant a defense.
This approach was used successfully to deal
with a turnover rumor in a noncompetitive en-
vironment. The manager explains as follows:
One fine morning one of our union
leaders came and told me that our
manager of industrial relations is re-
signing and leaving. Although I was
surprised, I asked him “Who told
you?” He had no answer. I didn‘t think
it was necessary to take any further ac-
tion because the rumor source was not
credible. Also, because the manager of
industrial relations was reporting to
me, I thought I had enough rapport
with him so that he would have come
and informed me first.
By challenging the source’s credibility,
this manager implicitly cast the rumor as lu-
dicrous. Again, the tactic was appropriate be-
cause of a weak rumor (implausible) and low
susceptibility (low uncertainty or anxiety).
Refute Effectively
Many highly credible rumors crop up in sus-
ceptible environments. And sometimes a
strong refutation is needed to reduce confi-
dence in the rumor. But caution is in order
here. Denials may turn out to be disloyal
rather than faithful servants: There is evidence
that denials are at best ineffective in combat-
ting rumors, in some instances. A denial may
actually increase credulity in a rumor.
Most of the personnel we interviewed
were shy about denial. “Too much denial
communicates that there must be something
going on,” a public relations manager said.
Personnel recognize that “the company
seems to be talking about this rumor a great
deal, therefore they must be trying to hide it,
trying to move it aside.” Here are some tips
for effective denials:
 Base them on the truth. In most circum-
stances, a denial based on the truth stands the
best chance of diminishing someone’s belief
in a rumor. Besides being ethical, honesty also
is the best policy. If consistent, it improves a
manager’s reputation and increases trust. Dis-
honesty, especially a false denial, doubles the
damage by tarnishing the reputation. False
denials also are doomed to fail because there
are always informants around. As one man-
ager put it, “You better be correct because the
press could find out in forty seconds.” Infor-
mants get beaten to the punch by prompt and
truthful disclosures. A major corporation
failed to heed this advice, and paid for it with
its reputation and stock equity. A costly hu-
man error had been leaked to the press. When
questioned, those involved denied the mis-
take had occurred. But the denials didn’t stick
because informants continued to leak, as re-
called by this public relations officer:
Monday morning, a reporter called me
and said that she understood that we
had a real problem. I checked a little bit
with the management and though
they knew there was a problem, they
did not mention it to anyone. The next
day the reporter called me again. She
really seemed to have some facts here.
On the fourth day she told me that it
was quite serious, she knew the num-
bers, the error would cost hundreds of
millions, so I went back to the manage-
ment and said “What‘s going on?”
They said, “Yes, we do have this prob-
lem.” She ran a story that afternoon.
Make sure everything the organization says is
consistent. Effective denials diminish rumor
credulity through the consistency of the orga-
nization’s statements. One way to achieve this
is to designate one spokesperson to represent
the organization. Consider what happened to
the manager who was called by the reporter:
Then, rather than everybody in man-
agement getting together and desig-
nating one spokesman who gets the
facts straight and stays with the press
(that should have probably been me or
somebody very senior in manage-
ment), instead, there were too many
senior guys who were talking to the re-
porters, all going with the idea that
they were going to put out the fire. But
there was no consistent kind of mes-
sage, they were talking about this an-
gle and that angle.. .It was absolutely a
mess. The rumors became rampant.
Select the appropriate spokesperson. An ap-
propriate spokesperson has a rank that
matches the scope and seriousness of the ru-
mor. Denials typically fail to reduce credulity
because they are issued by someone with an
insufficient rank-lower ranking officials are
not perceived as credible. Consider what
happened when a CEO did not rebut a
widespread and persistent layoff rumor, leav-
ing the task to lower echelon managers. As
one of the managers put it:
I think much more time could have
been spent by top management get-
ting involved with the union leaders
and reassuring them. This is because
the union does have a feeling that, de-
spite what the personnel people and
the middle managers might say, ulti-
mately the decision maker is the top
guy. And, until he gives us a reassur-
ance, we really don’t know whether
the denial has much credibility.
In contrast, another company’s CEO de-
nied a rumor that he was leaving. “So the
president stood up at the meeting and said
that he wasn’t going and he clarified the ru-
mor,” a manager said. “This seemed to have
squashed the rumor, eventually, because of
the fact that the chief executive stated it.”
As a rule, higher level sources are consid-
ered more credible, unless the spokesman’s
status is inappropriate for the rumor’s scope.
Using too high a source may draw undue at-
tention to the rumor, raising speculation that
the rumor is more serious than it appears. As
one public relations officer put it:
If the building is on fire, the chairman
should go and take over because it’s
very serious. If a manager on the sixth
59
 floor has a fire, you don’t send the me set you straight.” Usually there was
chairman, because what ends up hap- an element of truth in the rumor, but it
pening is that it’s just a little fire, and if had been distorted, so it was a matter
he runs in there, he will get this fire of just letting them know as much as I
smell all over his clothes, and it takes a could, truthfully, and setting it
long time for the smell to go away. straight, and trying to be honest and
truthful. Many times I pulled together
Denials should be easy to understand. De-
whoever the involved parties were, or
nials should be brief, pithy, and concise. De-
simply the whole team.
nials that are lengthy, vague, and verbose are
unconvincing and sound like a cover-up. The town meeting not only quelled rumors, it
“You know, when there is too much explana- prevented further rumors, as recounted here:
tion, and there are too many words, and it’s
The company had an open forum to
too verbose, then people begin to say, ‘Well,
deal with employee concerns,
this sounds like all those management peo-
grievances, anxieties, and rumors. On a
ple,‘” said a public relations officer. Another
regular quarterly basis, the company
officer trained himself to speak in “sound
would send out a questionnaire asking
bytes” which are “the distilled essence of
employees.. .to list any grievances or
what we’re trying to convey.” People remem-
frustrations they had. The data were
ber sound bytes; they forget lengthy, compli-
collected anonymously and they were
cated, or abstract explanations.
summarized in the form of overhead
Don’t repeat the TUWZOY.Repetition fosters
transparencies and slides. So, unedited,
belief, so more frequently heard rumors have
the president of the company would
a better chance of being believed and trans-
meet the respondents, in batches of 25
mitted. When McDonald’s rebutted false ru-
to 50, and respond to every issue.
mors that it used worm meat in its hamburg-
ers, for example, the corporation always A variant of this approach was used at anoth-
publicly referred to “protein supplements.” er company as explained below:
When countering false rumors that Pop
Every quarter, the five top senior man-
Rocks candy explodes in the stomach when
agement people go to the cafeteria for
it is washed down with soda, the sweet’s in-
a large meeting. Everybody in the
ventor referred to “a lot of wild rumors”
building-literally everybody from the
(without repeating them) and stressed the
guy who sweeps to the guy at the
product’s safety. Similarly, Pepsi’s recent
top-sits there and they have a two- or
open letter to customers thanked them for
three-hour meeting. They discuss the
disbelieving untrue “hoaxes.” But the com-
progress in all areas of the company
pany did not repeat the false allegation
and handle questions.
about reports of hypodermic needles being
found in Pepsi cans.
Hold town meetings. Town meetings in-
CONCLUSION
volve gathering the rumor public, issuing a de-
Effective guidelines for rumor prevention
nial, and providing for a spontaneous dialogue
and control are critical to surviving the kinds
between the spokesperson and the rumor pub-
of organizational problems often encoun-
lic. When effective, the meetings dispel uncer-
tered in today’s competitive environment.
tainty, raise the manager’s credibility, and de-
The guidelines presented here, derived from
molish the rumor’s credibility.
rumor theory, have fared well in practice.
One manager described this “11-o’clock
The overarching idea is that rumor guide-
conference” approach to rumor control:
lines can be implemented at strategic points
I would pull them all together and say, in the rumor process: generation, evaluation,
“Look, I hear this is going around, let and dissemination.
 Company managers will never be com-
pletely unaffected by harmful rumors. They
can’t explain every event, or quiet all anxi-
eties. And organizational members can’t al-
ways remain skeptical of rumors. Anxiety
and uncertainty are commonplace, especial-
ly in a sluggish economy, and they can
quickly foment a witch’s brew of malicious
rumors that are plausible. But managers
need not rely on folk remedies or incanta-
tions; they can use sound practices to un-
derstand and control rumors. Harmful ru-
SELECTED BIBLIOGRAPHY
Frederick Koenig’s quote appeared in Daniel
Goleman, “Anatomy of a Rumor: It Flies on
Fear,“ The New York Times, June 4,1991, p. C5.
Owen Edwards’ quote was taken from “Leak
Soup,” GQ Magazine, April 1989, p. 228.
Thomas Horton’s quote was taken from “Ru-
mors: A Corporate Communication Crisis,”
Security Management, June 1983, p. 21. David
Walke was quoted in Debbie Galant, “Re-
sponding to Rumors,” Institutional Investor,
March 1990, p. 58. The Kroy case study was
reported by Suellyn McMillan in “Rumor
Mill,” Personnel ]ournal, Oct. 1991, pp. 98-101.
The definition of rumor is an amalgama-
tion from the work of various rumor re-
searchers including Gordon W. Allport and
Leo Postman, The Psychology of Rumor (New
York: Holt, Rinehart & Winston, 1947), Ta-
motsu Shibutani, Improvised News: A Sociolog-
ical Study of Rumor (Indianapolis: Bobbs-Mer-
rill, 1966), and Ralph L. Rosnow, “Inside
Rumor: A Personal Journey,” American Psy-
chologist, May 1991, pp. 484496. The term YU-
mar public and the concept of rumor as “effort
after meaning” are taken from G.W. Allport
and L. Postman’s book. The comparisons of
rumor with news are discussed in “Mass Me-
mom, then, are like unwelcome guests: They
will arrive unbidden, but they need not rule
our house.
I
If you wish to make photocopies or
obtain reprints of this or other
articles in ORGAMZAI~ONAL DYNAMICS,
please refm to the special reprint
service instructions on page 80.
diated Rumor and Gossip,” by Allan J. Kim-
mel, Douglas Moore, Bruce Rind, and Ralph
L. Rosnow (unpublished manuscript).
The long line of research on uncertainty
in rumor generation includes Stanley
Schachter and Harvey Burdick in “A Field Ex-
periment on Rumor Transmission,” Journal of
Abnormal and Social Psychology, May 1955,
pp. 363-371. Cognitive unclarity is discussed
in “A Study of Rumor: Its Origin and Spread,”
Leon Festinger, et al., Human Relations, 1948,
pp. 464-485. SEPTA rumors were from raw
data culled by James L. Esposito and outlined
in his unpublished doctoral dissertation,
“Subjective Factors and Rumor Transmission:
A Field Investigation of the Influence of Anx-
iety, Importance, and Belief on Rumormon-
gering” (Temple University, 1987). Rumors in
the Soviet Union are described by Raymond
A. Bauer and David B. Gleicher in “Word-of-
Mouth Communication in the Soviet Union,”
Public Opinion Quarterly, Fall 1953, pp. 297-
310.
Studies investigating the role of anxiety
include Susan Anthony, “Anxiety and Ru-
mor,” Journal ofSocial Psychology, 1973, pp. 91-
98; and Charles J. Walker and Carol Beckerlie,
61
“The Effect of State Anxiety on Rumor Trans-
mission,” Journal of Social Behavior and Pevson-
ality, August 1987, pp. 353-360.
Evaluation’s role in rumor transmission
was investigated in Ralph L. Rosnow, James L.
Esposito, and Leo Gibney, “Factors Influenc-
ing Rumor Spreading: Replication and Exten-
sion,” Language and Communication, 1988,
pp. 29-42. Rumors among university person-
nel during labor negotiations are described in
“Belief in Rumor and Likelihood of Rumor
Transmission,” by Ralph L. Rosnow, John
Yost, and James L. Esposito, Language and
Communication, 1986, pp. 189-194. Availability
is discussed by Amos Tversky and Daniel Kah-
neman in “Judgments of and by Representa-
tiveness,” by D. Kahneman, I’. Slavic, and A.
Tversky (eds.), in Judgment Under Uncertainty:
Heuristics and Biases (New York: Cambridge
University Press, 1982). The role of belief in
“working over” rumors is discussed by Floyd
H. Allport and Milton Lepkin in “Wartime Ru-
mors of Waste and Special Privilege: Why
Some People Believe Them,” Journal ofAbnor-
ma1 and Social Psychology, 1945, pp. 3-36. The
racial rumor circulating in Detroit was report-
ed by Marylynn Rosenthal in “Where Rumor
Raged,” Tuans-Action, 1971, pp. 34-43. Rumors
occurring during the OPEC oil crisis were re-
ported by Donald A. Bird in “Rumor as Folk-
lore: An Interpretation and Inventory,” (un-
published doctoral dissertation, Indiana
University, 1979). Frederick Koenig analyzed
the devastating effect of a false rumor that
Continental Bank of Illinois was insolvent in
Rumor in the Marketplace (Dover, MA: Auburn
House, 1985). The Reebok rumor was reported
in Harold Unger, “Psst - Heard About Pop
Rocks? Business Rumors and How to Coun-
teract Them,” Canadian Business, June 1979,
p. 39. The role of rumors in making price
62
trends salient was investigated by Nicholas
DiFonzo in “Rumor and Behavior: Effects of
Rumors on Individual Trading Patterns in the
Stock Market,” (unpublished master’s thesis,
Temple University, 1993). Herbert A. Simon’s
explication of bounded rationality can be
found in Administrative Behavior (New York:
Macmillan, 1947). The ViZlejuif rumor is de-
scribed by Jean N. Kapferer in “A Mass Poi-
soning Rumor in Europe,” Public Opinion
Quarterly, April 1991, pp. 467-481.
For the finding that repetition fosters be-
lief, see Lynne Hasher, David Goldstein, and
Thomas Toppino, “Frequency and the Con-
ference of Referential Validity,” Journal of Ver-
bal Learning and Verbal Behavior, 1977, pp. 107-
112. For the finding that a rumor mutates to a
more plausible form, see Theodore Caplow,
“Rumors in War,” Social Forces, 1947, pp. 298-
302; and Warren A. Petersen and Noel I’. Gist,
“Rumor and Public Opinion,” American Jour-
nal of Sociology, 1951, pp. 159-167. The hit-and-
run study may be found in “Anatomy of a Ru-
mor: A Field Study of Rumor Dissemination
in a University Setting,” by Sanford B. Wein-
berg, et al., Journal of Applied Communication
Research, February 1980, pp. 156-160. The ru-
mors of waste and special privilege are in the
investigation previously mentioned by Floyd
H. Allport and Milton Lepkin.
Research findings that cast doubt on refu-
tation strategies are in “Using Information Pro-
cessing Theory to Design Marketing Strate-
gies,” Alice M. Tybout, Bobby J. Calder, and
Brian Sternthal, Journal of Marketing Research,
February 1981, pp. 73-79. The quote from the
Pop Rocks candy inventor was from Harold
Unger’s article, as was the McDonald’s corpo-
ration strategy of referring to “protein supple-
ments.N Pepsi’s open letter to customers was
in The Trenton Times on June 21, 1993, p. A9.