Originally Published by Global Knowledge Network, Inc. (February 2003)

Workplace Rumors Fuel Employee Uncertainty/Doomsday Forecasts Shatter Morale, Trust

Ralph Bohannon caught wind of the rumors two years ago.

Some said Atmel Corp. doesn't have enough cash to survive.

The company will close its Colorado Springs plant.

Bankruptcy looms.

Bohannon, an Atmel executive, discussed the rumors with employees several times.

But the rumors persist, even now, 24 months later.

"I quite frankly grow tired of them," said Bohannon, vice president of worldwide manufacturing at Atmel, which has a 1,900- employee plant in the Springs to make computer chips.

"It's bad enough with all the negative things occurring in our economy and in our industry. There's not a lot of room for dealing with rumors that have no merit."

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In an economy rife with cutbacks and layoffs, rumors have become rampant.

Employees turn routine developments into doomsday forecasts. Sometimes, rumors offer some level of truth, but the mill spins them into something far beyond what eventually happens.

Rumors offer challenges and setbacks for workers and employers - battering morale, lowering productivity, harming relationships with customers and creating mistrust.

"It was horrible," said Mary Schreiber, a former WorldCom Inc. worker, about the month leading up to layoffs in June.

"Nobody had any motivation to do anything," she said. "Many people thought WorldCom was going to lay off all of us and that there would be nobody left. It became hard to come to work."

In this unsettling business world, executives are learning the art of rumor damage control, and workers are confronting their own fears of uncertainty.

Few are doing it very well.

The rumor mill

The deluge of corporate rumors tends to be negative these days.

The economic landscape is littered with corporate scandals, a struggling stock market, a severe technology downturn and layoffs - more than 8,500 in Colorado Springs since January 2001

Employees are worried, hungry for morsels about the company's health.

"Given the economy right now, it's easy for rumors to get started," said Dennis Hoppe, owner of New York-based Change Management Implementation, Inc., a consulting firm. "People assume the worst, and in many cases their fears are validated."

Any number of developments can start rumors. Employees see a conversation between managers or notice more closed-door meetings.

Sometimes, workers assume things based on economic or business conditions.

At USAA Insurance, rumors flew after the company put up a real estate sign for part of its Briargate property.

The predictions began almost immediately: USAA is going to close its 1,170-employee local call center.

To fuel that argument, employees pointed to growth at USAA's Phoenix operation.

But USAA has no plans to move its local operation, spokesman John Henry said. The company bought more land than it needed in the early 1990s because it got a good deal, he said, then decided it won't need the land for expansion.

"Some people just misinterpreted some things," Henry said.

Kernels of truth

Many times, rumors are based on a grain of truth.

Take Intel Corp., which employs 850 people in Colorado Springs. Intel has struggled for three years during the worst downturn in the computer industry's history.

Last summer, the California-based firm announced 4,000 job cuts worldwide but didn't break down where the layoffs would occur.

Employees assumed the worst.

Rumors were rife the company was cutting more than 500 jobs here and closing the plant.

When the tally was complete, Intel said it cut 200 jobs. Company managers insist its operations here are staying put.

"I hear all the time that Intel is closing its plant, but it's just not true," said Judy Cara, Intel's community and public relations director in Colorado.

At WorldCom, which employs 2,700 at a local software plant and call center, rumors have percolated wildly since the company filed bankruptcy in July.

The most prevalent one is WorldCom will close its software building here.

Company officials say the firm intends to keep a "significant presence" in Colorado Springs, but otherwise they won't comment on "rumors and speculation."

Earlier rumors about layoffs at WorldCom have more or less been true. The company has cut roughly 1,300 workers in two years, including 500 layoffs in December.

"All the sudden, a rumor starts going around, and everyone starts worrying," said Schreiber, who was laid off in June. "The sad thing is, usually they were true."

Experts say lack of communication sparks most rumors.

"In the absence of information, people make up their own versions of reality," said Laura Benjamin, a national management speaker based here. "They draw conclusions and make assumptions based on the tangible evidence they see. No one's told them anything different."

Ripple effects

Whether true or not, rumors negatively affect companies, their employees and their clients.

Productivity may drop as employees spend more time jawboning around the water cooler. Many may lose interest in their jobs and, if rumors are not addressed, morale may drop.

As workers lose faith, some look for new jobs.

"After a few instances where management is telling you one thing, and then the other thing actually happens, you start to lose faith," said Mike, who asked his last name not be used and who quit WorldCom before the June layoffs because he was dissatisfied with the work environment and poor communication.

Mike - who recently received his real estate license and runs a hot dog stand - said rumors became common, and workers were left in the dark.

Employees would talk about who's going to get laid off, when it will happen, what severance pay will be, which facilities will close. "People were spending more time talking about rumors and chasing them down than working," he said.

Companies also may see managers' productivity drop because they spend more time dealing with employees, investors and clients.

Rumors also hit the bottom line.

Employees may spread rumors outside the workplace, even to company clients.

A vendor then may limit a company's credit line, or customers may think twice about doing business with the firm.

Combating rumors

Companies handle rumors in different ways, depending on the rumor, how far it spread and whether it's true.

Atmel, for instance, addresses only rumors it deems most important or most prevalent, such as the one about closing the local plant.

Still, deciding which rumors to address can be tough. Sometimes, the company doesn't know what's going to happen, and bad news may loom over the horizon.

"You can't suggest to people to just don't worry, be happy," Bohannon said. "It also doesn't do any good to stir up commotion. If you get people together every time there's a rumor, who is it that's actually on the yo-yo string?"

If the rumor takes on mythic proportions, managers may meet with workers to assuage fears or answer questions.

USAA Insurance offers workers several ways to ask questions, express concerns and share advice. They can send anonymous questions to top management. The company holds town hall meetings. Managers address rumors in division meetings.

After rumors circulated when the real estate sign went up, USAA handed out schematics that showed company plans.

Experts say the best way to handle rumors is to communicate as much information as possible, even if the rumor is true.

Top managers can't eradicate damaging rumors, but they can reduce them if they encourage employees to ask questions and communicate openly. Workers shouldn't fear losing their jobs if they do.

"People can handle bad news if they're just told, 'Look this is the way it is,'" said Joyce Reynolds, a business coach from Fort Lauderdale who helps businesses deal with damaging gossip.

"People point-blank want to know where they stand. Rumors abound when the facts are not available. People then are free to make assumptions."

Employees should also be cautious about believing and spreading rumors, she said. "My number one rule is don't scare yourself. If you buy into a rumor, and not look into it, you're scaring yourself needlessly."

Sometimes, though, all the communication in the world can't snuff a rumor.

Mike Schrader, executive director of Memorial Hospital, told employees many times they wouldn't get bonuses this year and he wouldn't get one either.

The news was recorded on the employee hot line, sent out in an e- mail and delivered to about 150 managers, who were told to share the information with their departments.

Still, the rumors persisted. Some employees remained convinced Schrader and other top managers got some extra cash.

"Communicating to 3,600 people is a constant challenge," Schrader said after sharing his and other managers' paycheck amounts for the past year with reporters.

"You just can't do enough of it."

- Cary Leider Vogrin contributed to this report

Dennis Hoppe is President of Change Management Implementation, Inc. in Brockport, NY. He has been a small business advisor to owners of hundreds of companies since 1989. Visit his web sites at www.dhoppe.com and www.hmcexecutivecoaching.com, or call him at 800-724-3525.