Company execs who think their worst nightmare is a rumor among stockholders may need a wake-up call.
Just-released research by the Institute for Public Relations on the incidence and impact of corporate rumors shows that by far the greatest grist for the rumor mill is gossip about corporate products and corporate reputation. In fact, corporate reputation takes the biggest hit, since rumors about products usually hurt corporate image as well.
The IPR findings, among the first to track the nature, effect and response strategies to the rumor-mill, are based on data reported by attendees at the 1997 gathering of the Arthur W. Page Society. Respondents were all execs serving top-level global corporations.
The study looked at both internal company rumors and those that blossom in the public marketplace.
The Result of the Blows
Rumors, no matter what their source, were most likely to result in decreased morale, bad press and a loss of trust between the corporation and its employees and customers, the study indicates. The least likely effects were strikes or sabotage.
Most of those surveyed said the worst outcome of any rumor was a loss of customer trust and a marred corporate image. The Internet contributes greatly to the quick spread of rumors and to their intransigence, they said.
In fact, one does not need the IPR study to realize that well-known examples of companies trying to dig out of image blunders abound.
Clothing designer Tommy Hilfiger [TLM] found his company in the stockade last March when erroneous news surfaced claiming that Hilfiger made racist remarks during an "Oprah Winfrey" appearance. He, however, had never even appeared on the show.
The company devoted nearly a week and an undisclosed amount of money to hire a consultant to track down Web sites where the rumor was posted and wipe it out from publication. Hilfiger gave the consultant carte blanche to contact Web masters so the corporation could set the record straight online by posting a prepared response, according to Catherine Fisher, senior VP of global communications for Tommy Hilfiger.
The rumor has since lost momentum.
Nonetheless, Fisher concedes the rumor could rear its ugly head again. "I don't think anything on the Internet is ever really gone," she says. "It would be naive to think it's ever completely over."
Rumors Never More
Hilfiger is hardly alone. Respondents to the IPR study said they deal with new rumors every week. And the information age has provided more than enough proof of how stories get legs.
Two years ago, TWA [TWA], while in the midst of rebounding from the crash of Flight 800, had to respond to tenacious allegations that a missile had downed the plane.
Nike [NKE] continues to refute the rumor that it sends new sneakers to people who send the company old sneakers as part of its recycling program for non-concrete playgrounds. The company's been shipped thousands of pairs of sneakers since the story surfaced in February.
One company, however, has turned the table and is combatting a pre-Internet rumor by using a Web site to set the record straight.
After years of rumors that claimed Procter & Gamble's [P&G] moon and stars trademark was a satanic symbol, the monolith resorted to placing at its Web site, http//www.pg.com, a statement asserting the rumor is false, as well as letters from religious leaders calling for a halt to the rumors. The Web destination also mentions the more than a dozen lawsuits it has levied - and won - about the false claims.
And IPR Reminds...
Not everyone has the time or resources to go the litigious route. So, the IPR study offers some solutions when you need to debunk misinformation or address embarrassing truths.
Some common strategies also have arisen to prevent rumors from ever starting, although not enough corporation have a proactive plan. Companies are most vulnerable to rumors when they are facing a change like downsizing, mergers or restructuring. Among the most popular antidotes are: outlining the value which will be used to spur an impending corporate change; explaining procedures as they apply to upcoming corrections; and setting a timeline for official messages.
The IPR study was directed by Nicholas DiFonzo of the Rochester Institute of Technology's Department of Psychology and Prashant Bordia of the University of Queensland's Department of Psychology. IPR is an independent foundation based in Gainesville, Fla. The study is $20. Call 352/392-0280.
MDealing with Rumors
(Other Than Sticking Your Head In the Sand)
- Refute a rumor with the appropriate person: a company-wide rumor should be knocked down by a top-level officer;
- Refute erroneous information through the help of a trusted third-party source: i.e., if your company is accused of giving money to the Church of Satan, seek clarification by a trusted religious organization;
- Establish a rumor hotline;
- Refute the myth with a clear, concise and memorable statement; and
- Reveal the truth.