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Controlling rumors during mergers
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Controlling rumors during mergers



This article was written as an assignment for Com433 Corporate Communications Management at Nanyang Technological University by Williams Natilie Yvonne, Cathy Quach, Jacob Lindberg, and Aloysius ...

This article was written as an assignment for Com433 Corporate Communications Management at Nanyang Technological University by Williams Natilie Yvonne, Cathy Quach, Jacob Lindberg, and Aloysius Lai.



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    Controlling rumors during mergers Controlling rumors during mergers Document Transcript

    • CS4033 CORPORATE COMMUNICATIONS MANAGEMENT Managing Rumours Among Employees During Mergers & Acquisitions By: Aloysius Lai, Cathy Quach, Jacob Lindberg & Natilie Williams “ R Three aspects that characterize rumours: they suggest unverified information; they arise from collective concerns and reflect the interests of the rumour public”. umours are inevitable among the workplace, but are especially rampant during times of organisational change or turmoil. In an article titled “Reining in Rumors”, Nicholas DiFonzo, Prashant Bordia, and Ralph Rosnow (1994)– three key researchers in the field of rumor theory – review this notion in an organisational context. In their article, they define the nature of rumours and the processes by which they are formed: generation, evaluation, and dissemination. By conducting in-depth interviews with top management in nine companies in the United States and India, DiFonzo and his colleagues also proposed a series of theory-based guidelines to prevent or neutralize damaging rumours. The importance of understanding and controlling rumours are emphasized as they are an integral part of any organization. ” What are rumors and their value in an organization? First and foremost, DiFonzo (1994) defines three aspects that characterize rumours: they suggest unverified information; they arise from collective concerns and reflect the interests of the rumour public; and are intended primarily for belief when reliable information is unavailable (p. 50). These key characteristics distinguish rumours from news or other genres of information communication such as gossip. Another research article, also by DiFonzo and Bordia, extends their previous literature and further investigates the precise nature and content of rumours. This research study collected rumours from a large metropolitan hotel undergoing major internal change. DiFonzo and his team concluded that rumours “reflect the psychologi
    • CORPORATE COMMUNICATIONS MANAGEMENT CS4033 cal climate of an organisation” and therefore, are a consequence of stressful circumstances (p. 603). In times of organisational change, especially during a merger and acquisition, employees are very likely to feel anxious because of the uncertainty and loss of control associated with the change (p. 607). As a result, rumours are constructed as an attempt to regain control of circumstances or justify the anxiety faced by employees. Additionally, DiFonzo’s (1994) research articles provide a useful insight on the value of rumours within an organisation. While there are often negative associations pertaining to rumours, DiFonzo’s research encourages us to realize their importance: by understanding rumor content, we can in turn, better understand the general concerns of employees. Management-level staff is encouraged to listen attentively to the rumours circulating in an organisation or perhaps practice open communication to prevent rumours from the beginning. Nevertheless, employees are an integral part of their respective places of employment. As a company begins to expand, mergers and acquisitions are often considered and executed as a business decision that opens the door for growth or consolidation. Yet, too often employees are left in the dark regarding the specifics of these decisions, which allows space for rumours to become cultivated and begin growing out of control. Corporate Communication practitioners in Asia would greatly benefit from receiving factual tips on how to properly communicate internal changes and restructuring changes to their prized stakeholders, employees. According to the article, PERCEPTIONS OF THE GRAPEVINE: Its Value and Influence, rumours are “neither completely functional or dysfunctional” to their specific organisation. Rumours appease employees who longer for information and upset high-level staff that prefer more concrete flow of information (Newstrom et al., 1974). The empirical study in this article published by the Journal of Business Communication, sampled 341 managers representing 164 places of employments. Of those that participated in the study, 53% believed that rumours have a negative impact on the overall atmosphere during times of organisational change. Rumours will live within almost every organisation, yet managerial staff can combat this issue by making sure that their organisation utilizes a concrete and effective flow of communication to ensure factual information is readily available. Comparatively, a study documented by David M. Schweiger and Angelo S. Denisi tested theory of effective and ineffective communication models during organisation. During this study, two similar yet separate organizations going through similar restructuring and the effects of the amount of information received. Employees at one organisation were given regular information regarding restructuring, while the control group was barely given information. The study found that that rumours and anxiety flowed through both organizations, no matter if employees received information maximum or minimum amounts of communication (1991). Why do rumours occur? Rumours often fester when there are gaps in communication within the organisation. This is prevalent during turbulent times, particularly mergers and acquisitions. Such information gaps are common within organisations with vertically structured hierarchies (Erden, 2013). In the context of organisations, the perceived inequality between high ranking and low ranking employees is termed power distance. A study has suggested that power distance is positively correlated to organisational uncertainty, and consequently the amount of organisational grapevine (Erden, 2013). More layers of hierarchy in an organisation can increase the chain of command and hence greater information loss through the number of people between top management and the lowest ranking employees. In the event that an employee is unable to receive information about organisational change through formal communication, he or she has to resort to using the grapevine. Therefore, flatter organisational structures may be better suited to handling rumours. Who should deny a misleading rumour? Specifically, in times of significant organisational change, rumours are often present in the workplace which derive as symptoms of high anxiety and uncertainty among the employees, and can lead to insecurity and suspicion in the workplace. With this threat to the productivity of the organisation, it is a common practice to quash rumours is through denials from top management. “ By understanding rumor content, we can in turn, better understand the general concerns of employees. ” Similarly, when a misleading rumor is spread through the organisation, it is important to decide if you should deny the rumor or not as a manager. If yes, who should deny it? While it is logical to assume that denials from the upper echelons would be more effective due to their greater authority and credibility, high-ranking employees may not always be the best choice. In an empirical study conducted at the University of Queensland in Brisbane, Australia, it was found that denials made from all levels of management reduced anxiety and belief related to the rumor (Bordia, DiFonzo, 1998). However, it was not the highest-ranking source in the organisation that was the most effective one. Above all, the source of denial should instead match the scope of the rumor. The manager that is the most effective at denying rumours is the source that have direct responsibility over the people who are affected by it. This source is the most appropriate for reducing belief and anxiety, as well as establishing high credibility. (Bordia, DiFonzo, 1998). This means that the denier of the rumor depends on the situation. A rumor surrounding a specific department in a company should be denied by the Head of the Department and a rumor spreading through a specific workgroup should be denied by the leader of that particular workgroup. Another study, made at the University of MissouriColumbia, supports this by showing that official communication has the best impact
    • CS4033 CORPORATE COMMUNICATIONS MANAGEMENT Recommendations for communication practictitioners regarding reducing uncertainty among employees (Kramer, Dougherty, Pierce, 2004). The top-management is less effective for reducing anxiety and belief and is not deemed as equally credible, unless the rumor is concerning the company as a whole (Bordia, DiFonzo, 1998). Although some official sources might be good at reducing uncertainty and anxiety, they are not the sources that are valued the most. Employees value information coming from the media and from their co-workers as most important in the beginning of an acquisition. The media becomes less important when the stabilization phase of the acquisition starts. Peers, as well as official sources, then become increasingly important. Communication with peers creates sense of comfort during a time of turbulence for all the employees. (Kramer et al., 2004). This indicates that both the impersonal communication and mass-produced communication plays a central role during an acquisition or a merger when it comes to reducing the uncertainty and false rumours among employees. Communicating Effectively with Employees to Prevent Rumours As a result, the content of information that is the most effective for reducing uncertainty among employees is regarding current information. Communicating past events and information were not deemed as efficient. This is probably due to the fast changing conditions during a merger or acquisition. Employees are also mostly keen to know information about their work setting. They do not value information about financial issues or customer impact as much as the work setting information. The interest in financial information decrease significantly over time, when the initial phase of the acquisition or merger is over. (Kramer et al., 2004). Therefore, communication regarding the employees work setting should be prioritized to minimize uncertainty and preventing rumours from spreading. Rumours are bound to surface regardless of the extent of communication efforts. However, such communication efforts can reduce untruth and anxiety that might spread amongst employees in trying times, and reduce the amount of those that might fall prey to rumours (Kimmel & Audrain-Pontevia, 2010). This can be done by building the organisation’s credibility and establishing trust with the employees. In doing so, not only do employees feel a greater sense of security with the organisation, the credibility of damaging rumours seem much lower in comparison. A study by Kimmel and AudrainPontevia (2010) showed that keeping stakeholders abreast of changes in the company in a timely manner is effective in reducing stakeholders’ susceptibility to rumours. It was also suggested that “providing requested information” and “attempting to build trust” are key tactics to control spread of rumours. Subsequently, in order for rumours to be controlled effectively, organisations should first. if employees deem the information trustworthy and credible. During a merger or an acquisition, upper management should ensure that they follow through with any promises they make. Transparency during major corporate decisions should also be a top priority. Keeping employees informed would allow employees to feel appreciated and help relieve any anxiety that may arise at this point. Weekly newsletters, regular email updates, and employee information meetings are also great ways to keep employees regularly updated regarding changes that the company is facing. Therefore, since rumour denials are most effective when the source of the denial is at the same level as the scope of the rumour, it is important that the various hierarchies in the organisation host departmental meetings of their own. For instance, there should be separate meetings for executives, senior executives, managers and senior managers in a company. This will allow for each hierarchical level to possess constant answers for any questions that may arise from employees and assist in diminishing any confusion. However, in the event that there are multiple rumours spreading during a merger or acquisition, communication practitioners should set up a common platform for all employees to clear their doubts. While constant updates from the organisation can help to reduce uncertainty among employees, such updates only represent a one-way communication channel. A question- and-answer platform, which can take the form of a Facebook group or an online discussion board, can provide a symmetrical two-way communication channel for employees to provide feedback and confirm or disconfirm rumours. These platforms also increase the perceived transparency of the company, as questions posted on such platforms can be viewed by all employees and hence the organisation is pressured to respond. Overall, rumours will always have a place in the work place; some researchers even believe that a few rumours are healthy for any organization. Organisations are no stranger to mergers and acquisitions, yet there are many places of business that are willing to utilize means conducive to the size and environment of their specific business. Corporate communication practitioners in Asia would benefit greatly from learning the history of rumours and ways to avoid ineffective means of communication, especially during organizational changes. It is a necessity to make sure that employees feel informed and appreciated during the most crucial moments of internal changes.
    • References Bordia, P., Jones, E., Gallois, C., Callan, V. J., & Difonzo, N. (2006). Management Are Aliens!: Rumors and Stress During Organisational Change. Group & Organisation Management, 31(5), 601-621. doi:10.1177/105960106286880 Bordia, P., DiFonzo, N., & Travers, V. (1998). Denying Rumors of Organisational Change: A Higher Source is Not Always Better. [Article]. Communication Research Reports, 15(2): 188-197. Difonzo, N., Bordia, P., & Rosnow, R. L. (1994). Reining in Rumors. Organisational Dynamics, 23(1), 47-62. Erden, N. S. (2013). Power Distance Leads to Corporate Grapevine: The Mediating Role of Perceptions of Uncertainty. [Article]. Journal of Multidisciplinary Research (1947-2900), 5(1): 95103. Kimmel, A. J., & Audrain-Pontevia, A.-F. (2010). Analysis of commercial rumors from the perspective of marketing managers: Rumor prevalence, effects, and control tactics. [Article]. Journal of Marketing Communications, 16(4), 239-253. doi: 10.1080/13527260902884433 Kramer, M. W., Dougherty, D. S. and Pierce, T. A. (2004), Managing Uncertainty During a Corporate Acquisition. [Article]. Human Communication Research, 30: 71–101 Newstrom, J. W., Monczka, R. E., & Reif, W. E. (1974). PERCEPTIONS OF THE GRAPEVINE: Its Value and Influence. Journal Of Business Communication, 11(3), 12-20. Schweiger, D. M., & Denisi, A. S. (1991). COMMUNICATION WITH EMPLOYEES FOLLOWING A MERGER: A LONGITUDINAL FIELD EXPERIMENT. Academy Of Management Journal, 34(1), 110-135. doi:10.2307/256304 Images retrieved from: http://www.blogcdn.com/smallbusiness.aol. com/media/2010/05/mobile-tech-rumors430jve052010-1274412704.jpg http://mtdeafblind.ruralinstitute.umt.edu/ Images/communication%20strat..jpg http://www.mspmentor.net/wp-content/uploads/2012/12/mergers_acquisitions.jpeg http://woman.thenest.com/DMResize/photos.demandstudios.com/ getty/article/44/115/stk163343rke. jpg?w=600&h=600&keep_ratio=1 http://www.advancedfamilydental.com/blog/ wp-content/uploads/2013/05/thumbs-up.jpg