Most companies will find themselves the subject of a potentially damaging rumour at some point. The challenge for management is deciding how best to respond. Do you ignore it and hope it simply goes away or respond and risk a ‘no smoke without fire’ reaction?
It’s easy to understand the appeal of the first option. It requires no further thinking or action. But before deciding what to do, you need to establish if there’s any truth in the rumour, who might be driving it and what their motives are.
If the rumour is true but exaggerated, can you correct or at least significantly improve the situation quickly? By quickly, I mean in a couple of hours at most. If you can, then do it before you start communicating. It might be appropriate to make direct contact with the source and hear what they have to say. Detractors can often be turned around.
By doing these things, you can begin communicating armed with the full picture and on the front foot. Acknowledge the criticism or claim, point out why it’s overblown and say what you’ve done to improve matters.
In most cases, that will be the end of the matter. Speed of action is critical here to prevent things blowing up. Next, you can do what’s necessary to prevent a repeat situation at a more leisurely pace.
If the rumour is false you can offer a short rebuttal, emphasising the falsehoods in the source’s claims. You should include demonstrable facts to support your case. Always remember that rebuttals have higher credibility if they include input from trusted, third-party sources. This is the perfect time to extract some of that relationship capital your company has spent years building up.
What if the rumour is malicious, and the source a competitor? In this situation, management usually turn to the company lawyer. A ‘cease and desist’ letter, or similar legal move, might be their recommended solution. This will often be enough to stop the rumour-mongering.
Of course, this won’t work if you don’t know who’s behind the rumour. In such circumstances, you need a different, perhaps more creative solution. It’s impossible to give precise advice because each situation will have unique characteristics. But here’s an example from my work in professional services. Let’s call the firm in question Smith & Partners.
Smith & Partners has a recognised brand name and is well-respected. It is part of a larger group that got into financial trouble under previous management. It has quite a lot of newer competitors who would love to see it fail.
Management are negotiating a private equity-backed MBO from the parent group. Meanwhile, the CEO hears from a supplier that a damaging rumour is circulating that her firm is heading for insolvency.
Competitors are the likely source of this rumour. What does the CEO do? First, she talks to the PE firm. This firm is underwriting the MBO and believes Smith & Partners has a viable future. Enlisting the help of the senior partner handling her deal gives Smith & Partners a vital and highly credible, ‘third-party source’ for a rebuttal statement.
Our CEO emails this statement to Smith & Partners’ most important stakeholders. She also briefs a couple of trade media editors and posts the rebuttal on the company website and social media channels.
Then Smith & Partners does something entirely inconsistent with a company on the verge of insolvency. It announces a reduction in payment terms for suppliers from 90 to 60 days with immediate effect.
This does two things: one, it takes any remaining credibility out of the rumour. How could a company in financial trouble possibly make a move like that?; and two, it wrong-foots the competition, who are now left at a commercial disadvantage or forced to follow suit with similar payment terms – perhaps terms they aren’t so well-positioned to offer.
Of course, there is always a risk in rebutting rumours by recounting them. The most common one is that some people will remember the false rumour as true. There’s also the so-called Streisand effect, named after the celebrity’s disastrous attempt to suppress photographs, which only drew even more attention to them.
But inaction creates a greater risk. The speed and reach of social media now means rumours are more likely to take hold and spread fast. People will associate silence with an acknowledgement of truth. It’s almost always better to take pre-emptive action and speak out.