Workplace gossip isn't always malicious. It's often fueled by simple curiosity on the part of employees who are concerned about rumored changes at the company or about allegations regarding their colleagues. Whatever the motive, it can slowly seep throughout a company, damaging reputations, creating conflict and possibly leading to legal action brought by those who feel they've been wronged by workplace chatter.
Hurts Reputations
It doesn't matter if the rumors about someone are true, once they're expressed they forever alter how other employees see that person. She may be excluded from projects or treated unfairly or rudely by colleagues who believe the gossip that she is dishonest or disloyal, for example. If the gossip spreads to people outside the company, such as clients or other people in the industry, she may be unable to work with customers, do business with people from other companies or get another job.
Damages Credibility
An employee who gossips potentially suffers as much as the subjects of her gossip. Her credibility will gradually erode in the eyes of her colleagues, and she'll gain a reputation as someone who can't be trusted. In the "Forbes" article "The Fastest Way to Kill Corporate Culture," leadership adviser Mike Myatt describes workplace gossip as "the tool of insecure, rank amateurs." The gossiper's colleagues, especially if they hold senior positions or have more experience, may perceive her as someone inexperienced and unprofessional and may no longer take her seriously.
Destroys Morale
Gossip not only destroys the relationships between the employees doing the gossiping and those being gossiped about, it can also shatter trust and create conflict throughout the team. In a workplace where gossip is pervasive, employees may not trust anyone and may feel uncomfortable working closely with colleagues for fear they'll learn something about them and use it to spread rumors. This creates a corporate culture characterized by an "everyone for herself" atmosphere rather than one in which employees freely share ideas and work together for the good of the company.
Inhibits Productivity
Workplace gossip distracts employees from their job duties, leading to a corporate culture in which employees spend more time huddled around the water cooler than they do closing deals. Eventually, the quality of the products or services the company offers may deteriorate because employees aren't devoting their energies to maintaining and improving the company brand. As productivity plummets, it will be more difficult for the company to stay competitive.The company may miss opportunities to land new clients, develop new products or expand into new markets simply because employees weren't paying attention to these possibilities.
Could Lead to Legal Action
Employees who feel their careers and reputations have been damaged by workplace gossip might sue the company and their colleagues for defamation, harassment or other offenses. They can use the workplace gossip to support their claims, especially if they can find co-workers who will testify about what was said or if they can acquire emails or other correspondence documenting the rumors.