Chief People Officer Kevin Kennemer delivers a thoughtful, multifaceted post about the rumor mill at work.
Rumor mongering can undercut attempts to build a great organization:
If you are a business leader working to create a great workplace built on trust and respect, the typical company grapevine and rumor mill can work against your best efforts.
However, the rumor mill can also be a natural product of inadequate communication from organizational leadership:
In companies where there is little communication coming down from the top, grapevine traffic will increase to counterbalance the information void.
The rumor mill can be a source of hurtful gossip — indeed, a lot skilled workplace bullies are experts at leveraging it — and ultimately we each bear personal responsibility as to whether to participate:
When someone volunteers a juicy piece of information while you make your morning or afternoon run to the break room, do you choose to participate, even if the information could be hurtful or degrading to a fellow employee?
Kennemer’s full post: http://thepeoplegroupllc.com/2009/12/the-rumor-mill-at-work/
Minding the Workplace 
David, thank you for publicizing this post on The Rumor Mill at Work. You made a very insightful comment when you stated, “The rumor mill can be a source of hurtful gossip – indeed, a lot of skilled workplace bullies are experts at leveraging it.” I have observed workplace bullies engineer some hurtful and toxic vibes through the grapevine. Thanks again!
Kevin Kennemer
The People Group