Watch Your Mouth.

It's said that a duck's quack doesn't echo; no one knows why. But quack something about someone you work with, and you may as well have fired the shot heard 'round the world.

It's human nature to talk about others. It can be informative. It builds intimacy. It lets off steam. It may make us feel superior - or acutely uncomfortable. One CFO, for example, says he's heard a CEO, over a drink or dinner, put down his subordinates. "You can cut that kind of talk off when it comes from below," he notes ruefully, but not when your boss is doing it, he found.

And talking about others can create a ton of trouble, because one person's chit-chat is another person's slander. That's why "relationships work better when people don't talk about other people," according to Elizabeth Danziger, president of Worktalk Communications Consulting in Venice, Calif. But is there a difference between what's said in a restaurant or over the water cooler and what's said in a meeting - especially one in the executive suite?

"Is That Fred's Only Shirt?"

"There's formal and informal conversation," says Andy Geller, a New Jersey-based partner at PricewaterhouseCoopers. "There are things that are clear and things that are judgment calls. There are things that are job-related and things that are not." So, during a meeting, for example, he thinks it's fine to discuss whether Sue is innovative enough or whether Ian has sufficient global experience. "It identifies talent within the organization, and pinpoints where there are strengths, weaknesses and gaps," he says. He even thinks a discussion of something as personal as clothing sometimes is relevant. If Bob in accounting has a small wardrobe that isn't of Brooks Brothers caliber, for instance, "that's not the CEO's business," he explains. But if Bob has extensive client or customer contact and is slovenly, "That's a business-related issue," Geller says. "It affects how people perceive the company."

If someone's promotion is the topic on the conference table, "There's a fine line between what's appropriate and what's not," says Elizabeth Wolfe Morrison, associate professor of management and organizational behavior at New York University's Leonard N. Stern School of Business. Pertinent subjects, she thinks, include "character, attitude and what you can glean from the person's behavior about his commitment. There has to be some rationale that clearly states why the information is germane. Is the rationale something you feel is important to alert people to that might lead to a bad decision down the line?" Often, though, she suspects a less noble motivation: Harry doesn't want Sally to get the job, so he raises "dirt." That's when "you have to ask what the real agenda is," Morrison notes.

Some CEOs like to toss staff names on a whiteboard for dissection by senior management. But, cautions Peter Giuliano, founder and CEO of Executive Communications Group in Englewood, N.J., "That's a dangerous, if not downright negative, way to improve performance. In the hands of a brilliant facilitator, it can celebrate somebody and help develop strengths. But you have to wonder, 'When is my name going to be there?' It can't be unlike the French Revolution or the McCarthy era. You'll start to do things and make decisions based on what happens when your name is up there." Thus, Giuliano advises, "Whether you're talking about developing a leader or aligning an organization, begin by talking about what's right: What is it we like and admire about this person? What are his key strengths? What can we tell her to help her do something better?"

"If you bring up information that's public knowledge, that's appropriate," adds Gini Graham Scott, an Oakland, Calif.-based sociologist and author of Work with Me - Resolving Everyday Conflict in Your Organization (to be published in January). "But you shouldn't reveal things said in confidence. And if what's said is negative, it should be relevant. If you get the reputation of telling tales out of school, you're going to get cut out of the loop. But evaluating the information is like a judge deciding on a case; it's situational. Something flagrant that could embarrass the company - something from which there could be negative fallout - is significant. If someone on a team hasn't fulfilled his responsibilities or made a mistake that caused damage, that's work-related. It's something other people know about and affects the group's ability to function. But if somebody is seen in a bar with someone else, that's detrimental gossip." Other off-limits subjects, she adds, include "weight, if somebody's looking old or if so-and-so has a problem with his son." Why? "They're off the job and don't affect performance."

Sticks and Stones

Sometimes the personal becomes the professional. "An executive divorce can be enormously costly to an entire organization," Danziger explains. "A sexual harassment suit can be damaging in terms of money and the company's good name. Drug use is another example. So there has to be a clear connection between private behavior and behavior that puts everyone at risk."

Still, if things said in a meeting about a third party make you uncomfortable, it's appropriate to say so. "Integrity is important," Geller thinks.

And if sensitive issues have been broached behind closed doors, Danziger adds, it's fair to say at the end of the meeting, "I'm sure we all understand this, but let's remember everything said in this room is confidential."

The issue really boils down to the old Golden Rule. "Use common sense," Scott explains. "Imagine what somebody might say about you. People can track back sources. If the people on top set a bad model for the troops, employees leave because they think it's a hostile environment. And there can be lawsuits."

"It's a challenge and a paradox," Danziger adds. "Sometimes the best information comes through the grapevine. You just have to manage grapevine issues in a responsible way."

Rumor Control

Elizabeth Danziger, president of Worktalk Communications Consulting in Venice, Calif., says, "Gossip is so much a part of most organizations that most people don't think about it - until they get bitten." She therefore offers these suggestions to help CFOs manage the rumor mill.

Treat all information skeptically. "Take gossip with a grain of salt. You might have to listen if a person is just overwhelmed emotionally and needs to vent and to talk. But you have to say to yourself, 'I have no idea whether any of this is true."'

Verify all information with the people directly involved before you take any action. "If, for example, a CFO gets wind of the rumor of an office affair, he or she should dismiss it as much as possible. But if the rumors persist and affect the morale or productivity of the whole group, the CFO should call the person involved privately into his office and say, 'Please set me straight here.' Sometimes it's all lies. Then the executive can say [to the group], 'We discourage people from gossiping.' And that's what builds loyalty in an organization."

Don't appear to be too interested. Pay attention to the grapevine but stay aloof. "It can be an early-warning system for other issues that are coming up. And people confide in you when they know you don't gossip. You get a lot more information when they know you're not a sieve."

Talk about ideas and stay above the fray. "Talk about events and things. It's the bottom of the barrel to talk about other people."