The problem that you have explained has two dimensions. First dimension is that of levels of efficiency and output. The employee in question is taking thrice the normal or standard time to complete the tasks assigned to her. In this way not only she is not delivering and also causing delay in work of others. The second dimension of the problem is spreading of rumors. These two problems need to be handled independently.
First, taking up the problem of low output, it is best dealt by properly motivating the employee. This can be done by various means such as monitoring and measuring performance clearly and correctly. This information can then be fed back to her for self motivation, in addition it can also be used for performance evaluation and decisions on remunerations. These motivation efforts may be supplemented by counselling. If an employee still does not improve, appropriate disciplinary action may be essential. If nothing works, transfer or dismissal may be the only options available.
The best way for handling the problem of spreading rumor is to be open with the employee in the first place. If senior management of company takes its employees in confidence and keeps them informed of all important matters, specially the ones affecting them personally, the chances of rumors spreading or harming the interests of the company are minimum when employees have confidence in their senior management they do not pay attention to irresponsible individuals spreading baseless rumors. However, if a situation arises where the some rumor has gained momentum in the company, and is likely to have adverse effect on the company, it is best to clarify the company view to the employees as early as possible. An approach like this will take the edge out of any rumors among the employee. In addition this approach can also be used to garner the support of employees to counter harmful rumors among general public.
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