FROM its headquarters in California’s Silicon Valley to its offices across the world, Cisco Systems revels in the communications revolution that is being fired by Web 2.0 technology, which aims to facilitate creativity, collaboration, and sharing between web users.

As well as encouraging its 65,000 employees to use social-networking sites such as Facebook and MySpace, Cisco operates its own social network – the Idea Zone or I-Zone for short – that allows even the lowliest employee to invite other employees to respond to an idea.

“It’s pulling innovation up from the roots of an organisation rather than expecting it to come down from above,” said Phil Smith, vice-president of technology and marketing, Cisco Europe. “The new Web 2.0 technologies are suited more to collaborative environments than to organisations that operate com-mand-and-control management.”

Cisco may be relaxed with Web 2.0 and networking – it also runs its own version of YouTube and Wikipedia – but many other organisations are unsettled by it. A study by the British internet-security firm Clearswift recently revealed that two-thirds of British companies have banned employees from using social-networking sites.

They have two concerns. The first is security. They don’t want to run the risk that sensitive company information will be leaked onto the net, or they fear that bad publicity on the web could damage the brand. The second concern is productivity. Half of the HR professionals surveyed by Clearswift said they had disciplined employees for time wasting on the internet.

The new networking technology is moving so quickly that the Chartered Institute of Personnel and Development (CIPD) has yet to come up with guidance for members – research has just been commissioned. But Debo-rah Fernon, a CIPD adviser, warns that companies that turn their backs on social networking could end up throwing out the baby with the bath water.

“Often a blanket ban is a knee-jerk reaction,” she said. “We need clear policies about use but I think there are great opportunities for business in social-net-working sites. In HR we have to think how we can harness it.”

The trouble is that HR people know little about the new technology. The Clearswift research found that one in five HR decision-makers was unfamiliar with the new networking technologies. Despite the popularity of the networking sites – particularly with younger employees – two-thirds of HR professionals do not use them. In short, many in HR are setting the rules of a game they don’t understand.

The CIPD restricts its employees’ access to social-networking sites to lunchtime. Fernon said firms with a blanket ban might be left behind by competitors. And she is concerned about the effect on employee engagement. “What kind of message does a blanket ban send out to staff?”

Cisco’s Smith agrees. “It’s a trust issue, not a technology issue,” he said, adding that it also suggests that managers are not managing properly. “Quite frankly, we keep our people busy enough for this not to present problems,” he said.

But whatever evangelists like Smith say, others argue that companies have every right to be wary that social networking will hurt productivity. Plenty of studies have shown that a mountain of time is being wasted by employees chatting, shopping and blogging online. A survey by America Online and Salary. com in 2005 concluded that employees thus engaged were frittering away $760 billion a year of their employers’ money.

That companies are struggling with the issue is clear. Last year, the City law firm Allen & Overy banned its staff from using Facebook – only to be forced into an embarrassing u-turn after an avalanche of employee complaints.

The company had to e-mail the entire staff acknowledging the strong reaction and conceding that Facebook was used by many employees for business as well as social networking. The Allen & Overy network on Facebook had 700 members.

But when the website Legal-week.com ran the story, the response from readers was mixed. Some sneered at what they regarded as craven capitulation by management. Others even confessed that they wanted a ban on Facebook in their work-place because they had become addicted to it.

Others make the point that bans on bringing one’s personal life into work time are a bit rich when companies now harness the internet to such effect that employees can never entirely escape from work.

Not everyone sees the line between business and social matters as distinct. In fact, the line was blurred long before the internet came along. How many business people have chugged for years around the golf course, hating it but knowing that 18 holes is good for business?

Companies like Cisco believe there can be wider business benefits in the links employees form on social-networking sites.

“It’s a natural human instinct to collaborate,” said Smith. “And Web 2.0 technology can be used to create huge collaborative communities. We already have companies like Procter & Gamble going beyond their own research staff and using the InnoCentive network that links 100,000 scientists across the world to come up with new products.”

Procter & Gamble used this network when it was trying to find a cost-effective way of printing trivia questions on crisps – to boost sales.

By tapping into this global resource, the company found a professor in Italy who had devised an ink-jet method for printing edible dye onto biscuits – and the method was adapted to crisps.

It may seem a million miles away from gossiping on Facebook – but for Smith and others, it’s all part of the networking phenomenon that they believe is transforming the business world.

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