A new report by thinktank Demos has concluded that staff should be encouraged to use social networking sites as part of their daily activities.

The report highlights key areas where social networking can be a boon rather than a burden.

First, allowing staff to interact with each other in social networks encourages company cohesion and employee retention. Secondly, encouraging networking outside the company bolsters business operations and avoids concentrating all outside contact in the hands of a few individuals, which could hurt the company if they leave.

“The answer is not to close down staff access to social network platforms, nor is it investing blindly in collaborative platforms,” the report finds.

“Rather, we argue that we need to understand how, once we accept the implications of social networks, we can manage the new challenges and trade-offs. Understanding and closing these fault-lines is now critical to business success.”

The report goes on that businesses may be tempted to shut down access to social networks in an effort to save time that employees spend on them, but that the savings are outweighed by the benefits.

Additional benefits include staying in contact with workers who have left the firm and are likely to be working in related industries.

Mark Turrell, chief executive of Imaginatik, a firm that participated in the Demos research, said, “There is a real question of how you get the best, most bright people to work for you.

“We have a range of incredibly bright people here who benefit from having the space to explore their ideas and develop them into business opportunities. In this situation, having a networked environment is really important to keep people together and maintaining the coherency of the organisation.”

There are downsides, however. Staff will have to be educated in safe networking, particularly in light of the growing amount of malware that attacks social networking systems.

“Networking has always been a fundamental part of good business practice,” said Robert Ainger, head of corporate at Orange Business UK.

“Its profile and significance is increasing now because of the proliferation of new technologies that enable us to connect to each other in our personal and professional lives. But it is also good for companies to be aware of the tensions and look at deploying practical guidelines and technologies that will protect the positive impact of networks, not hamper it. Changing how your business approaches and facilitates social networking could present a significant opportunity in the current business climate,” he said.