Does employee participation in social networking sites put companies at risk? A new study from Deloitte LLP says yes, there is considerable risk, and companies need to be more proactive in fostering awareness of social networking ethics.

Deloitte LLP’s 2009 Ethics & Workplace Survey (PDF available here.) found that 30% of employees and managers say that social networking is now a vital part of their business and operations strategy.  However, Deloitte also finds “there is great reputational risk” associated with social networking, as 74% of respondents believe it is “easy to damage a brand’s reputation via sites such as Facebook, Twitter, and YouTube.”

Forty-nine percent of employees say company policy wouldn’t change their online behavior. Twenty-seven percent don’t consider the ethical consequences of posting comments, photos, or videos online. More than one-third don’t consider what their boss, their colleagues, or their clients may think of postings.

And what should be done? “The easy answer is to establish policies and protocols,” Deloitte says. “However, the survey also finds that clearly defined company guidelines will not change how nearly half of respondents behave in cyberspace.”

Deloitte urges organizations to mitigate reputational risk in social networks by emphasizing “culture, values, and ethics within an organization.” Deloitte advises that discussion of the risks associated with Enterprise 2.0 be elevated to the highest levels of leadership within an organization.

Deloitte did not define how “culture, values, and ethics” should be emphasized to address social networking ethics issues, but it can be assumed this means more active involvement by senior management, addressing these concerns from the top on down.

Though far from the majority, there are companies trying to keep an eye on things, however.  According to the Deloitte survey, 27% say that their executive team “regularly discusses how we can best leverage social networks to our advantage while mitigating risks.” Another 22% say their companies have “formal policies that dictate how employees can use social networking tools.” Another 22% say their senior leadership team “addresses issues related to company-wide social networking.”

It doesn’t make sense to only accentuate the negative at a time when Enterprise 2.0 approaches offer so much potential for employee productivity and organizational advancement.  The Deloitte study does confirm that 56% of executive respondents agree that using social networking sites helps their employees achieve better work-life balance. Interestingly, though, only 31% of the employee respondents agree with this statement — pointing the perceptual gap that exists when it comes to Enterprise 2.0 approaches.