It's probably one of the most frequent workplace violations there is, and different employers have different tolerance levels - do you mind news browsing on breaks, quick faxes to a child's doctor's office, or personal emails coming through the work account? Decide at the start what the limit is, and enforce it.
There are plenty of reasons to limit use - it causes premature wear and broken equipment, massive loss of productivity, and often, uses company supplies (such as paper and ink for printing) as well. The biggest problem most consistently observed is that of morale, when lenient supervisors step in to curb runaway behavior or a restricted staffer witnesses another getting away with it.
Avoid this by stating policies upon hire, and carefully monitoring. Inevitably, these policies will sometimes be violated and a wise employer will use some discretion, but excessive personal use should be curbed quickly, quietly, and uniformly with all staff.
These policies will also be highly customized - an employee handling highly confidential information should not be permitted to play games with other players on an open network - that could be grounds for immediate dismissal. A staffer using a company car and checking email while driving puts your company - and the public - at massive risk. Consider the following absolutes:
- All computer passwords must be available at all times
- Unauthorized or pirated files may not be added to company machines
- Files brought from home may not be added to machines
- The company may open, search, and monitor computers and email used by all staff at any time and for any reason
- Business information may not leave the office without authorization
Consider curbing cell usage as well - keep phones off the desk and only answer or respond in the event of an emergency. Excessive abuse of the policies should be dealt with quickly and quietly so that it doesn't continue.
Leniency with electronic usage has detrimental effects on productivity and frequently exposes a company to liability. Consider strict policies with some common sense leniency, but deal with abuse fairly and quickly.