As the 2013 NCAA Men’s Basketball Tournament enters its second weekend of competition, many employers are asking themselves: What kind of impact does March Madness have on employee productivity? While most employers assume, and many experts agree, that March Madness is a productivity drain, an equal amount of experts say that March Madness can boost employee morale and contribute to productivity.

According to a survey by outplacement firm Challenger, Gray & Christmas, employees spend an average of one to three hours a day watching the basketball tournament during March Madness and checking scores, instead of working. CEO John Challenger estimates the goofing off costs employers $134 million in "lost" work during the first two days of the tournament. “People will be organizing office pools, researching teams and planning viewing parties,” he says. “When the games begin, many companies will probably notice a significant drop in Internet speeds, as employees start streaming games and clogging up the network’s bandwidth.” According to a survey conducted by MSN and Impulse Research, 86% of all American workers will devote at least some time during their working hours to the games, and 16% of workers expect to spend five hours or more following the tournament.

However, while March Madness may waste millions of employee hours (and millions of dollars), another survey conducted by OfficeTeam indicates that this isn’t necessarily a bad thing. “When enjoyed in moderation, there are potential benefits to March Madness activities at work,” says Robert Hosking, executive director of OfficeTeam, a staffing service specializing in the placement of highly skilled administrative professionals. “They can be a morale-booster and bring out team spirit in the office. It provides an opportunity for employees to bond as they talk about scores and root for their favorite schools.”

OfficeTeam asked more than 1,000 managers whether March Madness festivities in the office, such as watching game highlights or engaging in friendly competitions, affect morale and productivity. One in five (20%) felt activities tied to the college basketball playoffs boost employee morale at least somewhat, compared to only 4% of respondents who viewed them negatively. The majority (75%), however, said the Big Dance has no impact — positive or negative — on morale or productivity.

“[These festivities] may actually keep workers on track by providing them with much-needed breaks,” Hosking says. “Most companies realize that employees who participate in March Madness activities will still likely get their assignments completed — they’ll just compensate for time spent on non-work tasks by shifting their hours or staying late.”

He says it’s often smarter for managers to acknowledge the appeal of events like March Madness and provide opportunities for their staff to enjoy the festivities, rather than ignore them. Why? “Employees need a chance to bond with co-workers over shared interests,” he says.OfficeTeam offered five tips to help companies celebrate March Madness while keeping employees’ heads in the game. Here’s what they suggest:

  1. Grant time-outs. Allowing employees to take quick breaks to check scores or chat with coworkers about the tournament can help them recharge. An informal lunch or dinner at a restaurant to watch a big game also can build camaraderie.
  2. Foster friendly competition. Let staff wear their favorite teams’ apparel or decorate their workspaces, within reason, to get in the spirit. Consider organizing an office competition where individuals can win bragging rights or small items such as company-awarded gift certificates without the exchange of money.
  3. Go over the rules. Clearly communicate policies regarding employee breaks and Internet use so professionals know what’s acceptable when it comes to March Madness and other non-work activities.
  4. Take the lead. Set a good example by showing how to participate in tournament festivities without getting sidelined from responsibilities. If you complete assignments before talking hoops, employees will likely follow suit.
  5. Evaluate your bench. If team members want to take time off to watch the playoffs, ask them to submit requests as far in advance as possible. This will help you manage workloads and determine if interim assistance is needed to keep projects on track.