Brooke Pfautz realizes that sales at his Hunt Valley, Md., mortgage banking company could plunge during the NCAA basketball tournament that begins today.

But for the second consecutive year, he plans to show the games on his office’s big-screen TVs and give a prize to the employee who picks the winning team.

“I want to have a good, fun, upbeat atmosphere,” he said. “You spend more of your waking hours at work, so you might as well enjoy it.”

His attitude is catching on, workplace experts say.

Recognizing that workers are toiling longer hours, while seeking to accommodate their most talented producers, many employers are becoming more tolerant of employees who use work time for play time or personal tasks.

Some employers like Pfautz are using the three-week NCAA tournament – one of the year’s biggest workplace diversions – as an opportunity to boost employee morale. Some firms have launched office pools themselves around such major sports events instead of leaving that to their employees.

An office pool that requires money to enter is illegal in Kansas.

Some bosses say they look the other way as employees peruse Nordstrom.com or book concert tickets so long as their work gets done and the company’s computer system is not threatened. These and other employers say that work time lost to Web-surfing, e-mail and phone calls is a small price to pay for stronger office morale, less turnover and higher productivity.

Companies are becoming more flexible and tolerant “because you’re not going to attract talent if you manage with an iron fist,” said Brandi Britton, senior vice president of OfficeTeam, a Menlo Park, Calif.-based staffing company. “And talent is so hard to come by.”

With 24/7 e-mail and Internet access fuzzing the line between home and office, employees are spending as much as 36 minutes per day, or three hours a week, checking bank balances, arranging child care, watching TV and cyber-shopping from their desks, according a survey last month from OfficeTeam.

Some workers will spend as long as two hours a day tracking the NCAA tournament games, causing an estimated $1.2-billion loss of productivity nationwide, according to John Challenger, president of outplacement company Challenger, Gray & Christmas Inc.

But Challenger thinks bosses like Pfautz, who indulge their employees’ sports mania, are making a smart investment.

When employees had lifetime tenure, he said, co-workers came to know each other over time. Now employees change jobs more frequently and companies increasingly rely on consultants and independent contractors – factors that work against building the personal ties that make a company successful.

Employers need to take advantage of opportunities to create those relationships, Challenger said, “and here’s a ready-made event.”

“Why not embrace this event and use it?” he said.