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Ours is very open with no categories. I think it's the one place in our Jive instance where people know they can post whatever they want without worrying whether this is the "right" place for it. We also have a big button on our home page that serves as a link to the Water Cooler, which not only makes it convenient to get to but I think also sends a signal that the company is OK with what goes on there.
We have spun off other places from what we see going on there. So for instance people were posting items for sale there so we created a place just for that, managed by the person who runs our company store and employee activities. That way there is some organization to it (like Craigslist) and some clean-up of old postings, which is a lot harder to do when they're intermingled with other content in the Water Cooler. We also spun off a place for employees to ask questions about getting their work done. We assigned some people from HR, IT, Facilities, etc. to monitor that space to make sure questions get answered efficiently and accurately, because some of them were getting lost in the Water Cooler mixed in with the fun stuff.
So we basically try to keep the Water Cooler very loose and anything goes (sometimes serious and sometimes not), and when we discover some structure that could be useful we spin that structure off into another place.
Thank you, Dennis. This is how I'd like ours to work.