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Encouraging your employees to openly blog (what's a blog?) can be a rewarding and valuable experience for the employee and the company as well.  Blogging gives a rare look through the "PR firewall" into a company's gut and allows your clients (yes, and competitors) a glimpse of why your widgets really are so amazing.

Letting your employees blog takes guts.

Your customers will become fiercely loyal when they feel like you have the guts to share your whole company soul with them.

How to make your employee's blogging a successful experience:

My thoughts on making this successful:

• Buy a domain name of their choosing for them.  This should be something personal probably not immediately related to your company or brand (unless they choose it to be so).
  
• Host their blog for them as long as they work for you so they don't need to worry about that part.  If anything else, allow them to reimburse their own hosting fees, or allow them to call your webmaster with questions or concerns on occasion.
  
• Give them simple guidelines on what may cross the line in-terms of appropriateness so you don't have to retract a post later. 
  
  In the blog world, it seems your blog will get more attention when you remove a post (presumably due to big-brother coporate crack-downs) rather than when you post something a little rant-like. 
  
  The internet community loves to point-out when big brother can't sweat a little heat.
  
• Encourage them to be a Thought Leader in their expertise.  You hired them because they can do something valuable.  Promote that!  Let them be heard for it!  Get them on Technorati.  Have your geeks submit their blog to Google.  Encourage them to become known in your community for it.  Have them reach out to others (locally and globally) who are doing the same things.
  
• Help them market and promote their blog through links from your site, a "blogs" section, or other ideas.  Keeping a "Planet" blog, aggregated from all your employees' blogs is a fun way to do this.  Provo Labs does this, for example.  Cool.
  
• Allow them to blog on-occasion at work, or when something comes up that is very relevant to the way they work (maybe not your company in-general, but specific to their job).
  
  Many bloggers use their blog to note difficult experiences and how they worked around them.  Aaron Zupancic is classic for doing this.  He both shares his experience with the world, and keeps an online notebook for himself to rely on in the future.
  
• Encourage them to be real, dress down and have fun with their blog.  It will do more good for you, your employee, and your customer-relations than you may ever fully know.