The radius depends on two factors: the size of the physical location, and the GPS quality of the mobile phones your employees use.
1. Employees with newer phones and reliable GPS can work with a smaller radius.
2. Employees with older phones or weaker GPS may need a larger radius, since GPS drift can otherwise cause valid punches to fail.
3. A large corporate campus may need a wider radius. A single office room or client site may work with a tighter radius.
Test the setup with a few employees before rolling it out widely.