The blogosphere described the meeting as a panic measure following weeks of criticism over the way it handles members' data.
Several US senators have made public calls for Facebook to rethink its privacy safeguards.
The American Civil Liberties Union, ACLU, launched a petition directed at Facebook founder Mark Zuckerberg.
It called on him to regain the trust of users by giving them control over all the information shared via Facebook.
(Facebook was started as a way for students to share information)
A number of high-profile users have also deleted their Facebook accounts after the site introduced a new feature that lets non-Facebook websites, or third parties, post the personal views of Facebook users without their consent.
'Back to basics'
Facebook described its internal get together as part of its "open culture" giving employees "a forum to ask questions on a topic that has received a lot of outside interest".
Industry watchers said the company, which is the world's biggest social network, has shown it has "lost touch" over the issue.
Facebook's more than 400 million users share 25 billion things a month
(Facebook's more than 400 million users share 25 billion things a month)
"They need to get back to basics, throw out their policy and start all over again," she said. "It's way too complex for most people to understand how to change their settings and if they can't make it simple for people to make choices, it will cost them."
Recently the issue of how to deactivate a Facebook account has gained traction.
The blog SearchEngineLand reported that anyone who typed the query "How to quit..." into Google got as their number eight automated result "how to quit Facebook". It followed results for how to quit smoking, your job and drinking.
A number of well respected technologists have pulled the plug on their account.
(More and more people are investigating how to quit the site)
Peter Rojas, co-founder of the gadget site gdgt.com, told ABC News he quit because he "was spending more time managing my account than actually using my account.
"Having to constantly monitor the privacy settings was way too complicated. You can never be sure you caught everything."
As a result of the disquiet over Facebook's approach to privacy, a project that is being viewed as an alternative has been getting a lot of attention.
Diaspora is the brainchild of four students from New York University, which they described as "privacy aware, personally controlled, do-it-all distributed open source social network".
The students originally set a target to raise $10,000 to get their open source project off the ground over the summer but to date more than 3,300 backers have pledged in excess of $125,000.
"This is proof that people are scared and they don't have anywhere to go," Diaspora co-founder Max Salzberg told BBC News.
"I think a distributed social network is what people want. People value all their information online and we want to put users back in control of what they share."
Security upgrades
On the same day as the all-hands meeting at Facebook, the company launched new security measures to battle spam and other malicious attacks.
The upgrades include being able to approve the devices users commonly use to log in and being notified when that account has been accessed via a device that has not been approved. Another feature is giving users the ability to block suspicious logins before they happen.
"We're confident that these new tools and systems will do a lot to prevent unauthorised logins and the nuisance they can cause," said Lev Popov, a software engineer on Facebook's site integrity team.
"As always, though, the first line of defence is you. We need you to help by practicing safe behaviour on Facebook and wherever you go online."
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