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I think you just need better employees who care about their job, then give them the freedom to do what they want, if they don't perform then they are moved on.
Locking down PC's and monitoring what staff do is not what I would recommend, monitor output and morale, that's much more effective for your business.
Recently got rid of an employee who was taking the p.
Within a week of starting, she was on Facebook and e-bay for a considerable time. She was given a written warning and referred to the company handbook (which she received on starting) which gives the company policy on internet use (which is quite flexible, provided permission is sought prior). We only realised the amount of company time used this way when another employee used the machine, and noticed the history file was full of her non-work related internet use.
After her warning, she then became devious, and made sure that the browser options were set to not record history.
The company handbook said that the company reserved the right to monitor computer use, so we bought some key-logging software. Our supervisor finishes at 3.15 to pick up her youngsters from school, whereas this employee worked to 5pm, on a computer not easily seen by other workers. We were amazed when the daily reports came in that almost as soon as the supervisor left, almost the whole of the time till finish (other than answering phone calls) was spent surfing the net (but making sure her history was not being recorded in the browser).
As she had only clocked up 4 months, rather than make an issue about the internet use, we just terminated her employment.
An estimate was that she was clocking up between 6 and 8 hours a week surfing the net - yet the company was paying her to benefit the company, not herself, in these hours.