Spying on Employees

[Interpreneur]

I am part owner of a small firm with about 20 employees --- mostly administrative and data entry types -- where my brother is the hands-on person.

He is a little frustrated because he says that about half the time he walks by some people's cubicles, they are in the process of changing screens, and some don't even bother to switch screens any more, revealing that they are simply surfing the net during working hours.

Now he wants to purchase software to track the employee's internet surfing habits. All he wants to see is how much company time they are wasting online and which sites they are visiting to see if we need to come up with an "internet surfing policy".

We are pretty laid back, and we don't care if people take a break to surf news sites or even play video games on their breaks, but we don't want to get robbed either.

Has anybody tracked their employee's surfing habits? Did you get any positive results? Is it considered an invasion of privacy? Should we notify them we're doing this before installing the software?

Any thoughts are appreciated.