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It's not simply a question of privacy (to which we don't give a damn while it is other people's privacy), it is a question of security... Sysadmins are supposed to maintain security, not undermine it (building a system that periodically reads/collects shell history data (including that of the root user!) is undermining security, not ensuring it).
once upon a time .... our sysadmins had collected all the outgoing traffic (on the proxy server) and they also logged and saved all of our personal data, in plain text files (including the user/pass to the proxy, which was used internally in the company).
I would rather do in another way: allow the users do what they want just the job should be completed (in time). You will never be able to control all of the employees, and you do not need to do so. Just check the result. And lock torrent, lock forbidden sites and whatever you want - to be secure. In case of any security problem (depending on the case) either make the system more secure or fire the employee (who was doing something against the company).
Once upon a time .... I had to force a team (at about one hundred people) to do a specific way of working. I constructed some helper scripts to simplify their work (there was no logging of user activity but the tasks completed). That worked perfectly, they started to do the things right, as it was planned.
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