How can I monitor my employees' time on social networking sites and personal phone calls?
1. Is the employee accomplishing sufficient amounts or high enough quality in his work efforts?
If not, deal with this situation on that level as a performance matter--advise him of his shortcomings, counsel and discipline (up to and including termination of employment).
2. The employee is doing a great job but you are annoyed by him breaking a company policy (showing at the very least some level of dishonesty).
If this is the case, presumably the employee has a supervisor. So, the old-fashioned but effect use of observation comes to mind. I would not go further than that.
One of these two ways will work, if applied.