Usually you need a team focused on just one job to get done - otherwise there's no 100% commitment to your project. You don't want your employees to switch between priorities.
Read that. Twice. Now, add these words of pearly wisdom to the end: "It's also none of your fucking business."
It's their time, not yours. If your employees aren't giving you 100% at work, you've every right to complain. But it's absolutely none of your business what they do outside of work.
If you can't trust your employees then you need to review your hiring practices, and your leadership ability. That's your failure, not theirs. Own it, and deal with it.
I'm perfectly relaxed by the way. I swore for emphasis, not out of emotional engagement.
You, sir, have been awarded with an Honorary Indignation: http://www.youtube.com/watch?v=EtCiP8B2xpc#t=7s
Most people I've met can handle thinking about more than one thing in a given day or week and to be a productive human you have to. Whether it's reading a bed time story to your child, remembering what groceries to buy on the way home or checking the code a friend committed to your side project, you have to think about other things besides work every day to be a normal, functional human.
If you want employees to be 100% committed, you'll have to stop thinking of it as "your" project.
I'm perfectly happy to be 100% committed to my employers interests/projects for the ~40hrs a week that all the salary negotiations were assuming. I'm even perfectly happy to adjust those assumptions when it benefits the company - I'll work overtime when needed or do a few 60hr weeks at "crunch time" with time off in lieu.
But if work wants to start dictating what I do or don't do in those _other_ 128 hours, we first need to discuss what a reasonable rate to pay for that is. (And, indeed, whether I'm even interested in a job that wants control of more than 40-ish hours a week of my time.)