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This is called nepotism and there should be an HR rule written somewhere how to handle these situations. Do you have HR Employee Handbook to see if your organization has a policy addressing this?
This can be a short term issue for you. Follow protocol, document the details of the “rough patches”. Have the difficult conversations you’d have with anybody else on your team. They still might just be assigned to a different manager, but then at least you’ve done your part and started the documentation process that the other managers can follow up on. If this person is having enough “rough patches” that it’s causing disruption, you owe it to the rest of the team to drive the same level of accountability you would in any other scenario.
I had to manager the daughter of the CEO before. So I created a relationship policy and had the entire workforce sign it. This way the nepotism policy was able to be enforced through a company wide initiative. I pitched it because due to our demographics a lot of our employees actually were roommates and it was flagged when we were mailing insurance and tax paperwork. Going to the senior manager won’t help, but making a business case will. Don’t stop treating the direct report consistently and keep records out of work emails to protect yourself.
If there’s a scenario that is discussed via email, it may prove that certain people knew about the situation or were aware of the situation. No matter what you’re working situation documentation is king if you don’t know this already, you need to learn it now.
Even when it comes to conversations, he said, she said with work related items, documentation is king. One of the ladies in my area has a small sign on her desk that says, ‘but did you document it?’ That’s the rule we live by.