Q: My business partner is dating one of his direct reports.
To avoid the appearance of a conflict of interest, he wants her to report to me instead.
The distraction can tear at even the most cohesive group.
Your company's primary concern will be minimising the fallout should a relationship go south, and avoiding any allegations of impropriety or bias (especially if you're the boss of your colleague, or vice versa).
As business blog Inc explains, there are a few different types of approaches that can be taken: If you're considering dating a coworker, finding out what the policy is before you initiate a romantic relationship will typically be better than springing it on your bosses six months in.
So, from both the business and ethical perspectives—to keep your staff from getting distracted by a soap opera and to give the employee involved an opportunity to leave a complicated situation and come out even (or ahead) professionally—you should focus on separating the work and romantic relationships.
Once you have this situation sorted out, I recommend taking a look at the larger issue of interoffice romances.
Use the counsel of your attorney and HR expert to develop policies that reinforce the kind of work culture you are trying to sustain.