You don't spend your whole life at work (I assume -- you could be a stalker, astronaut or other professional that lives where they work, but this article assumes that you aren't).
Neither do your employees and co-workers.
So, occasionally, you're going to see someone out and about. In some cases, you may even be friends with people from the office. In all cases where you see someone--company party, accidental encounter, planned birthday party with other friends--the sad fact is your still the manager/co-worker...you might be "and" something else "manager and friend," for example, but you're always part of your work identity, even when you're not at work.
As covered in previous blog entries on all the horrible things that can happen at work for which you are responsible as an individual or a manager, all those same things can happen when you're not at work. In fact, there are often fewer reliable witnesses about what really is happening outside the office. Friendships and/or romances can go sour; ruffled co-workers can make up stories about how you behaved when they ran into you at the ice cream store, people with whom you don't really want to associate may take your kind and polite behavior to mean you are now "besties" at work.
This means you need to be scrupulous about confidentiality, even off hours--no heavy venting about work, for example, with your friend from work. If you spill something confidential, you put both of you in a bad situation: even if they don't disclose it, they didn't sign on to keep secrets for you, and if they do disclose it, you're both potentially in a lot of hot water...even worse if they act on secret information. You can still be friends and you can still vent a little about work, but you need to be careful what you say; this person can still be shaped by what comes out of your mouth, and their behavior altered at work by it.
Romances are potentially worse. As noted in the link above, sexual harassment is all kinds of bad. Something that starts out consensual and wonderful and romantic could be construed later to be forced or unwanted, depending on how bad the break up. Most people don't want to consider that there will ever be a breakup, but seriously, are you willing to gamble your professional and financial future on that?
You can't be romantically involved with someone who reports to you, or to whom you report. In general, its poor form to be romantically involved with someone higher on the food chain in general (even if its not direct chain of command) as preferential treatment could be inferred, or, later, the disparity in power in the work relationship could be cited as a reason for the relationship, more than any romantic feelings.
However, the heart does want what the heart wants. If you find yourself romantically entangled with a co-worker, tell your boss. If the boss is the person with whom you're involved, tell his boss. Together. If there is a rule in the workplace against workplace fraternization, then, and this going to sound harsh, don't do it at all. Wait until someone finds another gig and try to make it work. The reason is the company doesn't want to take the liability of any potential sexual harassment or hostile work environment complaints, so they can make a quick peck on the cheek a firing offense. If you're fired for it and then things go south with your formerly romantic partner, you no longer have the company back stopping you with legal help...they've washed their hands of you. Now all legal and potentially fiscal penalties are on your shoulders alone.
If there is no such penalty, tell someone: your boss, HR, whomever. You can often have your romantic partner managed by someone other than you (or vice versa) and get the status of mutual consent in the relationship into the HR files to protect you both against any issues that may come up later.
Switching gears from love and friendship to "I don't really like you," every office/workplace has someone you don't like at least some of the time. Maybe they're a loud gum chewer, last to take a cup of coffee but don't refill the pot, voted most likely to come into the office and start shooting...whatever. There's always one. In a perfect world, you'd have a good or neutral relationship with everyone. But if the world were good and perfect, I'd be having grapes peeled for me on a beach somewhere, so we can acknowledge: not a perfect world.
Now you run into this person outside of work.
Whether you've had issues escalated to bosses or HR, or just said catty things about each other to other people in the office, or even if this person is oblivious to the chaos and madness they invoke in your work life, keep it simple: a few polite words, an explanation of why you have to leave right now, and then leave right now. Don't try to confront them about previous problems. Don't try to be helpful and point out the fact that they might understand you better if they weren't texting on their phone all the time. Nothing about being in the wild away from the office really changes anything about the relationship with this person, except that there is no one there to witness the exchange...so that if things come down to a he said/she said, you're basically tossing a coin regarding your current professional career. If you insist on that, I recommend not paying any of your bills and buying lottery tickets with all your previous month's pay, skipping work for a week to scratch them all of/check them against winning numbers. It's more satisfying and completely within your control as to whether you screw up your job or not in that situation, and you might win some money.
Finally, as a manager, and to some extent being managed, you still have obligations to your job outside of work at work events. Say the company decides to take everyone to a baseball game, or bowling, or to host a formal evening party...you're still on as a manager. As an employee, your manager is going to try to be relaxed and leave you alone to have fun, but they're still going to be your manager. Sort of like having a teacher from elementary school over to your house for dinner--she can't bust out and make you write the first three pages of the "A's" from the dictionary, but she's still your teacher, even if your parents are calling her by her first name. You need to be polite and understand that she hasn't forgotten its her job to teach you, even if she isn't actively doing it right now.
For example, this is the (Im)Perfect Manager (on the left) with the handsome and amazing househusband/arm candy on the right at the last company party:
At this party, I wanted to make sure the team had people to talk to, mixed with other co-workers they might work with in the future, and generally checked in on them to make sure they had a good time, all the while attempting not to seem like a mother duck hovering over her ducklings (especially when several of the ducklings are older than I am).
It was a success, I think. People had a good time, and I did, too. Typically I only stay at company events long enough for the team to see that I attended and appreciate them, them flee as fast as my legs will carry me because while I'm there I'm "on" as their manager and, you know, they might want a break from that. But I stayed for three full hours, played games, talked, and generally had a very nice time...while continuing to be their manager, even if I tried hard not to smother them with it.
So there you go. Even when you're not in the office during normal business hours, you are still a manager (or someone who is managed). Keep it mind, but still make friends in the workplace and take advantage of being an ImPerfect Manager (or the employee of one).