It’s possible to be friends with someone who works for you, but you need to set boundaries. For example, there may be times when you’re privy to information that will affect your friend, but it would be improper for you to share it. To make the friendship work, be transparent about what you can and can’t share, and emphasize that it’s a matter of ethics, not trust. When sensitive topics come up, be clear about what kind of conversation you’re having. Say something like, “Let’s talk about this in friend mode” or “This is a work topic that I’d like to bring up.” And check that you and your friend want to have the same kind of conversation. You might say, “I want to find out how things are going with your project. Can we have that discussion now?” This way, you can maintain your friendship without crossing any lines.

Source: From “How to Be Friends with Someone Who Works for You,” by Sabina Nawaz