I don't understand. Maybe we have different professional cultures. Why is having an undisclosed relationship with another employee the worst possible business decision? (Certainly in my culture I can think of much worse decisions one person could make).
3. "You're the boyfriend of the COO? Congratulations, you're hired into my group as advisor for internal strategy. Can we three have lunch together some time?"
Yes, I was trying to dramatize a conflict of interest that was more relevant in this scenario, where the romance is not between a manager and his direct report. (Assuming the OP is correct.)
Again, this is a situation where there is a conflict of interest that could happen whether there is a romantic relationship between the two employees. Would HR really have the ability to stop such a promotion knowing that at the same time they must keep and relationship confidential?
In the UK, I've never been asked by a company to disclose any office relationships. Usually such relationships are had in the open even between different level employees.
Significant promotions have input from far up the management chain, as well as from HR (independently). There will be a board that meets to debate the qualifications of this year's crop of promotion candidates. As the promotion gets more senior, the board will be less ad hoc and more formal, with members from farther across the organization, chosen by highly placed engineers/managers.
So, the board has considerable power. If the relationship is not open, the board may end up with members with conflicts of interest (COI).
The promotion process at my large (5000 employees) California-based organization was changed a few years ago so that HR has input into every promotion, even junior developers. The board used to have pretty much the last word, but now HR has independent input into the decision, partly to put a check on potential COIs like the one I mentioned above. (There are other reasons too.) There was considerable grumpiness from engineering management, and there is foolishness resulting from the change.
HR: "From what you sent us, it seems like the candidate has a significant role in project X, but not a highly significant role...could you provide additional material to document a highly significant role?"
I assume lawsuits from unhappy employees were the reason for these changes. Large organizations are really afraid of large settlements and bad PR from employee lawsuits. All these questions would be decided by a jury, in a setting ripe for David vs. Goliath thinking.
As for your own experience, note that you've observed open relationships between different level employees. Keith's was not open....so not sure what point you're trying to make.
Put it this way: if everyone knows that senior manager Alice is in a relationship with first year employee Bob...how easy do you think it is for Alice to pull the strings to make sure Bob gets promoted past his merit? Sure, it can happen, but people aren't as likely to not notice it. And so Alice just may not try to pull the strings.
OK, so you are saying that in the situation where there is a conflict of interest then HR should be involved so that the matter can be dealt with fairly. In that case why not bring the matter to HR when there is an issue to be resolved. This is a situation of a higher level employee abusing their power over a lower level employee and could happen whether a romantic relationship exists or not. What does HR having foreknowledge do to help prevent such a situation?
For one, it leaves a paper trail. Assuming that HR says "OK, thanks for telling us"...now you have a third party that can nominally monitor the situation. Right now, it's just Keith's word (he claims to not have any impact on his partner's fate at the company, but how can we ascertain that he's not being misleading?) against his accuser's.
