|When you have a co-worker who is flirting with a manager, and a manager who is then playing favorites, both are actually flirting with danger. These types of corporate fairy tales rarely have happy endings.|
There are certainly stories of coquettish co-workers whose ways and means have carried them far, but there are many more whose charms have lost their magic, and whose careers done likewise. When the cute relationships with their managers fade, as most inevitably do, the working relationships typically evolve into hostility, discomfort, and antagonism. These are not exactly the building blocks for job satisfaction or career advancement. And, employees who have relied on style over substance for many years often find that there is no substance left when they really need it.
At the same time, a manager who is foolish enough to fall for the flirtatious employee is equally vulnerable. Your manager will soon find that his favoritism is taking its toll on departmental cooperation, coordination, and communication, as well as on the respect that you and your associates have for him. Ultimately, this can take a toll on departmental productivity, and that can take a toll on your manager's career.
At this point, you should say nothing. Their actions speak louder than your words.