An employee who tells you that he can do whatever he wants because he's related to the owner does not have a questionable attitude: he has an outrageous attitude. However, if you let him act this way, that is outrageous too. The situation is guaranteed to get worse if you take no action.
As a supervisor, you are supposed to provide guidance, direction, and leadership to your troops. By letting one seemingly connected employee undermine your leadership, you are also allowing him to undermine your credibility as well as your department's productivity, teamwork, and morale.
If you have advised this individual of the consequences of continued questionable performance, yet his insubordination persists, you should take appropriate disciplinary action. If this family business is truly being run as a business, do not be surprised to find the "volatile" owner becoming upset with this relative. However, if the owner becomes upset with you, then it is time to think twice about trying to build a career at what appears to be a family picnic.
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