There are some interesting comments about how other languages do it in other threads.

Here's one more idea - is this person present or not during the conversation

Edit to expand on the idea:
We can have 3 pronouns

• Person participates in the conversation
• Person doesn't participate but is somehow involved with speakers and conversation (like talking about a friend, or a customer that bothered you at work)
• Talking about someone in an abstract sense. Like when writing about a celebrity, or a biography, or describing someone's life (even if a friend)