How to Spot, Test, and Manage Employees Stuck on the Kohlberg Ladder
By: John S. Morlu II, CPA
Stage 1: Obedience and Punishment
(“Don’t Hit Me, Boss”)
🚩 Red Flags:
- Obsessively asks: “Will I get in trouble if…?”
- Only shows urgency when you walk past their desk.
- Calls in sick but still posts nightclub photos on Facebook.
✅ Quick Test:
- Give them a hypothetical: “What would you do if you found $20 on the floor in the office?”
- Stage 1 answer: “If cameras are there, I’d return it. If not… umm…”
💡 Entrepreneur’s Strategy:
- Don’t waste time on moral speeches. They’re motivated by sticks, not sermons.
- Create automatic consequences: late = deduction, theft = instant dismissal.
- Think of them like traffic lights: they only stop at red if a cop is watching.
Punchline: Managing them without systems is like babysitting hyenas with candy.
Stage 2: Individualism and Exchange
(“What’s in It for Me?”)
🚩 Red Flags:
- In an interview: “Do you give staff loans? Per diem? Free lunch?” before even asking about the job itself.
- Volunteers only if there’s overtime pay.
- Sees company laptops as personal Netflix devices.
✅ Quick Test:
- Ask: “Would you help a coworker struggling with a task?”
- Stage 2 answer: “If they’ll help me back.”
💡 Entrepreneur’s Strategy:
- Align incentives tightly. They won’t build culture, but they’ll chase bonuses.
- Use performance-based pay, not trust.
- Treat them like mercenaries — effective if paid, dangerous if ignored.
Punchline: You didn’t hire a team player; you hired a vending machine with shoes.
Stage 3: Interpersonal Relationships
(“Like Me, Please”)
🚩 Red Flags:
- Smiles at you, badmouths you on WhatsApp.
- Shows up to charity events only for photo ops.
- Constantly fishing for validation: “Boss, am I your favorite?”
✅ Quick Test:
- Ask: “If you disagreed with me, would you tell me?”
- Stage 3 answer: “No boss, I could never disagree. You’re always right!”
💡 Entrepreneur’s Strategy:
- Don’t mistake flattery for loyalty.
- Keep an eye on gossip networks — they thrive here.
- If you need actors for “culture photos,” they’re great. For actual accountability? Forget it.
Punchline: They’ll clap for you today and sell your secrets tomorrow if applause is bigger elsewhere.
Stage 4: Authority and Social Order
(“The HR Stage”)
🚩 Red Flags:
- Loves quoting company policy to sound superior.
- Will stop others from bending rules — but quietly bend them themselves.
- Believes bureaucracy equals morality.
✅ Quick Test:
- Ask: “What if company rules were wrong?”
- Stage 4 answer: “Rules are rules. We must follow.”
💡 Entrepreneur’s Strategy:
- Great for compliance, terrible for innovation.
- Use them as your “policy police.” Just don’t expect fresh ideas.
- Protect against stagnation — too many Stage 4s and your company becomes a DMV office.
Punchline: They won’t steal the pen. They’ll just write a 12-page policy on why nobody else should.
Stage 5: Social Contract
(“Rare Pokémon Employees”)
🚩 Red Flags (Positive):
- Speaks in long-term language: “sustainability,” “impact,” “reputation.”
- Will push back against short-term gain if it hurts the company.
- Asks questions about vision, not just salary.
✅ Quick Test:
- Ask: “Would you still do the right thing if no one noticed?”
- Stage 5 answer: “Yes, because it matters to me and the company.”
💡 Entrepreneur’s Strategy:
- Treasure them.
- Give them space, autonomy, and a share in the upside.
- They are multipliers — the people who grow your dream while you sleep.
Punchline: They’re the unicorns. If you find one, feed them hay, not bureaucracy.
Stage 6: Universal Principles
(“Saint Employees”)
🚩 Red Flags (Positive):
- Returns extra per diem without hesitation.
- Will resign rather than compromise ethics.
- Quietly does right even when inconvenient.
✅ Quick Test:
- Ask: “Would you report a friend for stealing company funds?”
- Stage 6 answer: “Yes. Loyalty without integrity is betrayal.”
💡 Entrepreneur’s Strategy:
- Rarest of all — like spotting a snow leopard in the Sahara.
- Don’t exploit them; they’ll walk if you betray their values.
- Put them in leadership — they can anchor culture like nothing else.
Punchline: If you find one, you didn’t just hire staff. You hired the conscience you didn’t know your company needed.
Final Entrepreneur’s Checklist
When interviewing or managing employees, always ask yourself:
- Stage 1 → Are they just afraid of punishment?
- Stage 2 → Are they only here for the perks?
- Stage 3 → Are they performing loyalty for likes?
- Stage 4 → Are they hiding behind rules?
- Stage 5 → Are they long-term thinkers?
- Stage 6 → Are they guided by principle, even when inconvenient?
If 80% of your staff are stuck at Stage 1–3, you’re not running a business. You’re running a survival camp with air conditioning.
Author: John S. Morlu II, CPA is the CEO and Chief Strategist of JS Morlu, leads a licensed public accounting and management consultancy firm. He has more than 20 years of professional experience in auditing and advisory work, including service as Auditor General of Liberia and FAR and DCAA compliance work at Unisys Federal Systems. The firm’s technology products include AI-powered reconciliation software (ReckSoft.com) and advanced cloud accounting solutions (FinovatePro.com), built for finance and operations teams.