By: John S. Morlu II, CPA
Kohlberg imagined moral development as a staircase to enlightenment. Entrepreneurs know it better as an elevator with broken buttons — most people get stuck on the first floor, pressing “UP” while arguing with the security guard.
Let’s map these stages to real-world employee behavior. Warning: if you recognize your staff in the lower stages, congratulations — you’re not running a business, you’re running a daycare with payroll.
Stage 1: Obedience and Punishment (a.k.a. “Don’t Hit Me, Boss”)
At this stage, employees follow rules only because they fear punishment.
Workplace Example:
- They come to work on time when they know the fingerprint machine tattles to HR.
- They “finish” their reports only because they know late submissions trigger salary deductions.
- They say “yes, boss” not out of respect — but the same way a child says “yes, mom” when holding a stolen cookie.
Fun fact: In psychology experiments, kids at this level will lie with a straight face until you physically walk into the room. Replace “kids” with “employees,” and suddenly you understand your office better.
Punchline: You thought you hired adults. You got toddlers with ID cards.
Stage 2: Individualism and Exchange (a.k.a. “What’s in It for Me?”)
Here, employees behave well only if there’s a reward.
Workplace Example:
- They’ll help a colleague only if they’re promised lunch.
- They’ll guard company property like the crown jewels — but only if there’s a bonus tied to it.
- “Teamwork” means: “I’ll carry the box if you buy me beer.”
Fun fact: Some economists call this “Homo Economicus.” In reality, it’s just glorified street-trading logic — same as kids swapping cookies for chips at recess.
Punchline: You thought you built a culture. They thought you built a vending machine.
Stage 3: Interpersonal Relationships (a.k.a. “Like Me, Please”)
Employees now follow rules to be liked, not because they believe in them.
Workplace Example:
- They smile at you in meetings but gossip about you in WhatsApp groups.
- They’ll show up to volunteer events, not for “corporate social responsibility,” but for the Instagram photos.
- Loyalty lasts exactly as long as the applause — or until a competitor throws a slightly shinier party.
Tidbit: Ancient Romans called this “bread and circuses.” Give them pizza and Wi-Fi, they’ll perform loyalty all day.
Punchline: You thought you had believers. You got clout chasers in business casual.
Stage 4: Authority and Social Order (a.k.a. “The HR Stage”)
Here, employees finally follow rules because they think rules keep society — and payroll — stable.
Workplace Example:
- They submit receipts on time, not because they care, but because “that’s company policy.”
- They wear seatbelts in company cars, not for safety, but because “it’s the law.”
- They lecture others about professionalism, then secretly take two-hour lunch breaks.
Fun fact: This is the stage where most bureaucracies live. Governments thrive here — following rules for rules’ sake, even when the rules are dumb.
Punchline: You thought you built innovators. You got traffic wardens with spreadsheets.
Stage 5: Social Contract (a.k.a. “Rare Pokemon Employees”)
Finally, employees realize rules are meant for the greater good. They start thinking long-term. They innovate, sacrifice, and sometimes… even tell the truth.
Workplace Example:
- They actually protect company secrets, even when no one’s watching.
- They’ll tell you, “Boss, we shouldn’t do this — it’ll hurt us in the long run.”
- They see beyond their salary — they care about sustainability, impact, reputation.
Punchline: You thought you’d never find them. Then one walks in and you nearly cry, because they exist — the workplace unicorn.
Stage 6: Universal Principles (a.k.a. “Saint Employees”)
Almost mythical, these employees act on deep principles of justice, fairness, and truth. They’d rather quit than compromise.
Workplace Example:
- They return extra per diem, even if no one would notice.
- They stand up against corruption, even if it costs them promotions.
- They don’t steal pens. (Yes, they exist.)
Historical note: Gandhi, Mandela, MLK — they were Stage 6 individuals. Which means if you find one in your payroll, guard them. Because they’re probably too good for this world — or for your balance sheet.
Punchline: You thought you hired staff. You accidentally hired the conscience of humanity.
Final Warning to Entrepreneurs
Most of your employees will never leave the basement floors of Kohlberg’s model. They’ll smile, manipulate, and perform ethics as theater. But if you, the entrepreneur, don’t build systems that protect your business from survival-mode morality, you’ll be funding short-term thinkers while destroying your own long-term dream.
Bottom line: Kohlberg drew a staircase. Entrepreneurs must install an elevator with ID access. If you don’t, the Stage 1 thinkers will eat the snacks, the Stage 2 thinkers will eat your margins, the Stage 3 thinkers will eat your reputation, and by the time you realize it — the business is gone.
Author: John S. Morlu II, CPA is the CEO and Chief Strategist of JS Morlu, leads a globally recognized public accounting and management consultancy firm. Under his visionary leadership, JS Morlu has become a pioneer in developing cutting-edge technologies across B2B, B2C, P2P, and B2G verticals. The firm’s groundbreaking innovations include AI-powered reconciliation software (ReckSoft.com) and advanced cloud accounting solutions (FinovatePro.com), setting new industry standards for efficiency, accuracy, and technological excellence.