Kohlberg's Stages of Moral Development presents a six-stage model of the way morality develops in modern individuals. Although the model is largely focused on adolescent morality, each of the six stages can shed light into the way people think in the workplace, or the way entrepreneurs think about morality as they build their companies. Understanding the relevance of Kohlberg's six stages of moral development in business can be helpful for developing human-resources policies and incentive systems, and can be especially insightful when trying to understanding younger employees' behavior and decision-making.

Punishment and Obedience

In stage one, people believe that rules are absolute and handed down from unquestionable authorities. This stage is most prevalent in children under 10 years old, but some adults in the workplace still display this type of moral orientation. Some employees may work best within a strict structure, and can be more motivated by fear of consequences than ambition or pride in accomplishment. This can be especially true of teenage employees, who see their current jobs as no more than temporary income opportunities.

Individualism and Exchange

In the second stage, people begin to believe that the concepts of right and wrong are not encapsulated in formal rules, and that the morality of a given action depends on the perspective and needs of the individual performing the action. Employees in this stage can make decisions directly opposed to the needs of their employers, as long as they can justify their actions based on personal needs. When managing employees at this stage, it is important to make sure they see their own compensation and conditions of employment as just and fair.

Interpersonal Relationships

In stage three, people move outside of considerations of individual morality, considering the moral norms and structures that come from relationships. In this stage, the underlying assumption is that "right" and "wrong" can be determined by an action's contribution to or detraction from social harmony. Employees in this stage can make decisions that resonate with the values of their employer, but which are not necessarily in the best interest of outside stakeholders. When managing people at this stage, clearly communicate the importance of ethical interactions with customers, suppliers and other outsiders.

Social Order

Stage four introduces a slight evolution from stage three. People interpret morality through the same social lens as stage three, but with a wider perspective. In this stage, people are concerned with the norms and structures of society as a whole, rather than only their own family, friends and workplace.

Social Contract and Individual Rights

In this stage, ideas of morality begin to supersede societal norms, allowing for the morality of acts like civil disobedience, which break social norms in the protection of individual rights. Individuals are seen as having the "right" to break rules, as long as those rules do not act in direct opposition to the basic structure of a social contract. At this stage, an employee may consider it a moral act to break a workplace rule to make a statement about the fairness of HR policies. When employees at this stage act out, it can be wise to listen to and address their concerns.

Universal Principles

According to Kohlberg, the final stage of moral development is achieved when people learn to see moral dilemmas through the perspectives of everyone involved in a situation. Suddenly, it's not just about relationships, social norms and individual rights. Morality becomes a function of all of these things combined, culminating in an understanding of the outcome of actions based on others' subjective biases and an appreciation of the dignity and rights of all people.