> For the complete documentation index, see [llms.txt](https://docs.naco.company/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.naco.company/employee-handbook/7.-the-escalation-protocol.md). # 7. The Escalation Protocol
NACO doesn't operate by automatic zero tolerance. It also doesn't operate by permissiveness. It operates by proportional escalation, in three steps. The principle behind the three steps: > **People have the right to adjust. The business has the right to protect itself. Both rights coexist in this protocol. Neither cancels the other.** *** ### The Three Steps **Step 01 — Corrective Conversation** What happened gets named. The shared framework gets reminded. The direction gets reset. No drama. No sermon. No public confrontation. This is the first response to a behavior that violates the values or the system. It is direct, private, and documented internally. **Step 02 — Formal Warning** If the behavior repeats after the corrective conversation, the situation escalates into a formal, documented warning. The warning is written. It names the behavior, the previous conversation, and the expected change. It is signed by both parties. **Step 03 — Direct Exit** If severity or repetition justify it, the exit proceeds. The exit is executed the way NACO executes all its exits: with respect, with clarity, with the cost absorbed, and without public drama. *** ### What Triggers Escalation Not every mistake triggers this protocol. NACO distinguishes between: * **Operational errors** — mistakes in execution, judgment gaps, learning moments. These are handled through feedback and training, not escalation. * **Value violations** — behaviors that break the non-negotiable principles: dishonesty, manipulation of information, systematic non-compliance, or deliberate disregard for the framework. The protocol applies to value violations, not to honest mistakes made in good faith. *** ### How the Protocol Gets Violated The protocol itself can be misused. NACO names this explicitly: * Using it as a tool to win internal arguments. * Applying it selectively based on personal affinity. * Skipping Step 01 and going directly to formal action without a prior conversation. * Using it as an instrument of pressure rather than correction. The protocol protects the business and the person. It is not a weapon. *** ### A Final Note NACO's goal is never to reach Step 03. The goal is that Step 01 resolves the situation. When someone adjusts after a corrective conversation, the matter is closed. There is no permanent record held against them. Growth is the point. When someone doesn't adjust, the business protects itself — clearly, proportionally, and without drama.