Business 101: Principles of Management

Alderfer's ERG theory is a simplified version of Maslow's hierarchy of needs that suggests that all human needs can be accessed and satisfied simultaneously, rather than from the bottom up. Either way, as needs are satisfied, employees are motivated to strive to satisfy a new need.

Alderfer's ERG Theory Simplifies Maslow's Hierarchy of Needs

Out of work for some time now, Jesse was offered a position as a copy assistant at a local website, The Pressing News Online (PNO). Jesse had been the senior editor for The Pelican, a major publication, for many years when it went under.

Desperate for work, Jesse took the PNO position with the hope of being quickly promoted to editor. When Jesse accepted the position of copy assistant, what she was really doing was fulfilling Alderfer's existence need. The paycheck satisfied her physiologically - it paid for basic necessities like food, water and shelter.

Alderfer's ERG theory contends there are three basic needs an employee seeks to fulfill. As each need is fulfilled, it serves as motivation to fulfill a different need.

ERG stands for existence, relatedness and growth, and these are defined as:

• Existence - the need for basic material existence, like physiological health and safety
• Relatedness - the need for interpersonal connections, social status and recognition
• Growth - the need for personal development, including creative and meaningful work

Maslow believed that there are five basic human needs.

As each need is met, another need could be satisfied. In fact, at any point, several could be satisfied. Similarly, Maslow believed that there are five basic human needs:

• Physiological needs
• Safety needs
• Belongingness needs
• Status needs
• Need for self-actualization

The difference is that Maslow believed that only one need could be satisfied at any given time. As a lower-order need is met, like getting a new job, work begins on satisfying a higher-order need, like getting a promotion.

If a lower-order need such as health is no longer satisfied, like being diagnosed with a long-term illness, the status of having a promotion is no longer important. A swift move down the hierarchy is necessary to work on satisfying the physiological need to heal.

Hierarchy occurs from a motive to act.

Motivation and Need Satisfaction

Need satisfaction for both Alderfer's ERG and Maslow's hierarchy occurs from a motive to act. In fact, in the pursuit to satisfy and re-satisfy needs, motivation is the driving force.

When Jesse is not checking news stories for factual inconsistencies, she spends her time hanging around the editorial office. Her motivation is to be accepted by her colleagues. Jesse is working on a relatedness need: the need to connect with people and to feel accepted by a preferred group. For Jesse, it is the editors because she was an editor at one time.

She regularly combs the job boards for freelance work in top magazines and newspapers. Jesse is working on a growth need: the need to work on meaningful and creative projects.

Although Jesse is working very hard to satisfy multiple needs at once, sometimes it ends in defeat. Alderfer calls this frustration-regression. Frustration-regression is the tendency to seek to satisfy lower-order needs when higher orders are not met.

In the pursuit to satisfy needs, motivation is the driving force.

Sending writing samples didn't amount to as much as a phone call or an email. Frustrated with everything, Jesse began looking for satisfaction elsewhere. Her growth need was not being met.

Back in the copy room, Jesse found her mind wandering to a time when she had an aspiring career. It was clear that she would never move up the ladder at The Pressing News.

Jesse did what anyone else seeking to satisfy a growth need would do: search for jobs from the office. Unfortunately, leaving her resume on the office fax machine proved disastrous. She lost her job. This meant that existence needs were no longer being satisfied.

Jesse was hired as a big-time producer for a local news station (existence need and growth need). She continued to send out writing samples to top publishers in hopes that her talents will be discovered (growth need). She also maintained the relationships she had built with her editorial ex-colleagues on a weekly basis (relatedness needs).

Frustration-regression involves satisfying lower-order needs when higher-order needs are not met.

What Managers Need to Know

Managers tend to concentrate on satisfying employee needs one at a time. Simply providing a job satisfies only the existence need. However, there are other needs employees have:

• Gaining a promotion (growth)
• Building relationships with co-workers and managers (relatedness)
• Performing meaningful and fulfilling work (growth)
• Recognition for a good job (relatedness)
• Being a part of creative decision-making (growth)
• Fair and equitable wages (existence)
• Job security (existence)

By building strong relationships with employees, managers may gain a better understanding of these needs and discover ways in which they could be satisfied.

Lesson Summary

Both Alderfer's ERG theory and Maslow's hierarchy of needs suggest that there are basic human needs. These needs, translated to the workplace, are considered motivating forces. As needs are satisfied, new needs develop.

Maslow saw humans as having five basic needs: physiological, safety, belongingness, status and self-actualization.

Alderfer's ERG theory centered on only three basic human needs: existence (which is physiological and safety needs), relatedness (which is social and status needs) and growth (which is creative and meaningful work).

Maslow believed that only one need could be satisfied at any one time, and as a lower-order need is no longer satisfied, the higher-order need is abandoned in a hierarchal descent to satisfy the lower-order need. Alderfer believed there are several needs that could develop and be satisfied at any one time. But when a need is no longer met, Alderfer contends that frustration-regression is experienced, and this leads to a need to re-visit a lower-order need.

Managers must understand that employees have many different needs like meaningful work, fair wages, solid relationships, job security and recognition. As needs are satisfied, so is the employee.