Alderfer's ERG Theory

In it, Alderfer compressed Maslow's hierarchy of needs from five to three:

• Existence
• Relatedness
• Growth

(Hence "ERG" – Existence, Relatedness and Growth.)

At the most basic level, people have existence needs. These encompass Maslow's physiological and safety needs, as shown in Figure 1, below.

Figure 1: How Maslow's and Alderfer's Levels Relate

Next, are relatedness needs, where we fulfill our need for satisfying interpersonal relationships. This level relates to Maslow's social tier and to the external part of self-esteem needs – we feel good about ourselves based on what others think about us.

Finally, we reach the growth level. Here, we are looking for personal growth and development by doing high-quality and meaningful work. This equates to the internal part of Maslow's self-esteem needs and to his self-actualization category.

However, Alderfer's theory goes further than simplifying the number of needs and broadening what each covers. While he maintains that there is a general order for pursuing needs, he claims that this order is not as fixed as it is in Maslow's hierarchy. Even though existence needs generally have a higher priority than relatedness and growth needs, priorities can change, depending on the person and the situation.

ERG theory has three key differences from Maslow's:

1. It suggests that people can be motivated by needs from more than one level at the same time. There is not necessarily a strict progression from one level to the next.
2. It acknowledges that the importance of the needs varies for each person and as circumstances change. Some people might put a higher value on growth than relationships at certain stages of their lives, for example.
3. It has a "frustration-regression" element. This means that, if a person's needs remain unsatisfied at one of the higher levels, he or she will become frustrated and go back to pursuing lower level needs.

Using the Theory

The flexibility of ERG Theory makes it very practical. It tells us that leaders mustn't concentrate on satisfying just one type of need for any individual. Motivating factors at work have to be very personal, and address a variety of need levels. Organizations have to provide good working conditions (existence needs) as well as encouraging positive working relationships (relationship needs), and providing development opportunities (growth needs).

It also suggests that changes in people's personal circumstances will mean that their work priorities change. Things like a birth or death in the family, marriage or divorce, job transfer, promotion, or health issues will bring about a shift in a person's needs and motivations.

Someone who's satisfied with their work and relationships will likely focus on personal growth and development. But, if they're in the middle of a divorce, their needs will shift, and existence needs will take precedence. Of course, this doesn't mean that they abandon the need for relatedness or growth. But short- and medium-term priorities move, and the person focuses their energy on the need to secure the future for them and any children involved.

There are also some people who simply don't fit the hierarchical mold. The pursuit of personal satisfaction (growth) over existence can be seen in those who pursue a vocation, such as a religious life, or choose to live in poverty so that they can work as artists.

This path is acknowledged within the ERG model, because it allows for people who don't follow the sequential path through existence, relatedness and growth, but are motivated almost entirely by their growth needs.

McGregor's Theory X and Theory Y fits well with ERG Theory, too. Theory Y people typically want to move up the needs hierarchy and are, therefore, motivated to pursue personal growth and development. Theory X people, on the other hand, aren't internally motivated and look for "carrot and stick" type motivators.

It can be frustrating to manage a Theory X person. But, if you use ERG Theory as a guide, you will likely be more attuned to the level of need from which your team member is operating. As a leader, you have to figure what it is that motivates your people and provide opportunities for them to be satisfied.

Finally, the "frustration-regression" element has interesting applications for workplace motivation. If your organization doesn't offer sufficient opportunities or challenges to satisfy your team members' growth needs, they will become frustrated. They will start looking to satisfy lower-level needs to counter this frustration.

This may mean they regress to relatedness needs, and look for more flexible work conditions that allow greater leisure time. Or they may put a new priority on existence needs, and start demanding higher pay, better benefits, or an improved pension plan.

As a leader, you need to be aware of this trade-off factor. If you are not prepared, or able, to satisfy higher-level needs, then your strategy for staff attraction, retention and motivation should probably focus on lower-level ones.

Because workplace motivation is so strongly tied to performance, managers must be sensitive to the variations in their team members' needs if they are to be effective. It is not enough to think that you know what motivates your people; you have to really find out.

This means engaging them in frequent, supportive and personal conversations, where you talk about their career and life goals and any recent changes they are experiencing. These conversations will give you insight into their needs. Your challenge is to figure out what you can do to satisfy them.