Alderfer’s ERG Theory

ERG theory was developed by organizational behavior scholar Clayton Alderfer to everyone the problems with Maslow’s needs hierarchy theory. ERG theory groups human needs into three broad categories: existence, relatedness, and growth. (Notice that the theory’s name is based on the first letter of each need.) As Exhibit 5.1 illustrates, existence needs correspond to Maslow’s physiological and safety needs. Relatedness needs refer mainly to Maslow’s belongingness needs. Growth needs correspond to Maslow’s esteem and self-actualization needs.

Existence needs include a person’s physiological and physically related safety needs, such as the need for food, shelter, and safe working conditions. Relatedness needs include a person’s need to interact with other people, receive public recognition, and feel secure around people (i.e., interpersonal safety). Growth needs consist of a person’s self-esteem through personal achievement as well as the concept of self-actualization presented in Maslow’s model.

ERG theory states that an employee’s behavior is motivated simultaneously by more than one need level. Thus, you might try to satisfy your growth needs (such as by completing an assignment exceptionally well) even though your relatedness needs aren’t completely satisfied. ERG theory applies the satisfaction-progression process described in Maslow’s needs hierarchy model, so one need level will dominate a person’s motivation more than others. As existence needs are satisfied, for example, related needs become more important.

Unlike Maslow’s model, however, ERG theory includes a frustration-regression process whereby those who are unable to satisfy a higher need become frustrated and regress to the next lower need level. For example, if existence and relatedness needs have been satisfied, but growth need fulfillment has been blocked, the individual will become frustrated and relatedness needs will again emerge as the dominant source of motivation.

Although not fully tested, ERG theory seems to explain the dynamics of human needs in organizations reasonably well. It provides a less rigid explanation of employee needs than Maslow’s hierarchy. Human needs cluster more neatly around the three categories proposed by Alderfer than the five categories in Maslow’s hierarchy. The combined processes of satisfaction-progression and frustration-regression also provide a more accurate explanation of why employee needs change over time. Overall, it seems to come closest to explaining why employees have particular needs at various times.

CONTENT THEORIES OF MOTIVATION

Most contemporary theories recognize that motivation begins with individual needs. Needs are deficiencies that energize or trigger behaviors to satisfy those needs. At some point in your life, you might have a strong need for food and shelter. At other tomes, your social needs may be unfulfilled. Unfulfilled needs create a tension that makes you want to find ways to reduce or satisfy those needs. The stronger your needs, the more motivated you are to satisfy them. Conversely, a satisfied need does not motivate. In this section, we will look at the four content theories of motivation that dominate organizational thinking today.

Maslow’s Needs Hierarchy Theory
One of the earliest and best-known content theories is needs hierarchy theory. Developed by psychologist Abraham Maslow, this theory condenses the numerous needs that scholars have identified into a hierarchy of five basic categories. At the bottom are physiological needs, which include the need to satisfy biological requirements for food, air, water, and shelter. Next come safety needs – the need for a secure and stable environment and the absence of pain, threat, or illness. Belongingness includes the need for love, affection, and interaction with other people. Esteem includes self-esteem through personal achievement as well as social esteem through recognition and respect from others. At the top of the hierarchy is self-actualization, which represents the need for self-fulfillment – a sense that the person’s potential has been realized.

Maslow recognized that an employee’s behavior is motivated simultaneously by several need levels, but behavior is motivated mostly by the lowest unsatisfied need at the time. As the person satisfies a lower-level need, the next higher need in the hierarchy becomes the primary motivator. This concept is known as the satisfaction-progression process. Even if a person is unable to satisfy a higher need, he or she will be motivated by it until it is eventually satisfied. Physiological needs are initially the most important, and people are motivated to satisfy them first. As they become gratified, safety needs emerge as the strongest motivator. As safety needs are satisfied, belongingness needs become most important, and so forth. The exception to the satisfaction-progression process is self-actualization; as people experience self-actualization, they desire more rather than less of this need.

Although Maslow’s needs hierarchy is one of the best-known organizational behavior theories, the model is much too rigid to explain the dynamic and unstable characteristics of employee needs. Researchers have found that individual needs do not cluster neatly around the five categories described in the model. Moreover, gratification of one need level does not necessarily led to increased motivation to satisfy the next higher need level. Although Maslow’s model may not predict employee needs as well as scholars initially expected, it provides an important introduction to employee needs and has laid the foundation for Alderfer’s ERG theory, which has better research support.

Motivation

Capital One employees are high performers partly because the company has found ways to keep everyone motivated. Motivation refers to the forces within a person that effect his or her direction, intensity, and persistence of voluntary behavior. Motivated employees are willing to exert a particular level of effort (intensity), for a certain amount of time (persistence), toward a particular goal (direction). Even when people have clear work objectives, the right skills, and a supportive work environment, they must have sufficient motivation to achieve work objectives.

Most employees (92 percent of them, according to one recent survey) agree that motivating employees has become more challenging. One reason is that many firms have dramatically changed the jobs that people perform, reducing layers of hierarchy, and jettisoned large numbers of employees throughout the process. These actions have significantly damaged the levels of trust and commitment necessary for employees to put out effort beyond the minimum requirements. Some organizations have completely given up on motivation from the heart and, instead, rely on pay-for-performance approaches and layoff threats. These strategies may have some effect (both positive and negative), but they do not capitalize on the employee’s motivational potential.

A second problem is that as companies flatten their hierarchies to reduce costs, they can no longer rely on supervisors to practice the old command-and-control methods of motivating employees. This is probably just as well, because direct supervision is incompatible with the values of today’s educated workforce. Still, many businesses have not discovered other ways to motivate employees.

Lastly, employee needs are changing. Younger generations of employees are bringing different expectations to the workplace than their baby boomer counterparts. Workforce diversity and globalization have added to this complexity because diverse employees typically have diverse values. Recall from the previous chapter that values represent stable, long-lasting beliefs about what is important in a variety of situations. These values influence what we want, what we need, and a what organizational should not to do full-fill those needs.

In this articles, we look at the foundations of employee motivation. Motivation theories fall into two main categories: content theories and process theories. Content theories of motivation explain the dynamics of employee needs, such as why people have different needs at different times. By understanding an employee’s needs, we can discover the conditions that motivate that person. Process theories of motivation do not directly explain how needs emerge. Instead, they describe the processes through which needs are translated into behavior. Process theories of motivation help explain why people behave the way they do. In doing so, they help us understand, predict, and influence employee performance, attendance, work satisfaction, and other outcomes.

Foundations of Employee Motivation

Mark Hawkins knows what it’s like to be challenged. The senior business analyst joined Capital One a few years ago and has been pushing his potential ever since. “The first few weeks you are playing catch-up, learning about a new industry and organization,” says Hawkins, who works at the credit card company’s British operations. “But pretty soon you are making decisions about how to take the company forward. There are so many opportunities and you are free to pick up as many projects as you can run with.

Capital One knows how to motivate employees. The Falls Church, Virginia-based firm starts by carefully screening job applicants and selecting those with an inherent entrepreneurial need for achievement. Then, as Mark Hawkins discovered, the company stretches them with challenging goals. “We expect associates to get out of their comfort zones and look for those ‘stretch assignments,’ ” explains a Capital One executive.

Employees are formally evaluated twice each year by supervisors and peers against specific behavioral competencies. They also receive plenty of informal feedback and encouragement. “You have to spend a lot of time working with people and giving them constant feedback,” says a Capital One executive. “It makes people feel valued and involved.” Employees are also motivated by financial incentives based on individual and organizational performance.

But Capital One’s dramatic growth over the past decade creates a challenge for co-founders Richard Fairbank and Nigel Morris. “As we become bigger, we have to make sure we preserve the spirit and the magic of Capital One,” Fairbank says. “Now we’re at 20,000 [employees], and it still has that entrepreneurial spirit. But it won’t be easy.”