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.