HIERARCHY OF NEEDS

In order to better understand what motivates human beings, Maslow proposed that human
needs can be organized into a hierarchy. This hierarchy ranges from more concrete needs such as
food and water to abstract concepts such as self-fulfillment. According to Maslow, when a lower
need is met, the next need on the hierarchy becomes our focus of attention.

These are the five categories of needs according to Maslow:

Physiological

These refer to basic physical needs like drinking when thirsty or eating when hungry. According
to Maslow, some of these needs involve our efforts to meet the body’s need for homeostasis; that
is, maintaining consistent levels in different bodily systems (for example, maintaining a body
temperature of 98.6°).

Maslow considered physiological needs to be the most essential of our needs. If someone is
lacking in more than one need, they’re likely to try to meet these physiological needs first. For
example, if someone is extremely hungry, it’s hard to focus on anything else besides food.
Another example of a physiological need would be the need for adequate sleep.

Safety

Once people’s physiological requirements are met, the next need that arises is a safe
environment. Our safety needs are apparent even early in childhood, as children have a need for
safe and predictable environments and typically react with fear or anxiety when these are not
met. Maslow pointed out that in adults living in developed nations, safety needs are more
apparent in emergency situations (e.g. war and disasters), but this need can also explain why we
tend to prefer the familiar or why we do things like purchase insurance and contribute to a
savings account.

Love and Belonging

According to Maslow, the next need in the hierarchy involves feeling loved and accepted. This
need includes both romantic relationships as well as ties to friends and family members. It also
includes our need to feel that we belong to a social group. Importantly, this need encompasses
both feeling loved and feeling love towards others.

Since Maslow’s time, researchers have continued to explore how love and belonging needs
impact well-being. For example, having social connections is related to better physical health
and, conversely, feeling isolated (i.e. having unmet belonging needs) has negative consequences
for health and well-being.2

Esteem
Our esteem needs involve the desire to feel good about ourselves. According to Maslow, esteem
needs include two components. The first involves feeling self-confidence and feeling good about
oneself. The second component involves feeling valued by others; that is, feeling that our
achievements and contributions have been recognized by other people. When people’s esteem
needs are met, they feel confident and see their contributions and achievements as valuable and
important. However, when their esteem needs are not met, they may experience what
psychologist Alfred Adler called “feelings of inferiority.”

Self-Actualization

Self-actualization refers to feeling fulfilled, or feeling that we are living up to our potential. One
unique feature of self-actualization is that it looks different for everyone. For one person, self-
actualization might involve helping others; for another person, it might involve achievements in
an artistic or creative field. Essentially, self-actualization means feeling that we are doing what
we believe we are meant to do. According to Maslow, achieving self-actualization is relatively
rare, and his examples of famous self-actualized individuals include Abraham Lincoln, Albert
Einstein, and Mother Teresa.

How People Progress Through the Hierarchy of Needs

Maslow postulated that there were several prerequisites to meeting these needs. For example,
having freedom of speech and freedom of expression or living in a just and fair society aren’t
specifically mentioned within the hierarchy of needs, but Maslow believed that having these
things makes it easier for people to achieve their needs.

In addition to these needs, Maslow also believed that we have a need to learn new information
and to better understand the world around us. This is partially because learning more about our
environment helps us meet our other needs; for example, learning more about the world can help
us feel safer, and developing a better understanding of a topic one is passionate about can
contribute to self-actualization. However, Maslow also believed that this call to understand the
world around us is an innate need as well.

Although Maslow presented his needs in a hierarchy, he also acknowledged that meeting each
need is not an all-or-nothing phenomenon. Consequently, people don’t need to completely satisfy
one need in order for the next need in the hierarchy to emerge. Maslow suggests that, at any
given time, most people tend to have each of their needs partly met—and that needs lower on the
hierarchy are typically the ones that people have made the most progress towards.

Additionally, Maslow pointed out that one behavior might meet two or more needs. For example,
sharing a meal with someone meets the physiological need for food, but it might also meet the
need of belonging. Similarly, working as a paid caregiver would provide someone with income
(which allows them to pay for food and shelter), but can also provide them a sense of social
connection and fulfillment.

Testing Maslow’s Theory

 Maslow’s theory has had a strong influence on other researchers, who have sought to build on
his theory. For example, psychologists Carol Ryff and Burton Singer drew on Maslow’s theories
when developing their theory of eudaimonic well-being. According to Ryff and Singer,
eudaimonic well-being refers to feeling purpose and meaning—which is similar to Maslow’s
idea of self-actualization.

Psychologists Roy Baumeister and Mark Leary built on Maslow’s idea of love and belonging
needs. According to Baumeister and Leary, feeling that one belongs is a fundamental need, and
they suggest that feeling isolated or left out can have negative consequences for mental and
physical health.

THEORY OF CLAYTON ALDERFER

1. Satisfaction-progression
Moving up to higher-level needs based on satisfied needs.

With Maslow, satisfaction-progression plays an important part. Individuals move up the need
hierarchy as a result of satisfying lower order needs. In Alderfer's ERG theory, this isn't
necessarily so. The progression upward from relatedness satisfaction to growth desires does not
presume the satisfaction of a person's existence needs.
2. Frustration-regression
If a higher level need remains unfulfilled, a person may regress to lower level needs that appear
easier to satisfy.

Frustration-regression suggests that an already satisfied need can become active when a higher
need cannot be satisfied. Thus, if a person is continually frustrated in his/her attempts to satisfy
growth, relatedness needs can resurface as key motivators.
3. Satisfaction-strengthening
Iteratively strengthening a current level of satisfied needs.

Satisfaction-strengthening indicates that an already satisfied need can maintain satisfaction or

strengthen lower level needs iteratively when it fails to gratify high-level needs.

The ERG motivation theory work situations

On a work level, this means that managers must recognize his employees' multiple simultaneous
needs. In Alderfer's ERG model, focusing exclusively on one need at a time will not motivate
your people. The frustration-regression principle impacts workplace motivation. For example, if
growth opportunities are not provided to employees, they may regress to relatedness needs, and
socialize more with co-workers. If you can recognize these conditions early, steps can be taken
to satisfy the frustrated needs until the employee is able to pursue growth again.

Implications for financial incentives in Alderfer's ERG model

Financial incentives may satisfy the need for growth, and for recognition by others. As you can
see, in this theory financial incentives can only fulfill human needs indirectly, through their
perceived value and effect on other people. So even though you may provide financial
incentives, if your people's other needs aren't being met, according to Alderfer's ERG theory
your workers will not be motivated.

DAVID MCCLELLAND’S ACQUIRED-NEEDS THEORY

splits the needs of employees into three categories rather than the two we discussed in
Herzberg’s theory. These three categories are achievement, affiliation, and power.

Employees who are strongly achievement-motivated are driven by the desire for mastery. They
prefer working on tasks of moderate difficulty in which outcomes are the result of their effort
rather than luck. They value receiving feedback on their work.

Employees who are strongly affiliation-motivated are driven by the desire to create and maintain
social relationships. They enjoy belonging to a group and want to feel loved and accepted. They
may not make effective managers because they may worry too much about how others will feel
about them.

Employees who are strongly power-motivated are driven by the desire to influence, teach, or
encourage others. They enjoy work and place a high value on discipline. However, they may take
a zero-sum approach to group work—for one person to win, or succeed, another must lose, or
fail. If channeled appropriately, though, this can positively support group goals and help others
in the group feel competent.

The acquired-needs theory doesn’t claim that people can be neatly categorized into one of three
types. Rather, it asserts that all people are motivated by all of these needs in varying degrees and
proportions. An individual’s balance of these needs forms a kind of profile that can be useful in
creating a tailored motivational paradigm for her. It is important to note that needs do not
necessarily correlate with competencies; it is possible for an employee to be strongly affiliation-
motivated, for example, but still be successful in a situation in which her affiliation needs are not
met.

McClelland proposes that those in top management positions generally have a high need for
power and a low need for affiliation. He also believes that although individuals with a need for
achievement can make good managers, they are not generally suited to being in top management
positions.

TWO FACTOR THEORY OF FREDERICK HERZBERG

1. Motivating Factors
The presence of motivators causes employees to work harder. They are found within the actual
job itself.

2. Hygiene Factors
The absence of hygiene factors will cause employees to work less hard. Hygiene factors are not
present in the actual job itself but surround the job.

VROOM'S EXPECTANCY THEORY

...assumes that behavior results from conscious choices among alternatives whose purpose it is to
maximize pleasure and minimize pain. Together with Edward Lawler and Lyman Porter, Victor
Vroom suggested that the relationship between people's behavior at work and their goals was not
as simple as was first imagined by other scientists. Vroom realized that an employee's
performance is based on individuals factors such as personality, skills, knowledge, experience
and abilities.
The theory suggests that although individuals may have different sets of goals, they can be
motivated if they believe that:

 There is a positive correlation between efforts and performance,

 Favorable performance will result in a desirable reward,
 The rewardwill satisfy an important need,
 The desire to satisfy the need is strong enough to make the effort worthwhile.
The theory is based upon the following beliefs:

Valence
Valence refers to the emotional orientations people hold with respect to outcomes [rewards]. The
depth of the want of an employee for extrinsic [money, promotion, time-off, benefits] or intrinsic
[satisfaction] rewards). Management must discover what employees value.

Expectancy
Employees have different expectations and levels of confidence about what they are capable of
doing. Management must discover what resources, training, or supervision employees need.

Instrumentality
The perception of employees as to whether they will actually get what they desire even if it has
been promised by a manager. Management must ensure that promises of rewards are fulfilled
and that employees are aware of that.
Vroom suggests that an employee's beliefs about Expectancy, Instrumentality, and Valence
interact psychologically to create a motivational force such that the employee acts in ways that
bring pleasure and avoid pain.

STACEY ADAMS EQUITY THEORY

John Stacey Adams' equity theory helps explain why pay and conditions alone do not determine
motivation. It also explains why giving one person a promotion or pay-rise can have a
demotivating effect on others.
When people feel fairly or advantageously treated they are more likely to be motivated; when
they feel unfairly treated they are highly prone to feelings of disaffection and demotivation.

Employees seek to maintain equity between the inputs that they bring to a job and the outcomes
that they receive from it against the perceived inputs and outcomes of others. The belief in equity
theory is that people value fair treatment which causes them to be motivated to keep the fairness
maintained within the relationships of their co-workers and the organization.

Words like efforts and rewards, or work and pay, are an over-simplification - hence the use of
the terms inputs and outputs. Inputs are logically what we give or put into our work. Outputs are
everything we take out in return.

Inputs
This equity theory term ecompasses the quality and quantity of the employees contributions to
his or her work. Typical inputs include time, effort, loyalty, hard work, commitment, ability,
adaptability, flexibility, tolerance, determination, enthusiasm, personal sacrifice, trust in
superiors, support from co-workers and colleagues, skill...

Outputs
Outputs in equity theory are defined as the positive and negative consequences that an individual
perceives a participant has incurred as a consequence of his/her relationship with another.
Outputs can be both tangible and intangible. Typical outcomes are job security, esteem, salary,
employee benefits, expenses, recognition, reputation, responsibility, sense of achievement,
praise, thanks, stimuli...

It's all about the money

Payment however, is the main concern and therefore the cause of equity or inequity in most
cases. In any position, an employee wants to feel that their contributions and work performance
are being rewarded with their pay. According to equity theory, if an employee feels underpaid
then it will result in the employee feeling hostile towards the organization and perhaps their co-
workers, which may result the employee not performing well at work anymore.
It's the subtle variables that also play an important role for the feeling of equity. Just the idea of
recognition for the job performance and the mere act of thanking the employee will cause a
feeling of satisfaction and therefore help the employee feel worthwhile and have more outcomes.

Perception of equity

But Adams' Equity Theory is a far more complex and sophisticated motivational model than
merely assessing effort (inputs) and reward (outputs). Equity Theory adds a crucial additional
perspective of comparison with 'referent' others (people we consider in a similar situation).
'Referent' others are used to describe the reference points or people with whom we compare our
own situation, which is the pivotal part of the theory.

Equity does not depend on our input-to-output ratio alone - it depends on our comparison
between our ratio and the ratio of others. We form perceptions of what constitutes a fair ratio (a
balance or trade) of inputs and outputs by comparing our own situation with other 'referents'
 (reference points or examples) in the market place as we see it. If we feel are that inputs are
fairly rewarded by outputs (the fairness benchmark being subjectively perceived from market
norms and other comparable references) then generally we are happier in our work and more
motivated to continue inputting at the same level.

If we feel, however, that our ratio of inputs to outputs is less beneficial than the ratio enjoyed by
referent others, then we become demotivated in relation to our job and employer.

Examples of equity theory at work

In practice this helps to explain why people are so strongly affected by the situations (and views
and gossip) of colleagues, friends, partners etc., in establishing their own personal sense of
fairness or equity in their work situations.
Equity Theory explains why people can be happy and motivated by their situation one day, and
yet with no change to their terms and working conditions can be made very unhappy and
demotivated, if they learn for example that a colleague (or worse an entire group) is enjoying a
better reward-to-effort ratio.
This also explains why and how full-time employees will compare their situations and input-to-
output ratios with part-time colleagues, who very probably earn less, however it is the ratio of
input-to-output - reward-to-effort - which counts, and if the part-timer is perceived to enjoy a
more advantageous ratio, then so this will have a negative effect on the full-timer's sense of
Equity, and with it, their personal motivation.

Mechanisms
Equity Theory consists of four proposed mechanisms for (de)motivation:
1. Individuals seek to maximize their outcomes (where outcomes are defined as rewards minus
costs).
2. Groups can maximize collective rewards by developing accepted systems for equitably
apportioning rewards and costs among members. Systems of equity will evolve within groups,
and members will attempt to induce other members to accept and adhere to these systems. The
only way groups can induce members to equitably behave is by making it more profitable to
behave equitably than inequitably. Thus, groups will generally reward members who treat
others equitably and generally punish (increase the cost for) members who treat others
inequitably.
3. When individuals find themselves participating in inequitable relationships, they become
distressed. The more inequitable the relationship, the more distress individuals feel. According
to equity theory, both the person who gets "too much" and the person who gets "too little" feel
distressed. The person who gets too much may feel guilt or shame. The person who gets too
little may feel angry or humiliated.
4. Individuals who perceive that they are in an inequitable relationship attempt to eliminate their
distress by restoring equity. The greater the inequity, the more distress people feel and the more
they try to restore equity.
 People respond to a feeling of inequity in different ways
Generally the extent of demotivation is proportional to the perceived disparity with other people
or inequity, but for some people just the smallest indication of negative disparity between their
situation and other people's is enough to cause massive disappointment and a feeling of
considerable injustice, resulting in demotivation, or worse, open hostility. Some people reduce
effort and application and become inwardly disgruntled, or outwardly difficult, recalcitrant or
even disruptive. Other people seek to improve the outputs by making claims or demands for
more reward, or seeking an alternative job.

Equity Theory in companies

Equity Theory in business introduces the concept of social comparison, whereby employees
evaluate their own input/output ratios based on their comparison with the input/outcome ratios of
other employees.
Employees who perceive inequity will seek to reduce it, either by distorting inputs and/or
outcomes in their own minds ("cognitive distortion"), directly altering inputs and/or outcomes, or
leaving the organization. Thus, the theory has wide-reaching implications for employee morale,
efficiency, productivity, and turnover.

Assumptions of Equity Theory applied to business

The three primary assumptions applied to most business applications of Equity Theory can be
summarized as follows:
1. Employees expect a fair return for what they contribute to their jobs, a concept referred to as the
"equity norm".
2. Employees determine what their equitable return should be after comparing their inputs and
outcomes with those of their coworkers (social comparison).
3. Employees who perceive themselves as being in an inequitable situation will seek to reduce the
inequity either by distorting inputs and/or outcomes in their own minds ("cognitive distortion"),
by directly altering inputs and/or outputs, or by leaving the organization.

Implications of Equity Theory for managers

Understanding Equity Theory - and especially its pivotal comparative aspect - helps managers
and policy-makers to appreciate that while improving one person's terms and conditions can
resolve that individual's demands (for a while), if the change is perceived by other people to
upset the equity of their own situations then the solution can easily generate far more problems
than it attempted to fix.
Equity Theory reminds us that people see themselves and crucially the way they are treated in
terms of their surrounding environment, team, system, etc - not in isolation - and so they must be
managed and treated accordingly.
Equity Theory has several implications for business managers:
 People measure the totals of their inputs and outcomes. This means a working mother may
accept lower monetary compensation in return for more flexible working hours.
 Different employees ascribe personal values to inputs and outcomes. Thus, two employees of
equal experience and qualification performing the same work for the same pay may have quite
different perceptions of the fairness of the deal.
 Employees are able to adjust for purchasing power and local market conditions. Thus a teacher
from Alberta may accept lower compensation than his colleague in Toronto if his cost of living is
different, while a teacher in a remote African village may accept a totally different pay structure.
 Although it may be acceptable for more senior staff to receive higher compensation, there are
limits to the balance of the scales of equity and employees can find excessive executive pay
demotivating.
 Staff perceptions of inputs and outcomes of themselves and others may be incorrect, and
perceptions need to be managed effectively.
 An employee who believes he is over-compensated may increase his effort. However he may
also adjust the values that he ascribes to his own personal inputs. It may be that he or she
internalizes a sense of superiority and actually decrease his efforts.
Relation of Equity Theory to other theories
The comparative aspect of Equity Theory provides a far more fluid and dynamic appreciation of
motivation than typically arises in motivational theories and models based on individual
circumstance alone.
There are similarities with Maslow and Herzberg in that the theory acknowledges that subtle and
variable factors affect each individual's assessment and perception of their relationship with their
work, and thereby their employer. However, awareness and cognizance of the wider situation -
and crucially comparison - feature more strongly in Equity Theory than in other earlier
motivational models.
Implications of Equity Theory for financial rewards
People may feel guilty because they feel they don't deserve the bonus. Or they may feel
undervalued because someone else did get one, and they perceive their inputs to be superior to
the person that got the bonus.
There are limits to the balance of the scales of equity and employees can find excessive
executive pay demotivating.
Staff perceptions of inputs and outcomes of themselves and others may be incorrect, and
perceptions need to be managed effectively.
An employee who believes he is over-compensated may increase his effort. However he may
also adjust the values that he ascribes to his own personal inputs. It may be that he or she
internalizes a sense of superiority and actually decrease his efforts.

GOALS SETTING THEORY OF EDWIN LOCKE

Goal-setting theory refers to the effects of setting goals on subsequent performance.
Researcher Edwin Locke found that individuals who set specific, difficult goals performed
better than those who set general, easy goals. Locke proposed five basic principles of goal-
setting: clarity, challenge, commitment, feedback, and task complexity.
One of the most effective ways to stay motivated is to set goals for yourself. However,
the type and quality of goals you set affects how well they will work.

Imagine you are 30 pounds overweight and want to drop some extra weight. When setting
your goal, you have several options. You could say, “I want to lose weight within the next
year. I will go on a diet to lose the weight.” This goal is pretty vague and poorly defined; you
haven’t specified how much weight you want to lose or what concrete steps you will take to
lose it.

The simple act of setting an effective goal gives you a better chance of realizing that goal. In
fact, listed below are several principles crucial to setting effective goals.
Effective goal-setting principles:
1. Clarity. A clear, measurable goal is more achievable than one that is poorly defined.
In other words, be specific! The most effective goals have a specific timeline for
completion.
2. Challenge. The goal must have a decent level of difficulty in order to motivate you to
strive toward the goal.
3. Commitment. Put deliberate effort into meeting this goal. Share your goal with
someone else in order to increase your accountability to meet that goal.
4. Feedback. Set up a method to receive information on your progress toward a goal. If
losing 30 pounds in four months turns out to be too hard, it is better to adjust the
difficulty of your goal mid-way through the timeline than to give up entirely.
5. Task complexity. If a goal is especially complex, make sure you give yourself
enough time to overcome the learning curve involved in completing the task. In other
words, if a goal is really tough, make sure you give yourself some padding to give
you the best chance at succeeding.

Advantages of Goal Setting Theory

 Goal setting theory is a technique used to raise incentives for employees to complete
work quickly and effectively.
 Goal setting leads to better performance by increasing motivation and efforts, but also
through increasing and improving the feedback quality.
Limitations of Goal Setting Theory

 At times, the organizational goals are in conflict with the managerial goals. Goal
conflict has a detrimental effect on the performance if it motivates incompatible
action drift.
 Very difficult and complex goals stimulate riskier behaviour.
 If the employee lacks skills and competencies to perform actions essential for goal,
then the goal-setting can fail and lead to undermining of performance.
There is no evidence to prove that goal-setting improves job satisfaction.
i.