You’ve probably encountered Maslow’s Hierarchy of Needs at some point in your life. In 1969, Clayton Alderfer created ERG theory to help account for some of the limitations he recognized in Maslow’s work.

The letters ERG are an acronym for three levels of needs: Existence, Relatedness, and Growth. Like Maslow, Alderfer presented his theory in a hierarchy:

• Growth needs (development of competence and realization of potential)
• Relatedness needs (satisfactory relations with others, including co-workers)
• Existence needs (physical well-being)

While Maslow and Alderfer share certain concepts, the ERG theory differs from Maslow's in the following three ways:

• Unlike Maslow's hierarchy, the ERG theory allows for different levels of needs to be pursued simultaneously.
• The ERG theory allows the order of the needs be different for different people.
• The ERG theory acknowledges that if a higher level need remains unfulfilled, the person may regress to lower level needs that appear easier to satisfy. This is known as the frustration-regression principle.

As you can see, ERG theory is still able to offer a model of progressive needs in a similar fashion to Maslow, but the hierarchy is determined on an individual basis rather than being rigid. This flexibility can help explain why some people experience their needs more intensely in some areas than others.

how can ERG theory help you become a better manager?

For one, ERG theory reminds managers that everyone isn’t motivated by the same things. It depends on where they are in the hierarchy (think of it as a kind of personal development scale). Secondly, there’s a good chance the needs hierarchy mirrors the organizational hierarchy to some degree: people at the top are more likely to motivated by self-actualization/growth needs than existence needs.

What is the value for managers?

ERG theory recognizes that employees have multiple needs to satisfy simultaneously. The theory also can also account for employees that fall victim to the frustration-regression principle and become more intent on fulfilling relatedness needs, such as socializing more frequently with co-workers during work hours. When a manager is able to recognize signs of regression, steps can be taken to concentrate on relatedness needs until the employee is able to pursue growth again.

Of course, with everybody having their own unique combination of needs, there is always the possibility that ERG theory can be self-illuminating.