MASLOW'S HIERARCHY OF NEEDS MOTIVATION THEORY

My MBA graduation, 2007

Maslow’s hierarchy of needs theory was a proposal in the early 1940’s by psychologist AhrahamMaslow of a way to motivate people at the workplace. Maslow suggested that a five-level hierarchy of human needs existed; that the needs were rated from first to fifth; and were satisfiable in that order.The five types of need identified by Maslow were physiological,safety and security,social or love, self-esteem and self-actualisation needs. 

According to Maslow, a need on a lower plane had to be satisfied before a higher one could be a motivator. However, Maslow did point out that a need did not have to be completely satisfied before the next higher one became stimulating: a higher need surfaced immediately a lower one was satisfied to a reasonable degree.

Maslow's theory states that a need that has been satisfied ceases to motivate. In management terms, it means the supervisor does not have to focus on giving an employee more of the same thing to motivate them. She has to see what the need on the next higher plane is and provide the environment in which the employee is able to achieve it.

What the foregoing argument actually means is that if, for example, an employee’s physiological needs were met, accommodating her in a bigger house would not motivate her as much as removing the likelihood that she could lose employment anytime (which would likely make her physically and emotionally insecure).The rationale of the argument is that this would likely result in better performance of work by the employee.

What are the Five Hierarchies of Needs in Maslow’s theory?

The five need levels in Maslow’s theory are:

  1.      Physiological needs. These are survival needs and include food, water, air and shelter.

  2.      Safety and security needs. These are needs to do with protection from harm, increased job security and elimination of threats to an individual well-being.

  3.      Social needs. Social needs are also called love needs. They concern desire for affiliation and acceptance by others.

  4.      Self-esteem needs. Self-esteem needs are about feelings of self-worth and recognition of one’s work by others.

  5.      Self-actualisation needs. These constitute the highest need level, according to Maslow. They concern desire to unleash one’s full creativity, search for greater personal development and chances to explore new areas of challenge. The needs in this class do not end, and so, desire to achieve is always there.

                    

                

                

                 Figure: Maslow's hierarchy of needs.

Empirical studies have shown that Maslow’s theory has some big weaknesses. 

Firstly, individual differences in human beings mean that the needs are not always satisfied in the order proposed by Maslow. For example, people like pugilist Muhammad Ali early in their lives appeared to seek to fulfill self-esteem and self-actualisation needs (I’m the greatest!) in spite of their relative deficiency in ‘lower-order’ needs; seemingly defying the hierarchy proposed by Maslow.

Secondly, needs can be met both at the workplace and outside. A possible problem, in view of that, is that a manager may be trying to address a need that has already been satisfied outside; and the effort would be unlikely to make an employee work harder or better. So, just because a need has not been met at work does not mean it has not been satisfied even outside.

Thirdly, it is possible for a person to address more needs than just one at the same time. For instance, a good salary from a job can be used to satisfy physiological needs like food and shelter but can also be a means of financing safety and security needs like personal protection from criminal harm.  In such a case, there is not always a one-step-at-a-time progression from physiological to safety and security needs. 

Notwithstanding the weaknesses, Maslow’s hierarchy of needs theory remains one of the most widely-known motivational theories.

How Can the Needs be Addressed at Work?

The work-place can address the employee needs proposed by Maslow in a number of ways. An example of addressing physiological needs is paying an employee enough to buy life-saving requirements like food, clothes and accommodation.

Sources of safety and security include harmless tools and instruments, healthy work environments, as well as pension schemes.

Social or love needs can be met partly by providing an atmosphere in which employees are friendly to each other and interaction is promoted in such ways as organising social events including celebration of staff birthdays.

One management solution to employee self-esteem needs is recognising outstanding achievement by, for example, giving promotion, changing title and raising salary.

Opportunities for entering unexplored arenas and allowing employee creative ability to fully come out can help satisfy self-actualisation needs. They can include placing an employee at the head of a major business diversification project team.

Conclusion

Abraham Maslow has made at least two important contributions to the study of motivation:

·          

     - He has identified classes of needs that managers can be aware require satisfying.

·         - He has made managers recognise that a need that is not satisfied ceases to be a strong motivator.

Maslow’s hierarchy of needs theory is one of the ‘content’ or ‘needs’ theories of motivation that include Frederick Herzberg’s two-factor theory, David C. Mclelland’s acquired-needs theory and Clayton Alderfer’s modified needs theory.

Rupert Chimfwembe

February 18, 2016

THE ERG MOTIVATION THEORY

The ERG theory is a re-cast of Abraham Maslow’s hierarchy of needs theory by Clayton Alderfer. It was another result of efforts to devise ways of motivating people at the place of work to ultimately achieve organisational objectives and goals.   

Alderfer compacted the five levels of needs (physiological, safety and security, social or love, self-esteem and self-actualisation), proposed by Maslow, into three. The three are existence needs (covering Maslow’s physiological and safety and security needs), relatedness needs (corresponding to Maslow’s social or love needs) and growth needs (which embody Maslow’s self-esteem and self-actualisation needs).

The abbreviation ERG in ERG theory comes from the first letter in each of the three words existence, relatedness and growth, which are the need categories proposed by Alderfer.

The ERG theory and Maslow’s hierarchy of needs theory have both agreements and disagreements.

Where the ERG Theory and Maslow’s Hierarchy of Needs Theory Agree and Disagree

Alderfer, like Maslow, arranges needs in a hierarchy: the lowest (and thus strongest) is existence and the highest (and weakest) is growth. Relatedness needs are between existence and growth needs and are therefore the second strongest, or second weakest. Alderfer, however, sees the hierarchy more as a continuum (Mullins 1999: 420) than a grading of needs.

According to Alderfer, there can be more than one need stimulating an individual at one time. This is in contrast with Maslow’s theory which states that a new need begins to motivate only when the next lower one has been significantly satisfied. So then, in accordance with Alderfer’s proposition, it is possible for both relatedness and growth needs to start motivating; continue to be active; and even get fulfilled at the same time.   

Alderfer, like Maslow, recognises that a need that is fulfilled ceases to significantly motivate. However, unlike Maslow, Alderfer argues that there is need-frustration regression. This, argues Alderfer, means that when meeting a higher need encounters barriers, an individual works even harder at ensuring that the lower need is satisfied.

Management Implications of ERG Theory

As in Maslow’s hierarchy theory, the responsibility of the manager is to improve organisational performance through taking advantage of the active needs of an individual.

The manager must identify the needs of a sub-ordinate at a given time and provide the opportunities that lead to meeting the needs. In an effort to satisfy the needs, an individual is likely, according to the theory, to perform better.

What, Specifically, Does it Take to Motivate an Employee?

Solutions at work to existence needs include a life-sustaining pay and a work environment free of danger.

By building good working relationships and comradeship at the work-place, the manager would be providing one way of satisfying relationship needs.

Encouraging employee innovativeness and creativity would be an opportunity to satisfy employee growth needs.

Stoner and Freeman (1989: 433-434) appear to suggest that one challenge of the ERG theory is that its benefits as regards organisational pursuits, for example, are not easy to verify.   

MANAGEMENT LEVELS

Three basic levels of managers exist. They are first-line, middle and top, who all perform the four key management functions of planning, organising, leading and controlling, but with great variations in how much of each of these tasks each level does.

First-line Managers

First-line managers or supervisors are the lowest in the management hierarchy. They are responsible for directly overseeing the work of non-managerial employees, who do the actual work of the organisation, and thus spend a lot of time leading and controlling. A lot of the planning of first-line managers is likely to be focused on a single day, week, month or a few months.

First-line managers need to possess a lot of technical competence as they have to closely monitor, advise and even give practical examples to the employees they supervise.

To have technical capacity means possessing both knowledge and practical abilities in such areas as salesmanship, accounting and machine operation.

First-line managers typically carry titles like foreman, supervisor, head-driver and office manager.

Each first-line manager reports to a middle manager and is actually directly in charge of one of normally a number ofsub-sectionssuperintended over by the middle manager. So, a first-line manager is likely to be found doing such work as supervising technicians in a workshop.

First-line managers interact a lot with other first-line managers, and middle managers, to ensure co-ordinated production of goods and services.

Middle Managers

Middle managers, who frequently are department heads, report to top management. They are the link between first-line managers and top management.

Middle managers convert broad objectives, policies and programmes created by top management to narrower, department-level goals, philosophies and activities.

Middle managers co-ordinate the work of the first-line managersworking under them.

Common titles of middle managers include marketing manager, production manager and finance manager.

Many individuals in middle management positions earlier served as first-line managers. In middle management, though, their involvement in technical activities is less.

Middle managers are instrumental in advising top management on such issues as the best goods and services to deal in and the most appropriate production methods.Staff training and development is another critical responsibility of middle managers.

Leading, organising and medium-and-short-term planning are common middle management activities. 

Top Managers

Top managers are responsible for the stewardship of the organization as a whole. They make general but far-reaching, long-term plans intended to, among other things, ensure institutional survival, create competitive advantage and grow the organisation.

Top managers normally include the board chairman, chief executive officer, president vice-president and directors of divisions. The plans, goals and policies they formulate become operational points of focus for the middle managers.

The typical work-day of a top manager hardly ends. Many matters requiring total concentration are done long after stipulated working time - and deep into the evening – at the office or at home.

Organisational success or failure ultimately rests on the heads of top management. They not only map out key directions but also find the resources for them. A large proportion of their time goes into planning.

Management levels. Bottom up: First-line management, Middle
Management and Top Management. The number of managers decreases at
each higher level

Management styles

Despite the existence of the above general hierarchy, personal style often determines exactly how a middle or top manager does their job.

Some middle managers, for example, while respecting the part played by their first-line managers, like to have as much direct communication as possible with the non-managerial staff, partly as a way of being in greater touch with reality.

Rupert Chimfwembe, 19 January, 2016.

PRICING STRATEGIES

Price is the amount of money organisations, groups and individuals ask for in a business exchange before giving away a product. 

Price is the amount of money organisations, groups and individuals ask for in a business exchange before giving away a product. Price is the amount of money organisations, groups and individuals ask for in a business exchange before giving away a product. Depending on the agreement reached between the party that has to give the product and the party that has to part with the money, the price is paid before or after the product is given; or partly before and partly after. (Payments in kind also represent price).

Price is one of the four traditional marketing mix variables that include product, place and promotion.

The kind and level of price set is driven by organisational and marketing objectives. Some of the most common objectives are:

1.     Recovering expenses (cost coverage)

2.     Maximising profit

3.     Maximising  sales (and in the process increasing market share)

4.     Maximising  revenue

5.     Matching or beating competition

6.     Preventing collapse of business

7.     To be leader in quality

A business may actually pursue more than one objective in its pricing approach.

In setting the price that is in line with objectives such as the above, there will be at least four major influences, including:

·        Costs, such as those concerning labour, promotion and distribution.

·        Customers, who, for example, may not be able, or simply willing, to pay above a certain price.

·        The competition. Will our price be so high as to give other suppliers a big advantage? Will it be so low as to ignite a price war? These, of course, are just two possible scenarios regarding competition. 

·        Distributor needs.  The manufacturer’s price must leave room for other members of the distribution channel, such as wholesalers and retailers, to place decent markups on their costs. 

Common Pricing Strategies

There is an endless list of pricing strategies employed by marketers. Here, we only cover some of the most popular. 

Strategies like skimming, penetration and introductory pricing are used when a new product is brought to the market.

Skimming pricing. A skimming pricing approach involves charging a price that, generally, only the higher-income group can pay. Skimming is a profit-maximisation policy. 

New products with new features and no competition are good candidates for a skimming policy. However, as new suppliers enter the market, prices are bound to fall because businesses need to maintain or increase sales revenue.  Reducing prices that way not only helps keep away competitors but also creates new buyers among lower-income groups. 

Penetration pricing. This strategy suits a price-sensitive market, or one in which there is likely to be strong competition at the heels of a newly-launched product. A low price is fixed for a new offering and offered to every customer. 

Penetration pricing can help grow market share. If the market is really big, the supplier can additionally benefit from economies of scale as unit costs drop. For instance, it may be possible to effect a reduction in price.  

Penetration pricing is also called stay-out pricing. 

Introductory pricing. Introductory prices are probably more useful in a market with established suppliers. 

Introductory prices are lower than those of older players. The aim is to induce ‘trying’ of a new product. 

Unlike in the case of penetration pricing, the new supplier raises the price as soon as it has created interest and a significant number of customers.

Some older suppliers sometimes lower the prices of their competing brands to avoid losing market share to the new entrant.

Competition-driven pricing. The traditional ones involve:

·        Pricing at the existing average market level.

·        Pricing above the market level. This is also called premium or prestige pricing), and

·        Pricing below the market level.

One will note that strategies like penetration pricing and introductory pricing (discussed above) do qualify, too, to be called competition-driven pricing. 

Psychological pricing. Psychological pricing is often odd-even pricing. Instead of pegging the price of an item at, say, $300, the seller may choose a figure of $299. One possible effect on the customer is that the price will be associated with the ‘lower budget’ of $200 instead of the ‘more-financially-draining’ $300.

Geographic pricing. This takes place when the price of a product varies from one location to another as the supplier takes into account changes in costs caused by transporting over different distances.

Differential pricing. In differential pricing, the same product, quantity and quality are offered to different customers groups at different prices. It is a discriminatory type of pricing and works well when the targeted markets are heterogeneous (possess different characteristics). 

An example of differential or discriminatory pricing is when a public transporter charges off-peak customers less than peak clients. Differential pricing does not involve cost differences. 

Differential pricing may not always be legal. Additional conditions are likely to include the evidence that it is not so easy for a ‘business chancer’ to buy at the lower price and sell at the higher. 

Product line pricing. A product line is a set of products with the same general characteristics. In product line pricing, each variation of the product is given its own price. Because prices range from lowest (for the most basic variety) to highest (for the most sophisticated), customers are given chance to purchase the product variation their pocket can afford.

The possibility of fixing a price which results in one product losing sales to another must be avoided.

In some cases, two or more product varieties are bundled together as one offering to ensure sales of each. The price given is lower than the total of their individual prices.

Captive product pricing. In captive product pricing, an item is offered at a low price while spares and other supplies carry a high price. The spares and supplies are usually not interchangeable with those of a competing product – which may be much cheaper.

Value-added pricing. This involves increasing the benefits to the customer without raising the price. Higher efficiency levels are one way of aiding value-added pricing.

Promotional pricing. A promotional price is one given occasionally for such purposes as reversing sales decline, strengthening brand loyalty, encouraging early purchase and diverting customer attention from a new product. 

Discounted pricing. A discount is a reduction in the normal price (list price). They are given to encourage volume purchases. Three examples are:

·        Cash discounts, given when there has been prompt payment.

·        Quantity discounts, given when large volumes are purchased.

·        Seasonal discounts, for buying an item or service at off-season times.

                                                                     

Pricing products accurately can be difficult and involving. Marketers have to read the marketing environment accurately, considering all relevant information and not losing sight of the central aspirations of the organisation. 

Rupert Chimfwembe 6 January, 2016.