Guide to Maslow’s Hierarchy of Needs and Importance for Businesses

Maslow’s hierarchy of needs describes five different types of needs that motivate people, and they are all hierarchical in nature. This human behaviour is studied not only in the domain of psychology, but also across a variety of disciplines in management, including marketing and human resources, among others.

American psychologist, Abraham Maslow, published a popular paper in 1943 for the Psychology Review journal, ‘A Theory of Human Motivation’. He postulated that human behaviour results from psychological and physiological needs. By 1954 he published the book, Motivation and Personality, which includes a chapter with the same title as the paper. Let’s explore Maslow’s hierarchy of needs from the perspective adopted in management.  

Maslow’s Hierarchy of Needs Theory

Maslow’s hierarchy of needs is one of the theories of motivation based on five types of needs, from basic to advanced. It is a hierarchical structure or pyramid in that people move to complex needs after fulfilling the basic needs. 

The bottom of the pyramid includes a lower level of tangible needs, after fulfilment of which, the needs tend to become more complex and intangible. 

The five needs in this theory of motivation from bottom to top are physiological, security, belongingness and love, esteem, and self-actualisation.

Psychology courses can particularly help in understanding this concept.  

Maslow’s Hierarchy of Needs Levels

Let’s explore the levels under Maslow’s hierarchy of needs, from the bottom to the top of the pyramid. Read along below to learn.

Physiological Needs 

Maslow describes them as the most basic of needs and calls them ‘physiological drives’ that are driven by the personality’s id instead of the ego and superego that Sigmund Freud describes in his psychoanalytic theory. According to Freud, id is the most primitive part of the mind where people think about necessities of survival. 

Examples of Physiological Needs – The physiological needs then, can be described as food, water, shelter, breathing, etc. 

Safety Needs

After fulfilling their physiological needs even moderately, people move on to the next level: safety and well-being. 

These needs are broader and can be one of the primary needs, but the fundamentals behind understanding safety remain as a preference for the familiar over the unfamiliar. 

Examples of Safety Needs – This level of needs cover security, freedom from fear, etc. 

Love & Belongingness Needs

Love and belongingness are social needs based on interaction. Being interconnected to society through these means make people feel that they belong somewhere. 

Examples of Love & Belongingness Needs – Friends, family, neighbours, colleagues, religion, etc., fall in this category.

Esteem Needs

There can be two types of esteem needs. One is towards the self when people desire accomplishment and competence. The other is achieving some form of respect that one gets from others. 

Examples of Esteem Needs – Achieving job titles from a regular role to a senior level role. Having a higher job designation provides more respects from subordinates. 

Self-Actualisation Needs

Self-actualisation is a term coined by German neurologist, Kurt Goldstein in his book, The Organism: A Holistic Approach to Biology Derived from Pathological Data in Man (1939). 

While Maslow refers to Goldstein’s definition which describes self-actualisation as the fulfilment of a person’s full potential, he mentions that it is a need that is more specific than Goldstein. 

According to Maslow, self-actualisation is “the desire to become more and more what one idiosyncratically is, to become everything that one is capable of becoming.”

Maslow says it is the desire for self-fulfilment, which varies from person to person. Self-actualisation in Maslow’s hierarchy system can be seen in terms of refining one’s skills. 

Examples of Self-Actualisation Needs – Such can be educational achievement, the desire to become the best artist in any field, painting, music, writing, etc. 

Maslow’s Hierarchy of Needs – Growth vs Deficiency Needs

In Maslow’s hierarchy of needs theory, the five needs are further categorised into growth and deficiency needs. Maslow further introduced these in the later years after he came up with the book. 

Maslow mentions that if deficiency needs are not fulfilled the growth needs would suffer. So which needs are in growth and in the deficiency category. 

Self-actualisation is considered to be the only need that exists in the growth category. Because, it does not originate from the lack of anything. There is no loss if this growth need is not fulfilled. 

The deficiency need originates from deprivation. Without the fulfilment of these needs, one can suffer psychologically and/or physically. 

Why Maslow’s Hierarchy of Needs is Important in Business

Maslow’s hierarchy of needs applies to running an organisation successfully with low employee turnover rates. 

As an example, see how it supports employees through every stage of the hierarchy through an example of one’s career journey – from hiring to reaching the top level of management. 

First Stage – Physiological 

The organisation should provide the employees (especially freshers) with adequate money so that they can afford the necessities. 

Second Stage – Safety

The employees will feel much safer to work when job security exists. At this level, employees have other responsibilities to fulfil which include buying a home, raising a child, etc. Not having a job security can make them look for other organisations.

Third Stage – Belonging

Nurturing a healthy work environment is essential. While the base needs such as the pay check and job security are now covered, the need for belonging in the organisation will soon emerge. 

The employee would have some specific attitude, beliefs and work expertise which will be similar to a group within the organisation. They should get the support for that. 

Fourth Stage – Esteem

This is also a psychological need that separates from the physiological needs of the employee. 

The employee, after feeling that they are a part of the organisation would usually gather good decision-making skills. They should be given the chance to grow professionally so that they move up into higher-level roles. 

Fifth Stage – Self-Actualisation

This stage is when the employee has reached a much higher level in the organisational hierarchy. What the organisation can do at this stage is to encourage them to share their wisdom through years of experience with younger employees. 

Also, check out on the difference between needs and wants, when looking this behavioural concept from a marketing POV. 

Parting Thoughts

This was Maslow’s hierarchy of needs in a nutshell. By the 1970s, Maslow added three more needs at the top of the hierarchy. They are cognitive, aesthetic, and transcendence. 

Cognitive needs are gathering knowledge, aesthetic needs are creating or appreciating art, and transcendence needs are spiritual. 

And, putting Maslow’s hierarchy of needs in an organisational context, they can keep employees satisfied and help them achieve their goals in their entire career. 

But again, there are limitations when leveraging them in a company. One of the main challenges is that it is not too empirical, especially when it comes to measuring self-actualisation. Another challenge of utilising these needs as a template in an organisation is that the needs will vary from one employee to the next.