The word "need" is quite familiar in our society. We hear people say on a daily basis that they "need to get a pedicure" or they "need to get a hair cut." But are these needs really needs? The dictionary defines a need as a lack of something requisite, desirable or useful; a physiological or psychological requirement for the well-being of an organism (Merriam-Webster). In terms of our psychological needs, how does one become motivated in life if even the most basic of needs are not met? The goal of this case study is to examine the flawed and fragmented infrastructure of a company, and to conceptualize some of its shortcomings via Maslow's Hierarchy of Needs Theory, Alderfer's Existence Relatedness Growth Model, and McClelland's Need Theory. As will be seen, with respect to work attitudes and motivation, the treatment and management of employees dictates, or at the very least, influences whether basic and higher-order needs are fulfilled.
Motivation is what drives us to do something. In the workforce, it is what drives employees to perform, achieve goals, and put forth the greatest amount of effort, which is why it is imperative that employers understand what motivates their employees. When employees are appropriately motivated, performance, satisfaction, and morale can be improved (PSU WC, L. 1, p. 2). Motivation is influenced by several factors such as individual characteristics, job characteristics, and work environment characteristics (PSU WC, L. 1, p. 8). Motivation can be classified as intrinsic as well as extrinsic (PSU WC, L. 1, p. 8). Intrinsic motivation occurs when an individual is influenced to achieve or do something from inside whereas extrinsic motivation occurs when an individual/group is stimulated from outside factors such as money, promotion, etc. But is it also important for employers to understand what leads employees to be unmotivated.
This case study will explain how a downsizing situation created by the financial crisis led employees to be unmotivated because their needs were no longer being met by the company. The case study was also compared and analyzed against three of the main needs theories: Maslow’s Hierarchy of Needs, Alderfer’s Existence Relatedness Growth Theory, and McClelland’s Need Theory. The case study will offer an explanation of why we feel the case is best explained by Alderfer’s Existence Relatedness Growth Theory. Finally, recommendations for future research will be offered.
Back in 2008, the employer of one of our team members discovered that it needed to dump some of its cargo (employees) in order to remain afloat amidst the credit crisis and the elimination of FFEL (Federal Family Education Loan) program designed to give financial aid to parents and students. For nearly 50 years, it had served the student loan industry as a guarantee agency -- the largest in the United States. Suddenly, there were no more guarantees to process and maintain because the Feds assumed the responsibility of insuring the lenders as part of their economic stability plan. At that time, this particular agency had a workforce of about 2,800 in its main HQ building with about another 300 scattered in satellite offices across the state. About 40% of these employees were tasked with keeping the guarantee systems running; processing new requests for loan guarantees from lenders, schools, and students; and ensuring that all due diligence requirements by the lenders were being met. What had been a successful operation with continual growth at an impressive rate was now failing. Changes had to be made and made quickly.
One of the first things eliminated was the in-house training and development program that offered free classes to employees wishing to expand their knowledge of personal and job enhancing items like Microsoft Office software, SAS programming, writing queries and gathering data for reports, public speaking and presenting, and being an effective front-line supervisor or employee. Next, the HR and Legal departments worked with the executive team and the board of directors to create a buyout/forced retirement/job elimination/reassignment program aimed at reducing the workforce by at least 50%. A lot of people departed the agency through the buyout offers or agreed to early retirement while many more opted to accept a reassignment to a lower-level position-- even if that meant going to the call center and a sizeable cut in pay. It was an ugly frightening time for this business, characterized by uncertainty and insecurity.
In the time following this initial workforce reduction/adjustment action, those that remained in their original positions were taxed to the limit with trying to cover the job tasks of those who exited or were reassigned in addition to what they were already responsible for handling. Throughout 2009 and 2010 things remained status quo, with reorganizations continuing to consolidate and centralize work tasks. Employees -- talented, reliable, knowledgeable employees -- continued to seek jobs elsewhere, afraid that they'd be next to be called in and told that their jobs were being eliminated. Finally, by the end of 2011 things began to improve as the agency succeeded in obtaining new lines of business to sustain what remained of the former operations. Some positions were added, but they were limited to minimum wage entry level customer service work in the various call centers.
At the start of 2012, the little bit of stability the remaining employees had begun to experience in 2011 was overshadowed with fear when the agency hired a compensation/task analyst to review the pay rates of every non-union position to determine if adjustments were needed. Initially, it was presented as a positive action because adjustments could mean pay increases as compensation would be aligned with job requirements and be comparable to the general location. However, what transpired was a total annihilation of several departments as groups of employees were told that their positions were unnecessary or that they would be posted externally to give opportunity to a better-qualified candidate. In most cases, this action was taken because the incumbent lacked the college degree and formal training that the job analyst determined would be required to do the tasks. Most of these employees learned on-the-job over a 20-30 year period and had historical knowledge that an external new hire would lack. The employees were both betrayed and devalued. The analysts were considered to be subject matter experts and were relied upon by executive management to help make operational decisions. Suddenly, all of that history meant nothing.
At the start of 2013, the management team turned its focus to the employees who remained with the intent of increasing morale and productivity so that the agency could continue to attract new business clients. This was futile. The employees don't trust the mid- or upper-management teams; they're angry that the last 15-25 years they've spent dedicated to the agency's success were completely disregarded by an outsider and that management allowed this to occur. Why would they want to put in 100% or even 90% effort now that they are aware that they could be eliminated, transferred to entry-level positions, forced to re-apply for their own positions, or told they can remain in their positions if they accept a 25% decrease in annual pay? Dozens of employees who meet the time requirement but are not yet retirement age have elected to take early retirement in the past six months because the stress of not knowing what will happen is too much for them.
Management is frustrated with the remaining 1,400 original employees; they don’t understand why they can’t just do their work and be satisfied to still have jobs. However, the compensation analyst is still on-site, and the employees are still bitter and don't trust their leaders. They feel that their leaders are sending them out to be slaughtered without concern for their financial security -- with most having families relying on their income for survival. They do not want to participate in team-building games and exercises, and they aren’t concerned for the welfare of an employer that seems to care very little about their own welfare.
Maslow’s Hierarchy of Needs
One of the earliest theories explaining human motivation came from Abraham Maslow. Maslow believed there were five categories of needs: psychological, safety, love/social, esteem, and self-actualization (PSWC, L. 2, p. 3). Psychological and safety needs are considered basic-level needs and include biological survival needs such as food and self-preservation. Social, esteem, and self-actualization needs are considered higher-order needs and include the need for friendship, recognition, and self-fulfillment (PSWC, L. 2, p. 4). Maslow believed in fulfillment progression, meaning lower basic needs must be met before high-level needs (PSWC, L. 2, p. 4). As applied to organizations, psychological needs include things such as providing adequate pay and break times. Safety needs are met with job security, health plans, and workplace safety. Social needs are met by the relationships we have with co-workers, and esteem can be met through feedback and promotions. In order to meet self-actualization needs, employers can offer increase responsibility, autonomy, and assistance in continuing education or training (PSWC, L. 2, p. 5).
In the case information, it is clear that initially the workforce for this agency had all needs met; employees were self-motivated, creative, and were paid adequately for their labor. Many enjoyed social interaction with each other, several had earned respect from peers, and they were able to identify a part of themselves with the work contributions they made. The agency had met all of its employees’ basic needs (physiological and safety) and was pursuing to meet the higher-level needs, referring to Maslow’s Hierarchy of Needs (PSU WC, L.2, 2013). The agency provided ample opportunity for personal and professional growth (self-actualization). Employees performed at higher levels of achievement because they felt their efforts were appreciated (esteem). But as the agency began to eliminate groups of jobs and institute pay cuts, the employees’ needs started to regress. From Maslow’s theory, an individual cannot progress to the next need until the basic needs are met (PSU WC, L.2, 2013). Yet Maslow's basic theory does not allow or consider that a person might regress.
Alderfer’s Existence Relatedness Growth Theory
Alderfer’s ERG theory is similar to Maslow’s Hierarchy of Needs; however it consists of three needs rather than five. Existence needs can be compared to Maslow’s physiological and safety needs. Relatedness refers to social needs, and Growth can be compared with Maslow’s esteem and self-actualization needs (PSU WC, L. 2, 2013). Although there are similarities, Alderfer’s theory was different than Maslow’s theory. Alderfer’s needs were organized on a continuum and did not have to be fulfilled in a strict order. Additionally, one can move back and forth from one need to another. Alderfer also introduced frustration-regression, a term that describes the regression back to more basic needs when other needs are not satisfied (PSU WC, L. 2, 2013).
Why are the efforts of management failing to motivate these employees? The employees are frustrated over what's transpired over the past three years and have regressed back -- all the way back to the bottom, to existence needs. Their fear of losing their jobs or having their incomes reduced is keeping their focus on the basics: food and shelter. Their relatedness needs are negatively impacted by two conditions: (1) the workforce is much smaller and many of their close associates have departed so they've lost their confidants and "buddies" and (2) those that remain no longer wish to be identified by their work since they feel like they've been made expendable by the agency. They feel no allegiance to the agency because they believe the agency no longer cares about them as people. They are now live bodies used to fill the chairs and perform the work needed by the agency---but the agency doesn't need them because any live body will do.
Similar to Maslow’s theory, the Existence Relatedness Growth model could be applied to this difficult situation. Because employees’ basic needs were not being met, they regressed into more concrete ideas (PSU WC, L.2, 2013). Applying the frustration-regression theory, employees were not worried with self-actualization or self-improvement; social relationships seemed to fall by the wayside, regressing from relatedness needs. Employees are now more concerned with basic and existence needs. They needed to keep their jobs in order to provide for their families. The remaining employees are struggling with a need to feel secure in their jobs and find an adequate social network in the new work environment. These needs are the first and foremost that would need to be acknowledged in order to bring a more stable work environment back to the agency. Unless management changes their focus from team-building motivational activities to having open, honest conversations with their employees about what they are feeling and fearing, the employees are not likely to move away from their basic needs level. In order for the workforce to return to its prior performance levels, their leaders must regain their trust.
McClelland’s Need Theory
David McClelland, working from Henry A. Murray’s taxonomy of human needs, generated three general needs of motivation including the need for affiliation, need for power, and need for achievement. The need for affiliation is the need to establish relationships. Those high in the need for affiliation need approval from others and are concerned with how they are perceived by others. The need for power is the need to control and influence others. Those with a high need for power are more likely to seek leadership positions. The need for achievement is the need to excel. Those who are high in the need for achievement are motivated by self-success (PSU WC, L. 2, 2013). McClelland believed that needs are learned and could be developed through training (PSU WC, L. 2, 2013).
Is the agency meeting the needs of its workforce? It's tried some changes. For instance, it has changed some security and safety procedures in the recent 24 months in order to help the workforce feel more physically secure in the wake of the various outbreaks of violence that seem to be occurring more frequently in workplaces across the United States and internationally. It hired contractors to close in the open external stairwells and catwalks connecting the parking garage to the building in order to reduce exposure to the elements as employees move from one structure to another. It's upgrading software programs and hardware and recreated an in-house training program that, at the moment, only offers classes on delegation and leadership to high-level management employees. All of these are good steps to take; however, they are not what the operational workforce needs in order to feel truly secure and get their minds back onto their jobs. Our team believes that these employees will not be motivated to peak performance until they believe that the strongest threat (the recommendations of the compensation/job analyst) to their job security has been reduced to a more-comfortable level. The McClelland Needs Theory seems to overlook this most basic of needs.
This agency's case is best compared with Alderfer’s Existence Relatedness Growth Theory because of the ability for people to move back and forth on the model (PSU WC, L. 2, 2013). Initially the company was meeting all needs within its power by providing a good work environment that inspired many employees to remain with the company for decades. Opportunities for employees to pursue growth needs were made available through on site educational opportunities, allowing them to progress through job levels and into positions with more responsibility. However, when the financial crisis hit, the company eliminated growth opportunities, causing the employees to regress in order to pursue both existence and relatedness needs through job searches and outside opportunities that would provide them with greater stability.
A key aspect of this case study is further revealed by the fact that the company opted to bring in an outside contractor to perform a comprehensive compensation/task analysis, which resulted in more employees being eliminated, reassigned, or forced into early retirement, rather than have the agency's top leadership members handle this themselves. By choosing this method, the company distanced itself from its employees and ceased providing any means of addressing the relatedness needs of its employees because it's destroying the social fabric of the agency. Whatever loyalties the remaining employees might have still felt were destroyed, frustrating them to the position of pursuing their existence needs by retiring early or submitting their resignation to begin working elsewhere. In total, the employees were not the only party injured by the actions taken initially by the employer; the employer has caused injury to itself, its sustainability, by forcing a multitude of its long-time experienced employees to walk out the door before any of the critical knowledge could be passed on or shared with others.
On target for further research would be to look at how the management could satisfy the employees' needs for workplace security–other than the physical plant. Going by Maslow's hierarchy, the employees' needs for socialization and esteem cannot be fulfilled unless their security need–which does include job security–has been satisfied (PSU WC, L.2, 2013). This also includes the very real aspect of dealing with the feelings and emotions of the employees. Trust was lost and the the relationship between employee and employer needs to be mended. Research into job-related mistreatment and betrayal would be key in beginning the healing process that would create the possibility of re-establishing the base of Maslow's pyramid. The next order of business would be determining what actions the organization could take to satisfy the next two needs in the hierarchy: socialization and esteem. These two could be accomplished by re-instituting some form of employee social events similar to those that were eliminated in 2008 and 2009.
The management group seems to believe that promotions or pay increases are all that the employees care about; not only is this inaccurate (proof that the managers do not fully understand the needs of their employees), but it would not be the best route for the company having just experienced its first year of financial stability since 2009. The managers should instead refer to McClelland's need theory. If the management team would be willing to spend a little bit of time researching this problem and are willing to take some steps toward addressing the employees' needs for affiliation, power, and achievement, they might notice an improvement in overall morale. Alternatively, as McClelland had found to be successful, various training and educational seminars could be offered in-house to the employees to help them find new ways to increase productivity and morale on their own (PSU WC, L.2, 2013).
Merriam-Webster. (n.d.). Definition of Need. Retrieved January 20, 2013, from Merriam-Webster Dictionary: http://www.merriam-webster.com/dictionary/need
Pennsylvania State University World Campus (2013, January) PSYCH 484 Lesson 1: Introduction to Work Motivation and Job Attitudes. Retrieved on January 19th, 2013 from https://courses.worldcampus.psu.edu/sp13/psych484/001/content/lesson01/lesson01_01.html
Pennsylvania State University World Campus (2013, January) PSYCH 484 Lesson 2: Need Theories: What Do I Want When I Work?. Retrieved on January 19th, 2013 from https://courses.worldcampus.psu.edu/sp13/psych484/001/content/lesson02/lesson02_01.html