Maslow’s Hierarchy of Needs is a theory in psychology that has relevance to organizational development. Visually, the organizational hierarchy looks like a pyramid, with the more ‘base’ needs at the bottom, meaning that these needs are essential to human life. Going up the pyramid levels, the psychological needs become more community-oriented and, finally, focused on self-actualization. Starting from the bottom, the levels of the pyramid include: physiological, safety, love and belonging, esteem and self-actualization. The theory states that the needs at the bottom of the pyramid must be met before the ones on higher levels; that is, once food, shelter, and water are handled, then a person can begin to think about their place in a community.
How Company Financial Stability Grows
Companies can also apply this theory or organizational hierarchy of needs to business structure and operations. Consider the below graphic showing Maslow’s Hierarchy in a business entity context. The left side shows the psychological needs; when the needs of each level are met, financial stability naturally increases– think of it as a by-product of taking the right action in the right order.
The right side of the graphic indicates that the first level is all about basic functionality—the physiology, the body, of the organization. This means being able to survive as an entity by being able to conduct transactions, have cash flow, hire the right people, know the core capabilities, have a workplace / structure, and address basic business capabilities.
Once basic functionality has been established, the next two levels account for efficiency, connection with others, corporate culture, and social aspects of the company (such as online presence, memberships, associations, partnerships, etc.).
The second level, Safety and Security, is about efficiency and creating a status quo. The focus is on developing structure, like predictable revenue and profitability, gaining a foothold in the market, putting processes in place, upgrading employee benefits, and getting a rhythm for business operations.
The third level emphasizes belonging-ness in terms of community and relationship needs. This is where the focus is on expanding sales, establishing partnerships, deepening customer relationships, engaging employees, fostering cross-selling and team building and cross-team projects, cultivating significance in the market, establishing vendor relationships, and anything related to enhancing community.
The final two levels—fourth and fifth—focus on aspirational growth and emotional intelligence. This is where the organization clarifies their differentiation through recognition and considers the greater good.
The fourth level distills marketing differentiation strategically on a number of levels, from increasing employee benefits, to upgrading customer experiences, to expanding IT system capabilities, to seeking awards and titles within their industry.
The highest (fifth) level means the organization has reached a level of comfortable, predictable success and so focuses on self-actualization in the bigger picture. Actions to expect here include gifting results at no cost, offering service-based initiatives and philanthropy, becoming a thought leader for additional authority and expanded opportunities, and participating in activities of corporate social responsibility.
Following is what the Hierarchy looks like filled in with these activities.
The Customer’s Point of View
This graphic below shows your company’s Hierarchy from the customer point of view.
On the left side, you see the familiar names of each level of the organizational hierarchy of needs. The interior levels show what your customers need and expect from your brand. The right side shows what your organization must provide to sustain customer relationships and, ultimately, cultivate mutual loyalty.
The bottom two levels, as in the initial explanation of the Hierarchy, are about basic functionality and establishing a sense of security. These two levels combine to deliver a frictionless experience to both customers and staff.
The first level requires your customers’ basic needs be met in terms of your solution—delivery of their purchase, communication about what to expect and how to implement, and access to support if they need it. This is the core premise—you had this problem, our company has this solution that you purchased, here is how you use it to get the expected outcome.
The second level of the pyramid indicates customers need security through having the tools promised to achieve the expected results. To do so, your organization should provide streamlined implementation guidelines, functionality, and workflows for their solution.
The third level of the pyramid shows that customers need to feel they are an insider with the organization, that they are part of a community, with access to important people and a way to express their thoughts directly.
The fourth level of the pyramid is about your company’s community—both internal and external—recognizing your customer’s relationship with the organization. This social status occurs through awards, social media, online forums, conferences and events, and personal networking opportunities.
The combined the third and fourth levels represent the benefits of digital transformation in that your organization has to be organized and robust enough to deliver these types of deliverables.
The highest level of the pyramid, the fifth level, enables your customer to become a company ambassador. As they share their success, naturally your company is a part of that story and it becomes inviting to others to have a similar transformation. To support these outcomes, your organization needs to give customers the language with which to communicate their success story—case studies, video interviews, newsletter spotlights, conference speaking opportunities. In doing this, your organization demonstrates leadership through that customer’s success story. Naturally, your organization expands its visibility and reach in the market. This also lends itself to positioning thought leadership content in context of customer successes.
The Significance of the Organizational Hierarchy of Needs
While it may not be obvious, there are several reasons why understanding this Organizational Hierarchy of Needs can be helpful to your organization.
1. Until lower needs have been met, organizations (and their initiatives) cannot grow financial stability by moving into higher levels. This single insight can help companies understand why expected growth has not yet happened.
2. Transformation is destabilizing to people, processes, and profit centers. When that happens, people may not be able to adapt, which creates (consciously or subconsciously) resistance to change. By understanding the Hierarchy, you can predict and, ideally, neutralize the challenges change inherently brings.
3. When change out-paces peoples’ ability to adapt to it, change can slow, stall, or even become blocked. When digital transformation does not, or cannot, occur, your competitors can out-innovate your solution and/or marketplace position. By supporting the psychological needs of your staff and leaders, your company optimizes the transformation adjustment, which supports having a competitive edge in the market.
4. By progressing through the first four levels, an organization will reach the fifth level of self-actualization. In that case, the organization needs to fulfill that mandate and operate at that level or risk losing ground. It’s similar to a master artist using a paint by numbers kit… it doesn’t make sense to waste the talent, the resources, they have earned the right to express.
5. The higher the level at which an organization finds itself, the greater the financial stability. That’s because the ecosystem has been built, reinforced, and expanded to accommodate reaching ever-higher levels.
The point of Maslow’s Hierarchy relevant to organizations is that there is a growth journey for companies. Organizations move through these hierarchical levels at various stages of lifecycle, from individual employees to the team to the whole company. Know where your organization is to support your customers, employees, partners, and goals properly. With that knowledge, it is simpler to identify and pursue new potential opportunities and revenue sources.