Maslow's Hierarchy of Needs for Business

In a 1943 paper titled "A Theory of Human Motivation," American psychologist Abraham Maslow theorised that human decision-making is undergirded by a hierarchy of psychological needs. In his document, he described human motivation in terms of which needs we choose to fulfil in order of how important they are to our survival, growth, and ability to thrive. These motivators are known today as Maslow’s hierarchy of needs.

1. Physiological?needs, such as food, oxygen, water, and sleep
2. Safety?needs, such as security, order, stability, and protection
3. Belongingness?and?love?needs, such as family, relationships, and affections
4. Esteem?needs, such as responsibility, achievement, reputation, and status
5. Self-actualisation?needs, such as fulfilment and personal growth

So how Maslow's Hierarchy needs affect us as a business owner??

Level 1: Setting up your business

Having a product or service to offer customers and clients. A basic business strategy or model. Funds. Basic office space and equipment. At least one person to do the work

At this stage, these basic needs must be met either before a business can be “born,” or very shortly after. If a business satisfies these needs, it has the potential to gain customers.

At this level, many business owners focus on getting things rolling without taking the big picture into account.

Even at this early stage, however, successful startups must begin creating a great marketing strategy to move forward.?As mentioned in our previous article many?businesses fail due to a lack of understanding of their market. To avoid this, you need to see your products and services as a solution to satisfy a specific customer needs.

Level 2: Sustainable Business

A steady revenue stream. A healthy customer retention rate. Multiple employees. Technology systems

This is the stage when a company needs to invest the initial profits back to begin growing and strengthen their position on the market.

Growth would translate on: More sophisticated financial transactions. Meeting additional regulatory demands. Requiring more reporting. Hiring employees with specialised skills to take on key roles within the company, which until then, were performed by the same business owner. Mapping out processes and roles to increase efficiency and reduce dependancy from the owner.

At this stage, many startups switch from being product-based businesses to focusing more on the customer. They realise they need not only more customers, but more?loyal?customers, since it’s?less costly?to upsell an existing customer than it is to earn a new one. Marketing strategies become more layered as the company segments its audience with targeted messaging that discusses various value propositions.

Level 3: Building Relationships

Investors. Long-term clients. Defined employee relations and an established company culture

This stage is all about maintaining and growing relationships with customers and employees. Keeping employees engaged and loyal. Furthermore, as a company adds new staff and departments, the need for more management grows.

It is at this stage where a divide may be felt between in-the-trenches workers and those steering the ship. Employees may feel more loyalty to their immediate superiors than to the company, so nurturing those relationships is critical to success.

Successful businesses focus on deepening employee, customer, and partner relationships. Mapping out processes and roles and review technology available are key elements on this area.

Level 4: Making a Name

Brand recognition. Partnerships. Press coverage. Initial Public Offering (IPO)

Here, companies have proven they have a viable business model and policies, and this level needs (4) are more about how to share that with the rest of the world.

Relatively few businesses achieve level four, and not all are meant to. These are businesses that are household names, perhaps with products that have infiltrated language itself, such as Kleenex and Coke. Companies in this stage have made getting the?right?brand messaging out mission critical. Leaders of companies seeking to attain level four needs will increasingly require management to handle not just daily operations, but operational decision making so they can focus on big-picture business strategy instead.

Level 5: Self-Actualization

Corporate citizenship. Corporate social responsibility. Giving back

The final level of the business Maslow hierarchy of needs is achieved when the purpose of the company transcends business itself to tackle social or environmental causes.

Giving back to your local communities or donate to charities doesn't need to happen only at this stage. For some small business owners, social responsibility is part of their strategy for staying competitive in the market, building a reputation as a company with a moral compass and more importantly but more often than not, it is the purpose of their business.

Level five is far less about being recognised for good works and more about re-aligning company values from the ground up toward making the world a better place.

How to Get from Survival to Self-Actualization

Maslow considered the first four levels of his hierarchy “deficiency needs,” meaning that without them, people become anxious. The fifth level, self-actualisation, can only be achieved when this anxiousness is calmed by attainment of lower level needs.

He called five the “growth level” because it was the one in which a person could achieve their fullest potential, however many business owners fail to allocate time for self-actualisation and this may contribute to depression and anxiety.

As with humans, a business’ path along the hierarchy may be interrupted by, or circular due to, a need to continue to meet lower level needs. This could be the result of a downturn in the economy, for example, or a crisis.

Maslow estimated that around?one per cent?of humans achieve this highest level of fulfilment. The number of companies that reach this level may be even lower. How can companies keep moving toward self-actualisation?

Understanding the hierarchy of business needs is a great start. Keeping it in mind when building and running a business is also critical.

Successful companies will invest in resources that will help them achieve each level before reaching for the next one, and they aren’t afraid to shift focus, circle back, and satisfy lower-level needs when necessary.

If you need "an external pair of eyes" to help you with this, don't hesitate to contact us in LinkedIn or by email at [email protected]

Resources:

• "From survival to self-actualisation: The business hierarchy needs" article by Salesforce.com
• A guide to the 5 levels of Maslow's hierarchy of needs by Masterclass
• Maslow’s Need Hierarchy Theory of Motivation by QS Study