What is the ERG Theory?

ERG Theory is a Tool that helps to understand our Needs and Motivations in a Schematic way.

  • It is a simplification of Maslow’s Pyramid created by Clayton Alderfer.


To do this, it identifies 3 types of Needs that explain our ambitions and state of mind.


Its name is an acronym for the 3 Needs proposed:

  • Existence Needs.
  • Relatedness Needs.
  • Growth Needs.

The Three Stages of the ERG Theory

1. Existence Needs: What we need from a physiological point of view.

  • Food, a House, Healthcare, etc.


2. Relatedness Needs: Our Social needs.

  • Social Relationships, Friendship, a National (or cultural) Identity, etc.


3. Growth Needs: Self-Realization needs.

  • Success, Feeling “important”, Transcendence, etc.


Depending on the Direction in which these Needs are covered, there is:

  • Progression:
    • When Somebody moves from Existence towards Growth Needs.
  • Strengthening:
    • When somebody moves back and forth between Stages.
  • Regression:
    • When someone moves from Growth towards Existence needs.

ERG Theory


As we often say, the best way to understand this Tool and How you can use it is by sharing some examples with you:

ERG Theory examples

Now, we will share 3 situations in which the ERG theory can be of great help for Companies and Employees.


Let’s begin:

Entrepreneur - ERG Theory example


Being an Entrepreneur is not easy.

  • You work a lot and success is never guaranteed.


What is curious is that, a Start-up Company follows the ERG Theory almost perfectly.



First, the Business (and you) begins to earn enough to pay for essentials.

  • Salary.
  • Electricity.
  • Raw materials.
  • etc.

Summarizing: It covers its Basic needs.


Second, the Company starts establishing relations with others.

  • Allying with other Companies.
  • Joining a cooperative to get better prices.
  • etc.

Summarizing: Your company begins to interact with others.


Finally, your Business starts to Grow.

  • In Margins.
  • In Size.
  • In Prestige.

Summarizing: Your Startup becomes a prestigious Company.

Demotivated Worker - ERG Theory example


The ERG Theory can be very useful to motivate Demotivated (or Unmotivated) employees.

How can it be useful?


  • All employees tend to cover Stage One (if they earn a fair wage).
    • The salary should be enough to cover their daily expenses.
      • Unless they spend too much in unnecessary things.


  • Not all employees socialize with their peers.
    • This can be a cause of Demotivation.
      • A lack of Socialization.


  • Not all employees are Self-Satisfied.
    • This tends to be the Main Cause of Demotivation.
      • Employees who feel they can contribute much more.


If you have a Devotivated employee, ask him the following questions:


Is his salary enough to cover his basic needs?

  • If not… Is he wasting money? What can he do? (we assume a decent fair salary).

You can offer help reducing his expenses or a future raise (if he deserves it).


Is he (or she) socializing with his peers?

  • Does he have a good relation with other employees?

You can organize dinners, activitiesfor everyone to socialize more.


Is he interested in other position?

  • A position that motivates him more.

In this case, you can analyze different alternatives as long as he is a talented employee.

Choosing a Career - ERG Theory example


When choosing a career, the ERG Theory can be of great help too.



First: Think about your economical needs.

  • How much money do you really need to cover your expenses?
    • What lifestyle do you have?


Second: Think about your Social Skills and Needs.

  • Are you a social person?
    • Are you an Introvert or an Extrovert?


Third: How Ambitious are you?

  • Do you have high expectations?
    • What kind of life do you want?


With all the answers in hand, you can decide which career path is best for you.

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