Human Needs

The concept of need is controversial—at least in some academic circles. Some theorists argue that the idea is too vague and ethereal. Others say that people's needs are so variable and influenced by their surroundings that the concept offers little help in explaining behavior (Salancik and Pfeffer, 1977). Goal-setting theory (Locke and Latham, 2002, 2004) suggests that managers do better to emphasize specific performance goals than to worry about employees' psychic needs. Economists like Jensen and Meckling (1994) argue that people's willingness to trade off one thing for another (time for money or sleep for entertainment) disproves the idea of need.

Despite this academic skepticism, needs are a central element in everyday psychology. Parents worry about the needs of their children, politicians promise to meet the needs of constituents, and managers make an effort to understand the needs of workers. That's how Wegmans, a grocery chain that perennially ranks high on Fortune magazine's list of best places to work (number two in 2017), states its philosophy: “We set our goal to be the very best at serving the needs of our customers. Every action we take should be made with this in mind. We also believe that we can achieve our goal only if we fulfill the needs of our own people” (Wegmans, 2016).

Common sense tells us that needs are important because we all have them. But identifying what needs we have—long term or at any given time—is more elusive. A horticultural analogy may help clarify. A gardener knows that every plant has specific requirements. The right combination of temperature, moisture, soil, and sunlight allows a plant to grow and flourish. Plants do their best to get what they need. They orient leaves sunward to get more light and sink roots deeper in search of water. A plant's capabilities generally increase with maturity. Highly vulnerable seedlings become more self-sufficient as they grow (better able to fend off insects and competition from other plants). These capabilities decline as a plant nears the end of its life cycle.

Human needs are similar. Conditions or elements in the environment allow people to survive and grow. Basic needs for oxygen, water, and food are clear; the idea of universal psychic needs is more controversial. A genetic, or “nature,” perspective posits that certain psychological needs are essential to being human (Lawrence and Nohria, 2001; Maslow, 1954; McClelland, 1985; Pink, 2009; White, 1960). A “nurture” view, in contrast, suggests that people are so shaped by environment, socialization, and culture that it is fruitless to talk about common psychic needs.

In extreme forms, both nature and nurture arguments are misleading. You don't need an advanced degree in psychology to recognize that people are capable of enormous amounts of learning and adaptation. Just about any parent with more than one child knows that many psychological characteristics, such as temperament, are present at birth.

Most scholars see human behavior as resulting from the interplay between heredity and environment. Genes initially determine potential and predispositions. Research has identified connections between genetic patterns and behavioral tendencies such as antisocial behavior. But learning profoundly modifies innate directives, and research in behavioral genetics regularly concludes that genes and environment interact in complex ways to determine how people act (Baker, 2004).

The nature-nurture seesaw suggests a more useful way to think about human needs. A need can be defined as a genetic predisposition to prefer some experiences over others. Needs energize and guide behavior and vary in potency at different times. We enjoy the company of others, for example, yet we sometimes want to be alone. Because genetic instructions cannot anticipate all situations, both the form and the expression of each person's inborn needs are significantly tailored by experiences after birth.

Maslow's Hierarchy of Needs

One of the oldest and most influential of the models in Exhibit 6.1 was developed by the existential psychologist Abraham Maslow (1954). He started with the notion that people are motivated by a variety of wants, some more fundamental than others. The desire for food dominates the lives of the chronically hungry, but people move on to other things when they have enough to eat. Maslow grouped human needs into five basic categories, arrayed in a hierarchy from lowest to highest (Exhibit 6.2).

In Maslow's view, basic needs for physical well-being and safety are “prepotent”; they have to be satisfied first. Once lower needs are fulfilled, individuals move up to social needs (for belongingness, love, and inclusion) and ego needs (for esteem, respect, and recognition). At the top of the hierarchy is self-actualization—developing to one's fullest and actualizing one's ultimate potential. The order is not ironclad. Parents may sacrifice themselves for their children, and martyrs sometimes give their lives for a cause. Maslow believed that such reversals occur when lower needs are so well satisfied early in life that they recede into the background later on.

Attempts to validate Maslow's theory have produced mixed results, partly because the theory is hard to test (Alderfer, 1972; Latham and Pinder, 2005; Lawler and Shuttle, 1973; Schneider and Alderfer, 1973; Wahba and Bridwell, 1976). Some research suggests that the theory is valid across cultures (Ajila, 1997; Rao and Kulkarni, 1998), but the many theories of motivation developed since Maslow attest that the jury is still out on whether people have the needs Maslow posited or that the satisfaction of one need leads to activation of another.

Despite the modest evidence, Maslow's view has been widely accepted and enormously influential in managerial practice. Take, for example, the advice that the Manager's Guide at Federal Express offers employees: “Modern behavioral scientists such as Abraham Maslow…have shown that virtually every person has a hierarchy of emotional needs, from basic safety, shelter, and sustenance to the desire for respect, satisfaction, and a sense of accomplishment. Slowly these values have appeared as the centerpiece of progressive company policies, always with remarkable results” (Waterman, 1994, p. 92). Chip Conley, founder of a California hotel chain, put it simply: “I came to realize my climb to the top wasn't going to be on a traditional corporate ladder; instead it was going to be on Maslow's Hierarchy of Needs pyramid” (Conley, 2007). Academic skepticism didn't prevent him, FedEx, Joie de Vivre hotels, or Airbnb from building a highly successful management philosophy based on Maslow's theory, because the ideas carry a powerful message. If you manage solely by carrot and stick, you'll get only a part of the energy and talent that people have to offer.

Theory X and Theory Y

Douglas McGregor (1960) built on Maslow's theory by adding another important idea: that managers' assumptions about people tend to become self-fulfilling prophecies. McGregor argued that most managers harbor “Theory X” assumptions that subordinates are passive and lazy, have little ambition, prefer to be led, and resist change. Most conventional management practices, in his view, had been built on either “hard” or “soft” versions of Theory X. The hard version emphasizes coercion, tight controls, threats, and punishments. Over time, it generates low productivity, antagonism, militant unions, and subtle sabotage—conditions that were turning up in workplaces across the United States at the time. Soft versions of Theory X try to avoid conflict and keep everyone happy. The usual result is superficial harmony with undercurrents of apathy, indifference, and smoldering resentment.

McGregor's key point was that a hard or soft Theory X approach is self-fulfilling: If you treat people as if they're lazy and need to be directed, they live down to your expectations. Managers who say they know from experience that Theory X is the only way to get anything done are missing a key insight: The fact that people respond to you in a certain way may say more about you than about them. McGregor advocated a different way to think about people that he called Theory Y. Maslow's hierarchy of needs was the foundation:

The man whose needs for safety, association, independence, or status are thwarted is sick as surely as the man who has rickets. And his sickness will have behavioral consequences. We will be mistaken if we attribute his resultant passivity, hostility, and refusal to accept responsibility to his inherent human nature. These forms of behavior are symptoms of illness—of deprivation of his social and egoistic needs (McGregor, 1960, pp. 35–36).

Theory Y's key proposition is that “the essential task of management is to arrange conditions so that people can achieve their own goals best by directing efforts toward organizational rewards” (McGregor, 1960, p. 61). If individuals find no satisfaction in their work, management has little choice but to rely on Theory X and external control. Conversely, the more managers align organizational requirements with employee self-interest, the more they can rely on Theory Y's principle of self-direction.

Personality and Organization

Like his contemporary McGregor, Chris Argyris (1957, 1964) saw a basic conflict between human personality and prevailing management practice. Argyris argued that people have basic “self-actualization trends”—akin to the efforts of a plant to reach its biological potential. From infancy into adulthood, people advance from dependence to independence, from a narrow to a broader range of skills and interests. They move from a short time perspective (interests quickly developed and forgotten, with little ability to anticipate the future) to a much longer-term horizon. The child's impulsivity and limited self-knowledge are replaced by a more mature level of self-awareness and self-control.

Like McGregor, Argyris believed that organizations often treated workers like children rather than adults—a view eloquently expressed in Charlie Chaplin's 1936 film Modern Times. In a classic scene, Chaplin's character works furiously on an assembly line, trying to tighten bolts on every piece that slides past. Skill requirements are minimal, and he has no control over the pace of his work. An efficiency expert uses Chaplin as the guinea pig for a new machine designed to feed him lunch while he continues to tighten bolts. It goes haywire and begins to assault Chaplin with food—pouring soup on his lap and shoving bolts into his mouth. The film's message is clear: Industrial organizations abuse workers and treat them like infants.

Argyris and McGregor saw person-structure conflict built into traditional principles of organizational design and management. The structural concept of task specialization defines jobs as narrowly as possible to improve efficiency. But the rational logic often backfires. Consider the experience of autoworker Ben Hamper. His observations mirror a story many other U.S. workers could tell:

I was seven years old the first time I ever set foot inside an automobile factory. The occasion was Family Night at the old Fisher Body plant in Flint where my father worked the second shift. If nothing else, this annual peepshow lent a whole world of credence to our father's daily grumble. The assembly line did indeed stink. The noise was very close to intolerable. The heat was one complete bastard.

After a hundred wrong turns and dead ends, we found my old man down on the trim line. His job was to install windshields using this goofy apparatus with large suction cups that resembled an octopus being crucified. A car would nuzzle up to the old man's work area and he would be waiting for it, a cigarette dangling from his lip, his arms wrapped around the windshield contraption as if it might suddenly rebel and bolt off for the ocean. Car, windshield. Car, windshield. Car, windshield. No wonder my father preferred playin' hopscotch with barmaids (Hamper, 1992, pp. 1–2).

Following in his father's and grandfather's footsteps, Ben Hamper became an autoworker—the pay was good, and he didn't know anything else. He soon discovered a familiar pattern. His career began decades after Argyris and McGregor questioned the fallacies of traditional management, but little had changed. Hamper held down a variety of jobs, each as mindless as the next: “The one thing that was impossible to escape was the monotony. Every minute, every hour, every truck, and every movement was a plodding replica of the one that had gone before” (1992, p. 41).

The specialization Ben Hamper experienced in the auto plant calls for a clear chain of command to coordinate discrete jobs. Bosses direct and control subordinates, thus encouraging passivity and dependence. The conflict worsens at lower levels of the hierarchy—narrower, more mechanized jobs, more directives, and tighter controls. As people mature, conflict intensifies. Leann Bies was 44 with a bachelor's degree in business when she started work as a licensed electrician at a Ford truck plant in 2003, and “for two years they treated me as if I were dumber than a box of rocks. You get an attitude if you are treated that way” (Uchitelle, 2007, p. 10).

Argyris argued that employees try to stay sane by looking for ways to escape these frustrations. He identified six options:

1. They withdraw—through chronic absenteeism or simply by quitting. Ben Hamper chronicled many examples of absenteeism and quitting, including a friend who lasted only a couple of months:

   My pal Roy was beginning to unravel in a real rush. His enthusiasm about all the money we were makin' had dissipated and he was having major difficulty coping with the drudgery of factory labor. His job, like mine, wasn't difficult. It was just plain monotonous…

   The day before he quit, he approached me with a box-cutter knife sticking out of his glove and requested that I give him a slice across the back of the hand. He felt sure this ploy would land him a few days off. Since slicing Roy didn't seem like a solid career move, I refused. Roy went down the line to the other workers where he received a couple of charitable offers to cut his throat, but no dice on the hand. He wound up sulking back to his job. After that night, I never saw Roy again (1992, pp. 40, 43).

2. They stay on the job but withdraw psychologically, becoming indifferent, passive, and apathetic. Like many other workers, Ben Hamper didn't want to quit, so he looked for ways to cope with the tedium. His favorite was to “double up” by making a deal with another worker to take turns covering each other's job. This made it possible to get full pay for half a day's work:

   What a setup. Dale and I would both report to work before the 4:30 horn. We'd spend a half hour preparing all the stock we'd need for the evening. At 5:00, I would take over the two jobs while Dale went to sleep in a makeshift cardboard bed behind our bench…I'd work the jobs from 5:00 until 9:24, the official lunch period. When the line stopped, I'd give Dale's cardboard coffin a good kick. It was time for the handoff. I would give my ID badge to Dale so that he could punch me out at quitting time, (1992, p. 61).

   If doubling up didn't work, workers invented other diversions, like Rivet Hockey (sailing rivets into a coworker's foot or leg) and Dumpster Ball (kicking cardboard boxes high enough to clear a dumpster).

3. They resist by restricting output, deception, featherbedding, or sabotage.¹ Hamper reports what happened when the company removed a popular foreman because he was “too close to his work force” (1992, p. 205):

   With a tight grip on the whip, the new bossman started riding the crew. No music. No Rivet Hockey. No horseplay. No drinking. No card playing. No working up the line. No leaving the department. No doubling-up. No this, no that. No questions asked.

   No way. After three nights of this imported bullyism, the boys had had their fill. Frames began sliding down the line minus parts. Rivets became cross-eyed. Guns mysteriously broke down. The repairmen began shipping the majority of the defects, unable to keep up with the repair load.

   Sabotage was drastic, but it got the point across and brought the new foreman into line. To survive, the foreman had to fall into step. Otherwise, he would be replaced, and the cycle would start anew.

4. They try to climb the hierarchy to better jobs. Moving up works for some, but there are rarely enough “better” jobs to go around, and many workers are reluctant to take promotions. Hamper reports what happened to a coworker who tried to crack down after he was promoted to foreman:

   For the next eight days, we made Calvin Moza's short-lived career switch sheer hell. Every time he'd walk the aisle, someone would pepper his steps with raining rivets. He couldn't make a move without the hammers banging and loud chants of “suckass” and “brown snout” ringin' in his ears. He got everything he deserved (1992, p. 208).

   Hamper found his own escape: he started to moonlight as a writer during one of automaking's periodic layoffs. Styling himself “The Rivethead,” he wrote a column about factory life from the inside. His writing eventually led to a best-selling book, as well as film and radio gigs. Most of his buddies weren't as fortunate.

5. They form alliances (such as labor unions) to redress the power imbalance. Union movements grow out of workers' desire for a more equal footing with management. Argyris cautioned, however, that union “bosses” might run their operations much like factories, because they knew no other way to manage. In the long run, employees' sense of powerlessness would change little. Ben Hamper, like most autoworkers, was a union member, yet the union is largely invisible in his accounts of life on the assembly line. He rarely sought union help and even less often got any. He appreciated wages and benefits earned at the bargaining table, but nothing in the labor agreement protected workers from boredom, frustration, or the feeling of powerlessness.
6. They teach their children to believe that work is unrewarding and hopes for advancement are slim. Researchers in the 1960s began to note that children of farmers grew up believing hard work paid off, while the offspring of urban blue-collar workers did not. As a result, many U.S. companies began to move facilities away from old industrial states like Michigan (where Ben Hamper worked) to more rural states like North Carolina and Tennessee, in search of employees who still embodied the work ethic. Argyris predicted, however, that industry would eventually demotivate even the most committed workforce unless management practices changed. In recent decades, manufacturing and service jobs have been moving offshore to low-wage enclaves around the world, continuing the search for employees who will work hard without asking for too much in return.

Hamper's account of life on the line is a vivid illustration of Argyris's contention that organizations treat adults like children. The company assigned an employee to wander through the plant dressed in costume as “Howie Makem, the Quality Cat.” (Howie was mostly greeted with groans, insults, and an occasional flying rivet.) Message boards were plastered with inspirational phrases like “Riveting is fun.” A plant manager would emerge from his usual invisibility to give an annual speech promising to talk more with workers. All this hypocrisy took its toll: “Working the Rivet Line was like being paid to flunk high school the rest of your life. An adolescent time warp in which the duties of the day were just an underlying annoyance” (Hamper, 1992, p. 185).

The powerlessness and frustration that Hamper experienced are by no means unique to factory work. Bosses who treat office workers like children are a pop culture staple—including the pointy-haired martinet in Dilbert and the pathetically clueless boss in the television series The Office. In public education, many teachers and parents lament that increasing emphasis on high-stakes standardized tests alienates teachers and turns them into “deskilled clerks” (Giroux, 1998). Batstone sees frustration as pervasive among workers at every level: “Corporate workers from the mailroom to the highest executive office express dissatisfaction with their work. They feel crushed by widespread greed, selfishness, and quest for profit at any cost. Apart from their homes, people spend more time on the job than anywhere else. With that kind of personal stake, they want to be part of something that matters and contribute to a greater good. Sadly, those aspirations often go unmet” (2003, p. 1).

Argyris and McGregor formed their views on the basis of observations of U.S. organizations in the 1950s and 1960s. Since then, investigators have documented similar conflicts between people and organizations around the world. Orgogozo (1991), for example, contended that typical French management practices caused workers to feel humiliation, boredom, anger, and exhaustion “because they have no hope of being recognized and valued for what they do” (p. 101). She depicted relations between superiors and subordinates in France as tense and distant because “bosses do everything possible to protect themselves from the resentment that they generate” (p. 73).

Early on, human-resource ideas were often ignored by scholars and managers. The dominant “assembly-line” mentality enjoyed enough economic success to persist. The frame's influence has grown with the realization that misuse of human resources depresses profits as well as people. Legions of consultants, managers, and researchers now pursue answers to the vexing human problems of organizations.

Lean and Mean: More Benefits Than Costs?

The advantages of a smaller, more flexible workforce seem compelling: lower costs, higher efficiency, and greater ability to respond to business fluctuations. After the recession in 2008, the U.S. economy shed roughly 5 million jobs (Coy, Conlin, and Herbst, 2010), albeit just a fraction of the some 50 million lost worldwide (Schwartz, 2009).

Downsizing works best when new technology and smart management combine to enable fewer people to do more. In recent decades, manufacturing jobs have been shrinking around the globe because of changes in technology (Kenny, 2014). Yet even when it works, shedding staff risks trading short-term gains for long-term decay. “Chainsaw Al” Dunlap became a hero of the downsizing movement as chief executive of Scott Paper, where he more than doubled profits and market value. His strategy? Cut people—half of management, half of research and development, and a fifth of blue-collar workers. Financial outcomes were impressive at first, but employee morale sank, and Scott lost market share in every major product line. Dunlap did not stay around long enough to find out if he had sacrificed Scott's future for short-term gains. After less than two years on the job, he sold the company to its biggest competitor and walked away with almost $100 million for his efforts (Byrne, 1996).

Despite eliminating millions of jobs, many firms have found benefits elusive. Markels and Murray (1996) reported that downsizing often turned into “dumbsizing”: “Many firms continue to make flawed decisions—hasty, across-the-board cuts—that come back to haunt, on the bottom line, in public relationships, in strained relationships with customers and suppliers, and in demoralized employees.” In shedding staff, firms often found that they also sacrificed knowledge, skill, innovation, and loyalty (Reichheld, 1993, 1996). Multiple studies have found that cutting people hurts more often than it helps performance (Cascio, Young, and Morris, 1997; Gertz and Baptista, 1995; Love and Kraatz, 2005; Mellahi and Wilkinson, 2006). Nevertheless, more than half of the companies in a 2003 survey admitted that they would make cuts that hurt in the long term if that's what it took to meet short-term earnings targets (Berenson, 2004).

Downsizing and outsourcing often have a corrosive effect on employee motivation and commitment. A 2009 Conference Board survey found that “only 45% of workers surveyed were satisfied with their jobs, the lowest in 22 years of polling” (Coy, Conlin, and Herbst, 2010, p. 1). Workers reported that the mood in the workplace was angrier and colleagues were more competitive, and a 2012 survey found employee loyalty at a seven-year low.

Investing in People

Employers often fail to invest the time and resources necessary to develop a cadre of committed, talented employees. Precisely for that reason, a number of authors (including Cascio and Boudreau, 2008; Lawler, 1996; Lawler and Worley, 2006; Pfeffer, 1994, 1998, 2007; and Waterman, 1994) have made the case that a skilled and motivated workforce is a powerful source of competitive advantage. Consistent with core human resource assumptions, high-performing companies do a better job of understanding and responding to the needs of both employees and customers. As a result, they attract better people who are motivated to do a superior job.

The most successful company in the U.S. airline industry for many decades, Southwest Airlines, paid employees a competitive wage but had an enormous cost advantage because its highly committed workforce was so productive. Competitors tried to imitate Southwest's approach but rarely succeeded because “the real difference is in the effort Southwest gets out of its people. That is very, very hard to duplicate” (Labich, 1994, p. 52).

Ewing Kauffman started a pharmaceutical business in a Kansas City basement that he grew into a multibillion-dollar company (Morgan, 1995). His approach was heavily influenced by his personal experiences as a young pharmaceutical salesman:

I worked on straight commission, receiving no salary, no expenses, no car, and no benefits in any way, shape, or form—just straight commission. By the end of the second year, my commission amounted to more than the president's salary. He didn't think that was right, so he cut my commission. By then I was Midwest sales manager and had other salesmen working for me under an arrangement whereby my commission was 3 percent of everything they sold. In spite of the cut in my commission, that year I still managed to make more than the president thought a sales manager should make. So this time he cut the territory, which was the same as taking away some of my income. I quit and started Marion Laboratories.

I based the company on a vision of what it would be. When we hired employees, they were referred to as “associates,” and they shared in the success of the company. Once again, the two principles that have guided my entire career, which were based on my experience working for that very first pharmaceutical company, are these: “Those who produce should share in the profits,” and “Treat others as you would be treated” (Kauffman, 1996, p. 40).

Few managers in the 1950s shared Kauffman's faith, and many are still skeptics. An urgent debate is under way about the future of the relationship between people and organizations. The battle of lean-and-mean versus invest-in-people continues. In pipe manufacturing, two of the dominant players are crosstown rivals in Birmingham, Alabama. One is McWane, which compiled an abysmal record on safety and environmental protection—9 deaths, 400 safety violations, and 450 environmental violations between 1995 and 2002 (Barstow and Bergman, 2003b) that “culminated in an $8 million fine imposed in April 2009. Four former plant managers were sentenced to federal prison for what authorities said was wrongdoing at the plant, including the cover-up of evidence in the 2000 death of Alfred ‘Alfie’ Coxe in a forklift accident” (Salamone, 2016).

The other is American Cast Iron Pipe (Acipco), which was the first firm in its industry to appear on Fortune's list of the best places to work in America and was named one of Birmingham's most admired companies in 2012. Barstow and Bergman write that “several statistical measures show how different Acipco is from McWane. At some McWane plants, turnover rates approach 100 percent a year. Acipco—with a work force of about 3,000, three-fifths the size of McWane—has annual turnover of less than half a percent; 10,000 people recently applied for 100 openings” (2003c, p. A15).

Which of these two competing visions works better? Financially, it is difficult to judge, because both companies are privately held. Both have achieved business success for roughly a century. But in January 2003, at the same time that Fortune was lauding Acipco for its progressive human resource practices, the New York Times and a television documentary pilloried McWane for its callous disregard of both people and the law. By 2012, a chastened McWane was describing itself as an industry leader in employee safety and offered data suggesting that safety problems in its plants had declined steadily.