Clayton Alderfer's ERG Theory of Needs states that people are motivated by three basic sets of needs: existence, relatedness and growth. These are reflected in the acronym "ERG" and can be simultaneously influential factors. Although ERG theory is based on Maslow's previous theory of needs, it is not based on a hierarchical structure as Maslow's is.
Unlike Maslow, Alderfer's theory states that if a higher-level need is left unsatisfied, an individual's motivation to obtain gratification from a lower-level need increases. The ERG theory is also based on three "condensed" need categories, while Maslow's theory is based on five needs that are somewhat more differentiated from each other.
The existence category in the ERG theory consists of meeting the basic needs of physical survival and is satisfied by the compensation gained from an individual's employment or productive output. The need for interpersonal relationships, which is the second category, can also be satisfied to a certain extent through a person's work because of the significant number of hours spent each week with coworkers or business associates. Once again, a person's career can satisfy the third category, growth, through the personal development that can take place in a work environment.
As an on-the-job theory of motivation, Alderfer's theory accounts for a shift in focus to another need if one of the three is frustrated. In this way, a person's work can provide the required need satisfaction as long as at least one of the three basic needs is met. If the job itself is threatened, however, Alderfer believes it can result in an individual being placed in a emotionally desperate situation.