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How Does Your Compensation Model Fit into Maslow’s Hierarchy of Needs?

Jessica Miller-Merrell, blogging4jobsIt can be easy to get caught up in the benefits rat race. You know, keeping up with the Joneses, or in this case, the Joneses, Inc. You probably spend a fair amount of time thinking about what’s in your benefits package, how it measures up against your competitor’s, how to market it to potential employees and more.

It can be easy to get caught up in the benefits rat race. You know, keeping up with the Joneses, or in this case, the Joneses, Inc. You probably spend a fair amount of time thinking about what’s in your benefits package, how it measures up against your competitor’s, how to market it to potential employees and more.

But the basis of why benefits packages are offered to employees is to meet their basic needs. Medical insurance keeps employees healthy and able to work on a day-to-day basis while retirement benefits give employees peace of mind for their future. It may seem elementary, but to understand basic human needs, the best place to start is Maslow’s Hierarchy of Needs.


Every benefit you offer employees falls into one of the categories in Maslow’s hierarchy of needs. Just like there are different levels of human necessities to meet our needs, there are some benefits people need before additional benefits or trendy extras should be offered. Take a look at the categories below to see where each type of benefit fits in.

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Physiological needs
The most basic of human needs fall into this category. Most benefits aren’t considered to meet physiological needs because if it’s considered a benefit to employment, it isn’t required for human survival, but fair compensation falls into this category as a means to buy those basic necessities.


The benefits that do fall into this category are things like a clean and safe facility to work in, access to food and water and time off. It sounds simple because it is. These are things that are legally required in the scope of employment.


Safety needs
After physical needs have been met, the need and desire for a sense of safety becomes people’s main concern. As far as safety needs that are satisfied by your company, there are quite a few. Your commitment to employ someone fulfills his or her need for employment and financial security. Health care coverage also fulfills a need for a healthy body, while disability and life insurance provide peace of mind that they’ll be protected if an unfortunate accident should occur. Lastly, retirement benefits offer long-term security that the employee and their family will be taken care of.


The funny thing about this category of Maslow’s hierarchy of needs is that most of the major benefits fall under it, yet as far as Maslow is concerned, it provides mostly intangible, mental health well being to employees.


Love and belonging
This need consists of a desire for interpersonal relationships and a sense of belonging. While your employees may not find love in the workplace (or who knows, maybe they will!), you can help to foster healthy and productive workplace relationships. This can be through workday events for employees, group training, team-building activities and more. Don’t forget that these are an important but often-forgotten part of your company’s added benefits for employees.



We all have a need to be respected, which includes self-esteem and self-respect. Many people’s self esteem comes from confidence they gain at work, so it’s important to help employees succeed and encourage respect and appreciation for others. This is where a pay for performance compensation model comes into play. Rewarding people for performance feeds this basic need.

Learning and development programs will be a significant part of this, including offering certifications and other training at no cost to employees. Appreciation programs and awards will also add to a sense of accomplishment, confidence and respect for employees.



Maslow stated, “What a man can be, he must be.” This thought is what the need for self-actualization is based on. Self-actualization includes the need to accomplish everything that you can. For employees to be happy and thriving, it’s vital that you provide them with the resources to do so. For some, it may be that they need the space and time to be creative in their jobs, while for others it may be opportunity for advancement. As an HR manager, you have the power to help your employees be all they can be.


Does your company do a great job in at least one of these areas? Let us know in the comments section below.


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Jessica Miller-Merrell
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AJDarlene HandleyFranko PessenbacherRobin ReichJessica Miller-Merrell Recent comment authors
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Darlene Handley
Darlene Handley

only the physiological and safety. the rest the company could care less about.

Robin Reich
Robin Reich

Unfortunately, in the majority small (1-15 employees) entrepreneurial companies, this is true. The bottom line only factor that seems to be of concern. As well it must be, but to achieve or exceed the bottom line, there must be a balance of business decisions that acknowledge, without the employee, there is no business and no bottom line. Part of this balance is provision of needed, quality benefits to attract and maintain productive people !

Franko Pessenbacher
Franko Pessenbacher

Lower paid blue collar workers live to meet physiological demands such as buying food and paying shelter. Competition does not allow an employer to spend more on wages.These needs need to be met, before the benefit of the motivators take place.  The problem is when unions dictate pay rates there is no reward for the harder worker or downward adjustment for the lazy worker. In South Africa it is very difficult to get rid off staff performing below standard.

Llakshmi Narayan NJ

A very interesting correlation Maslow and Compensation. Though I have heard may saying that Maslow’s theory is very primitive, it does have relevance in today’s living. Many of our compensation design is reaching out to the basic needs of food clothing and shelter and the acts governing minimum wages, union settlements, Owners designing compensation for their obedient employee etc addresses this only. In todays world where managing aspirations is the single most deciding factory in retaining employees and motivating them to deliver business goals,we are not sensitive to the other rungs talked about in Maslow’s Theory. Traditionally there was one family one… Read more »

Jessica Miller-Merrell

Thanks for the comment, Llakshmi. I’ve been hesitant to write about Maslow’s Hierarchy of Needs when it comes to employees because I think that in university studies and academia it tends to be overdone. I do think that employers need to remember that basic compensation needs to be met for an employee to stick around at their organization.  Having worked in retail much of my HR career, even if they job provided better hours and benefits, my employees would leave for a $.10 an hour increase at a job that also had a lesser commute because they were able to make… Read more »

Jessica Miller-Merrell

Thanks for the comment, Franko. In the history of employment and the workforce in the US, unions were created to elevate employees in compensation and benefits physiological benefits. That is no longer always the case depending on a variety of factors. Each industry is different just as each union is different as is each country. There are many different country specific employment laws that make hiring, developing and terminating employees challenging and this will always remain. It’s the nature of the world of work and the business of what we do. 



Just a comment: Maslow’s Hierarchy has been largely disproved because he suggests that you can only move progressively through the pyramid only after each prior need has been met. Often, people aren’t this logical to satisfy safety needs before their esteem needs (or you pick another one out of order). Alderfer’s ERG theory, which furthers Maslow’s work, is far more accurate and should be used instead. 

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