Determine Compensation Components Using Maslow’s Hierarchy of Needs Model

Maslow’s Hierarchy of needs explains the stages in a person’s life, experienced at different times emotionally. If we analyze Maslow’s hierarchy in terms of compensation structure then the lowest level which covers physiological needs includes the basic rights of employees to work in a clean and healthy work environment where they have access to basic necessities of life like water, clean air to breathe etc. benefits other than salary do not fall in this category because they enable employees to achieve higher level of satisfaction then just fulfilling their physiological needs (Miller-Merrell, 2013). This need will be of utmost importance to 750 employees who are non management employees. they are paid less and for them meeting both ends matters.

On the second level come safety needs where stable work environment comes with no fear of being laid off unfairly. Safe work environment also falls in this level where employees are given life insurance policies if their tasks involve some life endangering job. All benefits and conditions to ensure safe work environment are a part of fulfilling Maslow’s second level of need model like health care benefits, pension fund, retirement benefits, provident fund etc (Tanner).

Then a person moves higher up the ladder and his sense of belongingness come into play. In this stage the relationships with co workers, peers, boss and subordinates are considered. A person looks for love and respect in his workplace relationships and a company could help foster this through team building exercises and trainings or designing tasks in a way that employees have to work in groups in order to achieve the goal. People may find out the better salary structure and benefits somewhere else, but if they bond with their co workers well then they might turn into loyal employees. Miller’s sense of belonging maybe was too high that’s why he hired his relatives to surround himself with his loved ones even at his workplace.

[large]Then comes esteem needs in which a person needs to be appreciated for his/her efforts and recognized for their contribution in organization. This recognition can be in the form of monetary benefits like promotion and bonus or non-monetary terms like employee of the month programs. An employee who is at this stage of Maslow’s hierarchy seeks respect from his organization for his contributions. Miller clearly did not arrive at this level since he did not improve the production levels since three years and consistently performed bad. 

The final and last stage of Maslow’s hierarchy is self actualization and a person only reaches this stage when he/she has passed through all the lower levels. This means that an employee at this stage will be earning a good compensation from the company with surety of his employment to continue in future. He will also be receiving some health and insurance benefits and he would have friends in his workplace that would make his work enjoyable for him. He must be feeling appreciated for his efforts and now he is at a stage where he works because he loves his job and want to accomplish things for his own sake. He does not seek approval from anybody nor is his work an obligation for him. This stage is achieved only when the basic needs are met and it is the responsibility of HR to facilitate employees in a way that they feel self actualized.

Bibliography

Gunderson, M. (2001). Economics of personnel and human resource management. Human Resource Management Review , pp. 431 – 452.
Miller-Merrell, J. (2013, May 01). How Does Your Compensation Model Fit into Maslow’s Hierarchy of Needs? Retrieved June 11, 2016, from Payscale: http://www.payscale.com/compensation-today/2013/05/how-does-your-compensation-fit-into-maslow-hierarchy-of-needs
Rasim, T. S. (2008). The Role of Psychology in Human Resources Management. Europe’s Journal of Psychology .
Tanner, R. (n.d.). Motivation – Applying Maslow’s Hierarchy of Needs Theory. Retrieved June 11, 2016, from Management is a Journey: https://managementisajourney.com/motivation-applying-maslows-hierarchy-of-needs-theory/