Leadership & the Hierarchy of Organizational Needs (1 of 3)

Hierarchy of Organizational Needs (HON) Part 1 | Part 2 | Part 3

One way of examining your organization’s current condition and what is motivating you as a leader is with the Hierarchy of Organizational Needs (HON).

Leaning on Abraham Maslow’s well-regarded model of human needs, we can look at organizational needs in a very similar way. And, just as Maslow proposed his needs hierarchy as a way to explain motivation in humans, we can use the HON to better understand the motivation of corporate leaders as their organizations move up and down through the levels in the hierarchy.

Understanding where your organization currently resides in this hierarchical scheme will enable you to focus on the specific demands and challenges you face in today’s financial crisis, thereby enabling you to make (or help others make) better decisions moving forward.

This model is not meant to represent organizational growth, and it has no correlation with the age or size of the organization. It is a way of looking at a state of being. The bottom two levels are where many corporations, small businesses, and non-profit agencies are residing in this turbulent economy.

The HON Pyramid

Level 1 – Survival:

is a state in which the organization is just trying to stay alive. The current financial crisis (or some other devastating event) has rendered it non-viable. It is not only not profitable but is hemorrhaging cash at an alarming rate. Organizational leaders will be focusing their attention on drastic actions, such as plant closures, reorganizations through bankruptcy filing, accepting government monies, and heavy layoffs.

Examples of companies in dire straits in 2009 are General Motors and many of the Wall Street investment houses. Leaders of organizations at this level are motivated by the need to keep the doors open, for themselves, the shareholders, and for employees. They are willing to do whatever it takes to regain viability; they are living quarter to quarter and can think about little else during their waking hours.

Level 2 – Stability:

is a condition of tenuous equilibrium characterized by minor and/or temporary loss of profitability. Leaders see the current financial crisis as a serious threat to the organization’s financial health and continued growth, but not life-threatening. Their motivation is on maintaining or regaining equilibrium during the crisis.

This state may be characterized by hiring freezes, plant consolidations, small layoffs, and a variety of other cost-cutting mechanisms. The organization’s revenue has taken a hit, and costs must be brought in line. Income is more-or-less the same as outflow. Growth is not on the near-term horizon. Employees in organizations at Level 2 are looking to their leadership to steer the ship back to profitability, with as little pitching and rolling as possible.

Levels 3, 4 & 5

See Part 2 to see how leaders at those levels are motivated.

Hierarchy of Organizational Needs (HON) Part 1 | Part 2 | Part 3

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Posted on February 17, 2009 by Contributing Author Sara Zeff Geber, Ph.D.

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