The Business Hierarchy of Needs for Human-Focused Companies

This article is an excerpt from the Shortform book guide to "Humanocracy" by Gary Hamel and Michele Zanini. Shortform has the world's best summaries and analyses of books you should be reading.

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What is the business hierarchy of needs? How can it be applied to human-focused companies?

In Humanocracy, Gary Hamel and Michele Zanini propose a new way to build and run organizations: using human-focused principles. They argue in favor of adopting a business hierarchy of needs that doesn’t rely on bureaucratic principles like efficiency and employee obedience.

Read on to discover what a business hierarchy of needs looks like for a human-focused company.

The Business Hierarchy of Needs

To clarify why they believe that human-focused companies are important, Gary Hamel and Michele Zanini created a hierarchy of principles in their book Humanocracy. According to them, every company needs to embody this business hierarchy of needs to be successful. The highest tiers of this hierarchy are human-focused principles that can only be achieved by human-focused companies.

Like Maslow’s famous hierarchy of needs, Hamel and Zanini’s business hierarchy of needs is one in which each tier supports the tiers above it; in other words, you have to start at the bottom and work your way up. They say that the most successful companies are those that build all six tiers—including the top, human-focused tiers—into their business practices.

The six tiers are, in descending order of importance:

Tier 6: Courage
Tier 5: Ingenuity
Tier 4: Proactiveness
Tier 3: Proficiency
Tier 2: Conscientiousness
Tier 1: Compliance

Partial Counterpoint: Meet All Needs at All Times

The authors say that their business hierarchy of needs, like Maslow’s, must be built and implemented starting from the bottom and working upward. However, this strict order may not be necessary for seeing success with either hierarchy.

Psychologists generally agree with Maslow’s ideas about what humans need, but they question his claim that those needs must be met in a specific order. Indeed, the very concept of “need” implies that people should have all of these things at all times. For example, someone suffering from food insecurity—a lower-tier need—can still benefit emotionally from having close friends—a higher-tier need).

The same principle holds true for companies: Rather than thinking of the hierarchy of business needs as a checklist to be completed in order, try viewing it as a list of things to encourage at all times, from all employees. For example, a worker who isn’t especially experienced at her job (proficiency) could still have a brilliant idea about how to improve the company (ingenuity).

We’ll now examine each tier of the authors’ business hierarchy of needs in more detail.

The Lower Tiers: Making a Company Functional

The bottom tier of the authors’ business hierarchy of needs is compliance. Although a humanocracy runs on ingenuity and freedom, there still have to be rules regarding safety, customer service, and how company resources can be used. For example, without some rules in place, an unscrupulous employee might just take company funds for himself and produce nothing in return. In short, compliance is the foundation upon which any successful business must be built.

(Shortform note: Having compliance as the foundation of a business seems to contradict the authors’ main point: that companies should be encouraging creativity and innovation. However, some experts echo Hamel and Zanini’s view that compliance is crucial for any organization, up to a point—laws need to be obeyed, processes need to be consistent (until they’re improved), and so on. Creativity and autonomy are important, but letting employees do whatever they want would almost certainly destroy a company.)

The second tier is conscientiousness. Simply put, workers need to do their jobs consistently and carefully for an organization to function. This is closely related to the third tier, proficiency: This means that employees must have enough training and experience to do their jobs well.

(Shortform note: Again, here, the authors arguably contradict their main practice of replacing bureaucratic principles with human-focused ones: They’re saying that employees need to perform narrow job descriptions consistently and develop their skills in those specific functions, ignoring employees’ creativity and autonomy. However, providing a consistent routine and clearly defined duties—in other words, structure—is itself a very human-focused principle. Having an established routine helps people to feel grounded and confident because they know what they’re supposed to be doing and are confident in their ability to do it. Routine can be especially important for neurodivergent people, who may become stressed and upset if their routines are disrupted.)

Hamel and Zanini say that these bottom three tiers are necessary for any business, but they aren’t enough to generate profits in the crowded, modern-day marketplace. That’s why a truly successful company—a human-focused company—will continue working its way up the business hierarchy of needs.

(Shortform note: Marketing guru Seth Godin makes a similar argument in Purple Cow, although with a focus on building products rather than companies. He argues that there are simply too many products on the market nowadays, so a merely “good” product is no longer good enough. In order for your product to be successful, it needs to be special or remarkable in some way so it stands out. Hamel and Zanini are applying that logic to an entire company—it’s no longer enough to just have your employees do their jobs. To stand out in a world full of companies, you need to create an exceptional organization that encourages employees to come up with exceptional ideas.)

The Higher Tiers: Making a Company Great

The next tier of the authors’ business hierarchy of needs is proactiveness. Breaking out of rigid, bureaucratic habits requires employees who are willing to take the initiative: to go beyond their basic job responsibilities to solve problems and improve the company. It also requires a company that will allow them to do so.

Proactiveness is closely related to the next level, ingenuity: having the creativity and intelligence to not just take the initiative, but also to do so effectively. An employee who’s proactive but not creative might take it upon himself to fix a problem and accidentally make it worse, or he might spend an unreasonable amount of time and energy fixing the issue when a more efficient solution is possible.

Finally, the highest level of the pyramid of business needs is courage: being prepared to formulate and implement risky ideas and solutions. Courage is what allows employees to truly innovate; to put themselves on the line, try new things, and accept the results whether they’re good or bad.

The Higher Tiers Are Challenging to Reach, but Necessary

The top three tiers of the authors’ business hierarchy of needs—proactiveness, ingenuity, and courage—are only possible to achieve when workers are engaged with and devoted to what they do. Remember, employee engagement can’t be brought out through bureaucracy and managerial orders; it only happens when people truly believe that their work is exciting and important, and that it therefore deserves their absolute best efforts.

Although they may be difficult to achieve, Hamel and Zanini believe that those top three tiers define the best businesses. This is because companies that encourage all employees to proactively generate ideas have the greatest chance of generating outstanding ideas.

In general, the companies with the best ideas will be the most successful. However, truly great ideas are very rare. Therefore, a company that sources ideas from all of its employees will have a huge advantage over one that relies on a small team of executives or experts. In other words, if you tap into a larger pool of ideas, you have a greater chance of finding the next outstanding one due to the sheer number of ideas at your disposal.

Before Collecting Ideas, Devise a Mission

In The Fifth Discipline, Peter Senge makes a similar argument regarding pooling ideas from as many people as possible: He agrees that more people coming up with more ideas means a better chance of finding great ideas. However, Senge says that before encouraging idea-sharing, it’s important to first give your organization a common mission: an audacious and exciting goal that will inspire your workers to look for new ways to accomplish it. In other words, to effectively use the top three tiers of Hamel and Zanini’s business hierarchy of needs, you must first figure out exactly what your company wants to accomplish and how doing so will improve the world.

Devising an inspiring mission is crucial because it will focus your company’s efforts—employees won’t just be coming up with new ideas that may or may not be relevant to your company’s future. Instead, they’ll come up with new ideas about how to reach clear and relevant goals. Having an inspiring mission will also increase employee engagement, granting your employees access to the top three tiers of the authors’ pyramid.

The Business Hierarchy of Needs for Human-Focused Companies