The theory assumes that all human activity is motivated by needs. Needs can be divided into three groups of related needs, and these need-groups can be rated according to their importance. The assumption is that humans must meet the need of the most important group before significant attention and energy can be devoted to needs in the second group, and must meet the needs of the first and second groups before much energy can be expended on needs in the third group.
The need-groups are:
Existence needs: Food, water, air, shelter, clothing, safety, physical love and affection.
Relatedness needs: To be recognized and feel secure as part of a group, a family, a culture
Growth needs: To progress toward one's ideal self.
These are usually presented in pyramidal form, with the most essential needs at the bottom. This illustrates the notion that the structure of human needs must start at the lower, most essential level, and that higher "structures" can be achieved only when the base is "solid."
This does not mean that one can ignore the lower needs after they have been achieved; one does get hungry again, for instance. Instead it represents life development, in that we work out systems that meet our needs such that they do not require our full attention, thus freeing up energy for higher needs.
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Like Maslow's model, the ERG theory is hierarchical - existence needs have priority over relatedness needs, which have priority over growth.
ERG theory was developed by organizational behavior scholar Clayton Alderfer to everyone the problems with Maslow’s needs hierarchy theory. ERG theory groups human needs into three broad categories: existence, relatedness, and growth. (Notice that the theory’s name is based on the first letter of each need.) As Exhibit 5.1