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INTRODUCTION A&B, a strong ethical chain of department stores, selling clothes, food and hardware, faces insurmountable obstacles to its survival as many of the structural factors that have provided the basis for the company’s success are under threat. Radical changes in the retail market make the company to loose ground in market share and, consequently, to have to reconsider all elements of its activities. Hence, as an attempt to recover, A&B’s managing director proposed to remodel staff attitudes and set customer care as the primary focus of activity, in other worlds to adopt a more flexible firm model. THE IMPLICATIONS OF THE PROPOSED FLEXIBLE FIRM MODEL Formal organization, organizational culture, structure and characteristics of the employees are key variables constraining the entire change process. The flexible firm model will enable A&B to remove hierarchical levels and to introduce a flatter organizational structure, which may lead to reduced costs. This structure may increase the quality of working life, as it draws on many people’s skills and expertise necessary for rapid decision-making. Moreover, with the flexible structure, decentralized management and control will be increased. Some decisions will be made by individual smaller centers, whilst centers still report to the central control. This situation will give divisional managers some freedom to experiment with new ways of working and make decisions as best fits the circumstances at the time as they ‘know best’ how to act in their own local sphere of responsibility. But, it is worth noting that “because flat organizations have fewer levels of management, with fewer supervisors and middle managers, vertical communication between the workforce and senior management may be hindered”. (Leicester 2001, 3.7-3.8) In general, employees resist a change as they fear will take away something of value. A proposed change in job design, structure may lead to a real or perceived loss of power, prestige, pay, or company benefits. The fear of personal loss is perhaps the biggest obstacle to organizational change (Donnelly, Gibson & Ivancevich 1987, 449). Undoubtedly, according to propose that all the employees’ full-time contracts will become part-time will cause job insecurity. This arises from the fact they will loose all the privileges and benefits previously had and moreover will feel treat of loosing their jobs, as their contracts may not be renewed. Job insecurity among employees leads to job dissatisfaction. There may be more of a dominant assumption that inputs are offered with the expectation of a like response. Therefore, according to the ‘Expectancy Theory’, if the outcomes, such as pay, recognition, benefits and other rewards that are available from high effort and good performance, are not valued by employees, motivation will be lower. (Daft 2003, 556&557) As stated by Abraham Maslow in his ‘Hierarchy of Needs Theory’, employees are motivated by multiple needs. The first need in the hierarchical order is the Physiological need that in the organizational workplace is reflected in the need for a base salary to make certain survival. The next one has to do with the need for job security; therefore, security needs could be aroused at work when there is uncertainty about continued employment with the company. Subsequently, social needs act as important motivators of behavior when the individual has a need to belong to a group at work, which, for example, influences the desire for developing good relationships with co-workers, participation in a work group, giving and receiving friendship, understanding, and finally a positive relationship with supervisors. Esteem needs include the recognition as a result of efficient and effective job performance and the need to establish status in the organization. At the bottom of the hierarchy is the self-actualization need that provides employees with opportunities to grow and to be creative. Managements’ blocking or frustrating of these needs can lead to potentially dangerous implications for employees’ safety attitudes and balancing behaviors; resistance to budget pressures, antagonism, and an unwillingness to cooperate. (Daft 2003, 549&550) The effect job insecurity can have not only on a range of important individual outcomes but also on organizational. Employee’s motivation affects organization productivity, as it is worldwide known that people are the most crucial resource in any organization. Therefore, an organization is effective only if it is staffed by talented and highly skilled employees that effectively discharging their assigned duties (Donnelly, Gibson & Ivancevich 1987, 46). Differently, low employee motivation goes hand-in-hand with low organizational performance and profits (Daft 2003, 546&547}. Employees who feel that their jobs are insecure may prefer to close the eyes to critical safety policies and ‘cut corners’ to maintain or enhance their production numbers in an effort to retain their job.
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