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Promotion of products Strategies for sales promotion

Modern marketing calls for more than developing a good product, pricing it attractively, and making it accessible to target consumers. Firms should promote products at the market. Why?

Slide 1 I don't know you.

I don’t know your firm.

I don’t know your firm’s products.

I don’t know people using your products.

And now, what do you want to offer me?

To communicate effectively, companies hire advertising agencies to develop effective ads, sales promotion specialists to design sales incentive programs; and public relations firms to develop the corporate image. They train their salespeople to be friendly and knowledgeable. For most companies the question is not whether to communicate, but how much to spend and in what ways. Modern company manages a complex marketing communications system. The company communicates with its middlemen, consumers and various publics. Its middlemen communicate with their consumers and various publics. Consumers engage in word-of-mouth communication with each other and with other publics. Meanwhile each group provides communication with feedback to every group. The marketing communication mix (Promotion mix) consists of four major tools:

1. Advertising – any paid form of no personal presentation and promotion of ideas, goods, or services by and identified sponsor

2. Sales promotion – short-term incentives measures of encouragement of purchase or sale of a product or service.

3. Publicity – no personal stimulation of demand for a product, service, or business unit by planting commercially significant news about it in a published medium or obtaining favorable presentation of it upon radio, TV, or stage that is not paid by other sponsor.

4. Personal selling – oral presentation in a conversation with one or more prospective purchasers for the purpose of making sales.

Own specific receptions, such as – trading presentations, expositions in sale places, advertizing by means of souvenirs, specialized exhibitions, demonstrations, catalogs, trading - advertizing literature, posters, competitions, awards and coupons are inherent in each of them. It is necessary to notice that external registration of the goods, its price, the form and color of packing, a manner and clothes of the seller – something all it speaks to the buyer. For achievement of the greatest effect it is necessary for firm to coordinate carefully all complex of marketing, and not just a stimulation complex. We

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will consider making elements of advancement of the goods from the point of view of planning. For successful planning it is necessary:

1. Identifying the target audience

2. Determining the response sought

3. Choosing a message

4. Choosing media

5. Selecting source attributes

6. Collecting feedback

1) Starting activity it is necessary to have absolutely accurate idea about the target audience. It potential buyers of the goods of firm, current users, deciders, or the general public. The target audience will critically influence the communicator’s decisions on what is to be said, how it is to be said, when it is to be said, where it is to be said, and who is to say it. An example – antihypertensive preparations.

2) Having revealed target audience, it is necessary to define, which response is desirable for receiving. Certainly as much as possible favorable reaction is purchase, but purchase is result of long process of decision-making. Proceeding from what, it is necessary to know in what condition there is at present a target audience. The target audience can be any of the six conditions of purchasing readiness:

1. awareness (know or not? – simple messages repeating the name)

2. knowledge (how much aware? – messages with description of firm, product or service)

3. liking (how do they feel about it? – describing quality of the product)

4. preference (do prefer it to other analogs? – comparing advantages of the products with analogs)

5. conviction (are they sure to buy?– purchase is the only correct choice)

6. purchase (offer lower price, discounts, gifts)

The listed six conditions reduce usually to three stages

1. cognitive (awareness, knowledge)

2. affective (liking, preference, conviction)

3. behavior (purchase)

Having defined the desired audience, the communicator moves to developing an effective message. Ideally, the message should get Attention, hold Interest, arouse Desire, and obtain Action – AIDA model. The communicator has to figure out an appeal

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or theme that will produce the desired response. Three types of appeal can be distinguished:

1.Rational appeals – relate to audience’s self-interest. Examples will be message demonstrating a product’s quality, economy, value or performance. Colgate toothpaste - against caries.

2.Emotional appeals – attempt to stir up some negative some positive or negative emotion that will motivate purchase. Mezim – toad with a tympanitic stomach

3.Moral appeals – are directed to the audience’s sense of what is right and proper. Grand Candy, Grand Tobacco- our is different, our is better.

4) Now it is necessary to choose effective methods of communications. Communication channels are of two broad types:

• channels of personal communications

• channels of impersonal communications

5)The message’s impact on the audience is influences by how the audience perceives the sender’s credibility. What factors underline credibility:

• professionalism

• conscientiousness

• appeal

This explains why pharmaceutical companies want doctors to present their products since their opinion is trustworthy and professional.

6) We will consider four basic schemes of calculation of the total promotion budget and mix

1.Affordable budget – spent as much as company can afford.

2.Percentage-of-sales method– about 30 – 50% in cosmetics and up to 10 – 20% in pharmacy.

3. Competitive-parity method – the budget set to match competitor's outlays.

4. A method of calculation proceeding from the purposes and problems. Objective-and-task method.

• Establish the market-share goal – the advertiser wants 8% out of 50 000 patients use the drug – 4000 patients.

• Determine the percent of the market that should be reached by ads – have to cover 80% of the market – 40 000 patients.

• Determine the percent of patients that should be persuaded to try the drug – 25% since out of them only 40% will continue to use it and it will be – 4000 patients.

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• Determine the number of advertising impression per one percent trial rate – 40 advertising impressions per 1% of the audience.

• Determine the number of gross rating points – 40 advertising impressions per 1%, and for 80% - 3200.

• Determine budget size – 30 radio ads – $100, 3200 – about $1100.

The nature of stimulants /promotion/

The unique characteristics, the kinds of costs are inherent in each stimulant.

Advertising 1. Public nature. Advertisement is a public form of communication. Its public

nature assumes that the product is legal and common. 2. Ability to persuade. Advertisement is persuasion mean allowing to repeat

the message many times. 3. Expressivity. Due to skilful use of fonts, colors, and sounds advertisement

presents the product effectively and bright. 4. Nonpersonal. Advertisement is a monolog, not a dialog. The buyer should

not respond or pay attention. 5. Advertisement can be placed in various media: newspapers and

magazines, radio and TV, external banners, placards, souvenirs, etc.

Sales promotion – use of diverse means of the stimulating influence, called to accelerate or strengthen market response.

1. Attractiveness and informativeness – usually attracts attention and contains information leading to the product.

2. Purchasing motive – they offer discount or privilege valuable for the consumer. 3. Invitation to purchase – Contain clear message to purchase immediately

Methods of stimulation of sale concern:

• Sample distribution

• Money back

• Packages –sets

• Favorably priced packages

• Premiums

• Contests

• Lotteries

Stimulating sales

• Discounts for the volume of sales

• Offer products without up-front payment

• Benefits for sellers for including the product into the nomenclature

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• Joint advertising (is when small companies, freelancers (those who work for different companies at different times rather than being permanently employed by one company), or social organizations are doing their advertising together to reach better...)

• Premiums

• Sellers contests

Stimulating trade personnel

• Premiums

• Contests

• Sellers conferences

PROPAGATION (PUBLICITY)

Involves securing editorial space as divorced from paid space.

1.Trustworthiness – Informative materials (articles) seem more trustworthy to readers compared to advertisement.

2.Wide coverage of buyers – cam reach many potential buyers that avoid contacts with sellers and advertisement.

3.Expression. Like advertising, propagation possesses possibility of effective, bright representation of firm or the goods.

Personal sales 1. Personal nature – Assumes immediate communication between two or more

people. Gives an opportunity to research needs and characteristics of a buyer and immediately make adjustments.

2. Building relationships – Personal sales contribute to establishing various relationships, from formal to friendly.

3. Motivation for response – Personal sales make buyer feel obliged because of commercial talk held with him.

Basics of sales’ professional skills

1. Survey – do a survey and reveal buyers’ needs 2. Presentation – Confirm understanding of needs, describe one or more

advantages of satisfying these needs. 3. Making a deal – list advantages that the client admits during the

discussion, offer an action plan and ask to make a decision.

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Management is a complex of activities aimed at transforming an unorganized crowd

into an effective, goal oriented and productive group.

Peter Drooker

Management

The Nature of Management Management is the arrangement of people’s activities in such a way that by inputting their own capacities, motivation and work they will fulfill the manager’s projected goal. A management situation in a society can take place when at least 2 people come together to reach a mutual goal by agreeing on their project’s objectives, means, methods, evaluation criteria etc. Enevitably, they will end up by dividing into managing and managed parties. A person lives and functions in a certain environment. The environment, in which an individual lives, is either natural or human made. Activities aimed at coordinating and organizing these processes makes the content of management. In organizations the object of management are people, their social status and relations, as well as their activities in terms of production, monitoring, organizating, quality improvement and the managerial structure. Since management is a mental process, its subjects are also individuals and their groups, as well. Management, from Old French ménagement “the art of conducting, directing”, from Latin manu agere “to lead by the hand”) characterises the process of leading, influencing and directing all or part of an organization, often a business, through the deployment and manipulation of resources (human, financial, material, intellectual or intangible) so as to induce in individuals and/or groups the desired behavior towards reaching the a goal. By doing so the managers take on the responsibility for the effectiveness of that process (see Figure 1). Pharmaceutical Management is distinguished by its goal, mainly, by providing the population with medicines, health care products and para-pharmaceutical products. Figure 1

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Management includes the following three aspects:

“Who" manages “whom" (institutional aspect) “How" management is performed and “how” it influences managed people (functional aspect) “With what" management is performed (instrumental aspect).

There are several schools of management theory: 1. Classic management schools

A. Scientific approach to management and organization of work B. Administrative approach management C. Approach to management from process perspective

2. Theory of human relations and behavioral science A. School of interpersonal relationships B. Behavioral approach C. Motivational basics of management

3. School of scientific management A. Quantitative and systematic approaches B. Situational approach C. Systematic approach

Classic (traditional) School of Management The workers are viewed as means of production, aimed at maximizing the revenues.

a. Scientific approach to management, or scientific organization of the work b. Administrative approach to management c. Process approach to management

Scientific approach to management The founder of this theory is regarded Frederic Taylor. This school of management deals basically with calculating the costs of production, the differential system of wages payment, chronometering (studying time and motion), identifying and rationalizing the working styles, order card systems etc. As an application goal of his theory, Taylor mentions maximizing the productivity through a thorough analysis of work content. Researching work activities using chronometric measurements is one of the most up to date methods that allow revealing the strong and weak points in work, to elaborate standards for completion of sertain tasks and their putting into practice. According to Taylor, remuneration system should be based on scientific methods for defining the work. Each employee should do the work that fits them the best. The basis of this theory is to motivate employees to increase their productivity through systematic attempts at raising their motivation level.

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Tasks should be delegated to those workers who qualify the best. This theory is based on periodically inducing workers’ motivation so as to raise both production and productivity levels. Provision of short breaks and unavoidable delays in production give managers the opportunity to set production norms and to pay more those employees who overdo the set minimum. The methods of scientific management are widely used in pharmaceutical business for quantitative assessments of work organizing quality (analysis of work time distribution, labor efforts), methods for researching work time (chronological measurements, taking photo of work places, observations) are used for researching the timing of cyclical repeating elements, registering time used by pharmacy employee, work time losses, and to find additional resources for improving productivity. Staff load norms are used in pharmacies and pharmacies are formed according to staffing norms. Administrative managerial approach .

Management principle

(MP) Content of M P

Influence of MP on drug store activity

1 Task Delegation

Specialization on admission of prescriptions, preparation of pauders, soft, liquid and injection drug forms

Improved sills, preciseness, quality and production levels

2 Power – Responsibility

Power – is the right to give orders and the authority forcing to obey orders. Power is meaningless without responsibility, that is to say, without a wise system of punishments and rewards.

Official power is accompanied with authority and is based on the rules, whereas personal authourity is based on such individual characteristics as intellect, knowledge and experience, as well as on psychic influence, ability to lead and management skills

3 Discipline

Obedience, diligence, performance, proper professional conduct, impression from personality characteristics produce agreement between employees and their company

The level of discipline is heavily dependant on the manager’s personal authority and respectfulness, which eventually affects the productivity

4 One-person management An employee can be given two different orders related to their work from only one

Dual management creates problems in enterpirses worldwide and is one of

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manager the major sources of conflict. It undermines wuthourity and ruins order.

5 Integrity of management

One manager – one project implying a good coordination of activities aimed at reaching a common goal

For a managerial process to have integrity, its activities and efforts should be well coordinated

6 Forgoing personal interests in the name of corporate welfare

The interests of individual workers or small groups within the company should not be prior to the company’s interests

This leads to success in doing the work in time and doing it well

7 Rewarding System Workers shold be remunerated fairly according to the work done

Those employees who exceed their direct duties and raisy their productivity should be distinguished by receiving bonuses or higher salaries

8 Centralization

A good balance between centralized and decentralized management is a contributing factor for raising productivity

Managers should be well aware of their own responsibility, yet at the same time they should be prompt at delegating some of their managerial functions to their subordinates

9 Hierarchy (scholarly chain)

Ensuring a proper subordination between higher lower rank employees

Pharmacy director, deputy director, head of the unit

10 Order (material order)

Every item, as well as every employee in the pharmacy should be assigned their proper place

Keeping order facilitates work and raises its effectiveness, since all departments are properly designed, equipped, set up and ensure unhindered and smooth operation of all specialists (pharmacist-analyst, pharmacist-technologist, assistant and others) with substances, tools and trays

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11 Fairness

Fairness is the combination of justfulness and goodness towards people. Such an attitude normally lifts the spirit of workers and stimulates them to do their work well and in time

Pharmacy’s manager is respectful with their subordinates and deals with them as on the premise of equality. Such an ambience at work inspires people to be diligent and loyal

12 Constant staff

High staff turnover is a result of poor management and is too expensive for an organization

Drug companies strive for long-term contracts with employees and managers

13 Initiative

This is the driving force of any organization and if workers of all levels manage to coordinate their initiatives, then the probability will be quite high that the company will be a success

Everything else fixed, those managers who can properly delegate a measureof initiative and responsibility to their subordinates are far more likely to be successful than those who fail doing it

14 Corporate spirit (staff unity) Unity is strength

This will result in harmony among the pharmacy staff by creating a favorable atmosphere and raising productivity

Process Approach Management – is work process to reach the goal using other people labor in a series of continuous actions which is a process itself and it is important for organization’s success. Theses actions are called management functions and each function is a process, since consists from a series of interconnected actions.The management process is a sum of all these functions.

According to Fayol, to manage means to make projections, to plan, to organize, to direct, to coordingate and to control. Broader speaking, it is about planning, organizing, motivation, managing, coordinating, decision making, staff recruitment, presenting, negotiating and agreement making. Management is a series of interventions aimed at directing individuals’ and groups’ activities in towards fulfillment of the company’s goal.

Human relations theory and behavioral sciences

To improve productivity managers should take into account the employee’s psychology, their feelings, experiences and relationship with the staff.

a. School of human ralationships (PR) b. Behavioral Approach c. Motivational basics of management

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The main purpose of the school of human relationships is raising the company’s productivity through improving the quality of human relationships. Social and psychological factors influence the growth of production more than physical given that organization itself is rational and effective enough. Even the highest salary not always results in growth of labor productivity and reaching desired goals. According to Maslow theory, motivation for human behavior is not economic interests, but the needs that can be satisfied with money, partially or indirectly. “School of social systems”. Attention is emphasized at person’s relationships in team. The process of forming groups with optimal number of employees is considered. Correlation between labor productivity and ethnic, psychological, age, gender factors is considered. “New management school”. Is based on mathematical methods of economics. Management is based on high technologies, computer nets, etc. There are several approaches to management:

1. Process approach. With this approach, the management is viewed as a process, for example, planning, motivation, organizing, coordination and monitoring

2. Systematic approach. With this approach, goals are set and problems are defined in picturous way, objectives’ tree is developed and the whole system is divided into subsystems and the whole organization – into substructures

3. Situational approach. With this approach the outcome of the organizations activities is evaluated concerning different situations and the dynamics of changes in various situations is described.

Organization

Organization is an open system of interrelated and managed parts (divisions, people, etc) working for a definite goal, meaning, mission, and having resources at its disposal, namely:

1. Financial 2. Material (e.g. equipment) 3. Human resources 4. Information resources 5. Time

There are some resources, typical of pharmaceutical enterprises:

1. Financial 2. Material 3. Human 4. Information 5. Technological.

There are internal environment of organization, external environment and international environment. Internal environment is defined by the structure of organization, stated goals and objectives, production technologies, distribution of responsibilities and power. External environment – are resource suppliers, competitors, purchasers, state and state structures. Morale and people religious beliefs, as well as trade unions, scientific progress, state of economy, politics are also parts of external environment.

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Organizations can be formal and informal. Formal organizations are built according to initially defined management structure. In formal organizations act planned relations between divisions, people, etc. Informal organizations are organized and act spontaneously, based on personal contacts, sympathy, etc. Management Management – is process of planning, organization, coordination, motivation, and control, necessary for formulation and achievement of goals. Any organization should identify their goals, which has the following role in management process:

- Comparison of existing state of affairs with desired (“Where are we?" and “Where do we go?");

- Managerial requirements for actions (“What should be done?"); - Criteria for decision making (“which way is better?"); - Control instrument (“Where did we get in reality and what are the consequences?“) (see

Figure 2)

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Figure 2. The nature of management

Goal is the main driving force of activities, which describes the future desired state or the course of actions to be taken. Goals can be classified as follows:

1. Coverage (general, specific); 2. Importance (major, intermediate, secondary); 3. Number of variables (single- and multivariable); 4. Subject (intended for general or specific result).

Outcome-orientedness of goals is another major classification:

1. Striving for higher revenues 2. Striving for better equipment 3. Striving for higher turnover 4. Striving for minimal costs

Choosing among particular goals, in general, is a process of compromising between various interests (see Figure 3).

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Figure 3. Main factors effecting goal identification process in an organization

Formulating goals is an important managerial objective. It is important to clearly define:

1. Goal content; 2. Size (maximum, minimum, level); 3. Timelines; 4. Space characteristics; 5. Personal ties; 6. Place in goal hierarchy.

VGORM Management System

• Vision – what kind of results the company is willing to achieve in a long run perspective • Goals- what kind of results the company is projects to achieve in a mid-term perspective • Objectives – what kind of specific steps the company is determined to take towards the

achievent of the its goals • Reporting – how the organization will maintain the beforementioned three points • Meetings – how the organizaiton will run manager-worker relationshps in order to achueve its

goals

SMART System

This system is related to thos factors that have to be:

• Specific (how much/many, where, when) • Measurable • Achievable • Relevant (correspond to people’s or organizations’ needs) • Timely (specific changes in a specified time period)

For example, a company sets a goal of increasing the sales level of its new X anti-hypertension medicine among the adult population (50-75 years old) for about 20% from January 01 to May 01, 2011.

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The notion the concept of management and its classification

According to Henri Fayol, there are five management functions: - Planning. The planning function involves defining the organization’s goals, establishing and

overall strategy for achieving these goals, and developing a comprehensive hierarchy of plans to integrate and coordinate activities.

- Organizing – designing an organization’s structure. - Leading – every organization includes people and management’s job is to direct and

coordinate these people. - Motivating: to achieve proper management and high productivity, it is important to interest

employees. - Controlling – monitoring activities to ensure that they are being accomplished as planned and

correcting any significant deviations. As a whole, firm’s management can be divided into separate functions, which are focused in the following three main sub-groups:

- General management (establishment of normative requirements and management strategy; innovation strategies; planning; organization of work; motivation; coordination; control and responsibility ;

- Management of corporation (its establishment, function,legal norms, relations with other corporations, location/building, organization, reconstruction, liquidation);

- Specific areas of management (marketing, production, human resources, finances, main funds).

Specific functions of corporation management are related to the specifics of the corporation and its profile (general management, finance management, production and marketing).

General management of corporation depends on its structure, organization, planning, human resource management, control, monitoring and analysis of results.

Industrial management deals with expenses, prices and production planning

Production planning objectives are:

• Choosing technological processes; • Planning production programs; • Planning production sequence (operational planning); • Forming production systems (equipment systems); • Maintenance and operation of equipment; • Provision of suppies.

During innovations management following management functions are applied:

• Organizing innovation process; • Selection and application of innovation process strategy; • Optimal distribution of resources for innovation process; • Implementation of innovation process results; • Protection of results of innovation process.

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Following functions are applied for marketing:

• Data collection and analysis of marketing information; • Selection of target markets and their segmentation; • Application pf marketing decisions; • Selection and cooperation with production channels; • Selection and application of pricing policy; • Planning and analysis of effectiveness of marketing activity.

Financial management includes:

• Obtaining financial resources; • Using financial resources; • Solvency management; • Structuring of capital and assets; • Payments management; • Financial planning and control.

Normative requirements to management and defining firm’s activity policy

An important objective of firm’s management is identification of its activities’ policy. It is a union of all normative requirements and ways of their implementation (i.e. firm’s policy).

Normative requirements for the management are

• Principles of entrepreneurship; • Goals, objectives, activities; • Requirements to its organization.

Main principles of entrepreneurship:

• Clear formulation of entrepreneurship meaning; • Managers’ attitude towards other members of the entrepreneurs’ group (i.e. readiness to bear

responsibilities towards the staff and investors) • Attitude to the environment (business partners, social and economical environment); • Responciveness to scientific and technical advances; • Readiness to risk.

Based on shared values, the company elaborates its own structure and defines the distinguishing skills, strategy, management system, staff working style (motivation, culture, activities). Realisation of normative requirements determins the structural policy of a company, as well as the policy for separate units.

Structural Policy

• Policy of firm establishment (goals, solutions, resources); • Policy of firm location; • Policy of its legal form; • Policy of attitude of its owner toward the firm; • Cooperation policy with other firms; • Policy of concentration and enlargement;

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• Policy of firm’s liquidation.

Specific action policies include:

• Policy of procurement (raw materials, materials, etc .); • Investment policy; • Stocks policy; • Equipment policy; • Human resource/staff policy; • Financial policy; • Production policy (system and type of production, size of production sets, technology ,

operational management); • Sales policy (prices, distribution, advertisement); • Reporting policy of the firm’s activities.

Ethics and Corporate Culture

Corporate ethics, i.e. morale of business relationships, is strictly related to normative requirements towards management. These norms should be implemented to ensure sustainability of the firm and with a goal to limit the principle of income maximization, which creates conflicts in the management of the specific areas of firm’s activities.

Ethical values towards personnel can include:

• Consideration of the their personal characteristics; • Giving possibility for full opening of personality; • Protection from the unjustified interventions; • Guaranteeing the rights; • Fair remuneration; • Social benefits; • Consideration of personal responsibility areas; • Participation in the management, etc.

In relation to business partner:

• Trust to joint work; • Refusal of a deceit; • Guaranteed optimal supply; • Attention towards customers; • Honesty in completion, etc.

In relation to shareholders :

• Proportional participation in profit; • Fair informing; • Joint actions; • Protection of interests of proprietors, etc.

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Ethics and Corporate Culture

Culture of the enterprise is a set of values, norms, ideas which subconsciously and consciously form employees’ behavior.

Its basic aspects are:

• Economic (attitude to profit, control); • Organizational (standardization, formalisation, accurate goal orientation, hierarchy); • Technical (innovations, degree of risk); • Market (marketing role, attitude towards partners, clients’ preferences), etc.

Ethical Code

Johnson&Johnson Corporation

• We believe that our first responsibility is towards doctors, nurses and patients, mothers and fathers and all others who uses our products and services. We should constantly reduce our costs for the purpose of maintenance of reasonable prices. We should address consumer requests completely and precisely.

• Our suppliers and distributors should have possibility to make worthy profit. • We are responsible for our personnel, men and women, who work with us all over the world.

Everyone should be considered as individuality. We should protect their distinction and realize their importance. They should feel security for their employment. Remuneration should be fair and adequate, and working conditions should be healthy, coordinated and safe. Employees should be free to voice the requests and offers. Similarly they should have possibilities for work, professional developments in accordance with their qualifications.

• We should provide competent management and operate ethically and legally. • We bear responsibility for the communities where we work and live and for global community. • We should be good citizens, support good affairs and pay our taxes. • We should improve a life, public health and education, use all possibilities to protect the

environment and natural resources. • We bear responsibility towards our shareholders. The business should be profitable. We should

experiment with new ideas, support the researches, we should develop innovative programs to develop, and should pay for mistakes.

• When we operate according to these principles, shareholders should receive the good income.

Behaviour Ethics of Professional Managers

The content and the conditions of the work of the managers, as well as of the rest of the staff, is determined by the owner of the company (in accordance with the legislation) and the management ethics is determined by the ethics of the company.

• Professional objective of the manager is to work with clients, employees, investors and a society; bringing to equilibrium possible contradicting results.

• The manager should serve clients, professionally address their requirements, provide fair competition between firms, which gives the maximal price reduction, better quality and a diversity through realisation of scientific and technological achievements.

• He/she should serve employees, since only then he/she will be perceived by them as the manager. • He/she should serve investors, provide the highest possible income as compensation for risk.

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• He/she should serve the society, be responsible for environment, contribute to scientific and technological progress.

• Services of the manager to clients, employees, investors and a society are possible in a long run given long-term existence of the enterprise, for which sufficient income is necessary, thus income is considered as means, not the goal.

Management Hierarchy One-stage hierarchy in management is quite rare. Usually, there is a management hierarchy (pyramid) with differentiation in power, decision making, authority and position. Management hierarchy is a tool that helps reach the company’s goals and is an assurance of system sustainability. The higher the level of an employee in the hierarchy pyramid, the higher the position of that worker in the company and the more complex are their functions, the higher their responsibilities, as well as access to information of decision making and strategic significance. Additionally, the higher are the requirements towards that person in the organization and the fewer the limits pertaining to their freedom for action. Lower levels in the hierarchy imply simpler tasks, fewer and lighter requirements, more limitations in freedom for activities and lower responsibility (see Figure 4).

Figure 4. Management Hierarchy

Organisation of interactions between employees is implemented through responsibility, authority, delegation, power, accountability, principles of one-man management and conformity. Responsibility Responsibility is an obligation of tasks performance. This obligation is documented and implies penalties for malfunction and errors. Taking the responsibility and bearing liability are indispensable consequences of performance of people with a division of work between them.

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Responsibility is:

• Willingness to consider interests of the parties to whom the decision concerns in decision making or actions

• Willingness to bear responsibility for personal actions (which is connected to the right of independent actions),

• Willingness to be responsible for action of those who performed the task, in a case when investigation did not identify their fault or malfunction.

There are several types of responsibility:

• Personal responsibility (being responsible for own actions), • Responsibility for other people (being responsible for decisions or actions of others), • Responsibility towards him/herself (in a case when person who developed the norms and who

implemented them is the same person), • External responsibility (towards external activities of the enterprise), • Internal responsibility (towards internal activities), • Responsibility towards the enterprise (consideration of interests of the enterprise and its owners).

Another major group of responsibility type is its degree of expliciteness:

• Obvious (direct) responsibility (which corresponds to orders and regulations), • Implicit (indirect) responsibility (to distribute, taking into account personality of the specialist)

Principles of task delegation Authority is a limited right to use resources in accordance with documented norms. Delegation is a transfer of power authority and responsibility to perform the task. Principles of delegation of authority:

• Controllability norm – shows, how many direct subordinates should each manager have. The most reasonable rate of controllability is 5-10 people.

• One-man management principle – one supervisor per n subordinates. • Conformity principle – authority and power should be concordant to the level of responsibility for

task performance

There are number of the reasons of why the supervisor does not want to delegate responsibilities:

• Fallacy – «I will do it better» - less time for planning and control • Lack of ability to supervise • Lack of trust towards the subordinate • Fear of risk • Lack of the control

There are number of the reasons of why subordinate does not want to take the responsibility and hinder delegation:

• It is better to ask, than to make an effort to solve the problem • Fear of being criticized for errors and mistakes • No enough for decision making rights • The workload exceeds the subordinate’s regular workload

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• No incentives for additional responsibility

The advantages of task delegation

• Delegation of authority creates background for the best administrative decision making and more effective implementation of the made decision (efficiency of decision making increases, since the implementers bear personal responsibility for given work, and not responsibility for the enterprise as a whole).

• Delegation of authority increases the sense of responsibility of the implementers • Head of the organization acquires an opportunity to focus core and most important issues

(delegation of authority allows the organization head to get release from multiple non significant issues and routine operations).

The norm of managibility shows the number of subordinates that have to be managed by the manager. One-person management means one manager for all the staff. Conformity means that power and tasks should correspond to the level of responsibility for company’s operation. Power implies influencing people and gives right to make orders and require their fulfillment by the subordinate. One can have power but not have tasks. Among the most apparent manifestations of power is forcing, rewarding, competing, traditions and examples, convictions and involvement into decision making process. Accountability – each subordinate is accountable to his/her supervisor. The supervisor is obliged to report for actions of subordinates. Basic Methods of Management

Methods of Economic Management

It is system of techniques and ways of influence on the subordinates through expenses and results (incentives, financing and crediting, remuneration, cost, profit, and price). It should be considered that, in addition to personal goals, the process participant also pursues both public, and the group objectives. The salary and appraisal system, which should be results oriented, acts as the main management method.

Organizational-administrative methods of management

These are direct influence methods which are obligatory. They are based on discipline, responsibility, the power, compulsion.

Organizational methods are:

• Organizational projecting, • Regulation, • Rationing.

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For administrative methods (order, instructing) specific implementors and deadlines are clearly defined.

Administrative methods are:

• Orders • Decisions • Instructing • Commands • Recommendations.

It is necessary to set up the rules obeying which is a must for all and determine the content and sequence of the company’s activities (charter, in-company standards, situation, staff, planning, accounting etc.) Setting the norms is necessary for reasonable use of company’s resources. Reglamenting and setting up the norms is the basis for making organizational projections.

Socio-psychological management methods

Since participants of any managerial process are people, their social relations and corresponding management methods are important and closely connected with other management methods:

• Moral encouragement, • Social planning, • Belief, • Personal example, • Regulation of the interpersonal and • Intergroup relations, • Creation and maintenance of positive • Working environment.

Types of organizational structure in management

Organizational structure of management is a type of labour division for production management. Each division/department and position is created to perform certain set of functions or tasks. For performance of the division/department, division officials have certain rights for resource management and bear responsibility for performance within their divisions. The scheme of organizational structure of management reflects position of divisions and positions and communication between them.

The following main types of organizational structure of management are defined

• linear; • functional; • linear-functional; • framework; • divisional; • multi-structural.

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In the linear structure of management the organization head manages subordinate divisions by all kinds of activities. Advantage - simplicity, profitability, limited one-man management. The main disadvantage is high qualification of the organization head. Currently, it is not widely practiced.

Functional organizational structure links administrative management to functional management.

Figure 5. The functional structure of the management. D – director; FS – Functional Supervisor; Implementor One-man management principle is not employed and cooperation is limited in this structure. Currently, this structure is rarely practiced. Liner-functional structure is hierarchical. In this type, the line managers are one-man managers, and they are supported by functional divisions. Managers of lower levels of the hierarchy do not report to the functional managers of higher levels of the hierarchy.

Pharmacist (un.)

Pharmacist (col.)

Manager

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Figure 6. Linear-functional structure of management. D – director; FS – functional supervisor; FD – functional division

ºñµ»ÙÝ ³Û¹åÇëÇ Ñ³Ù³Ï³ñ·Á ³Ýí³ÝáõÙ »Ý ßï³µ³ÛÇÝ, ù³ÝÇ áñ ѳٳå³ï³ëË³Ý Ù³Ï³ñ¹³ÏÝ»ñÇ ýáõÝÏóÇáÝ³É Õ»Ï³í³ñÝ»ñÁ ëï»ÕÍáõÙ »Ý ·Í³ÛÇÝ Õ»Ï³í³ñÇ ßï³µÁ:(ÜÏ.6-áõÙ ýáõÝÏóÇáÝ³É Õ»Ï³í³ñÝ»ñÁ ëï»ÕÍáõÙ »Ý ïÝûñ»ÝÇ ßï³µÁ):

The linear-functional system from the second level of hierarchy divides a management issues by its separate objectives.

The structure has following advantages:

• Enables high professionalization of employees, • Allows to locate levels of decision-making and identify resources (personnel), • Enables standardization, formalisation and programming of the managerial processes.

Disadvantages:

• Establishment of specific functions of divisions complicates the horizontal coordination, • The structure is rigid and barely reacts to changes.

Brunch-based management structure is focused on products, commodity markets, regions.

The structure has following advantages:

• Comparatively bigger independence of brunch heads, • Linear communication, • Powerful use of coordination with technical support, • Immediate reaction to market changes, • Non-involvement of organization’s higher level managers in operational and routine decisions, • Less conflicts as a consequence of having a common goal within brunch.

Disadvantages:

• Comparatively higher expenses on coordination because of decentralisation and separate financing,

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• In decentralized system there is evidence of lack of cooperation (supply, etc.).

Divisional structure is pictured in Figure 7. Divisions are separated from each other either by the sphere of their activities, or by geographical dimensions.

Figure 7. Divisional structure of management

Divisional/Branch-based management structure is focused on products, commodity markets, regions.

The structure has following advantages:

• Comparatively bigger independence of brunch heads, • Linear communication, • Powerful use of coordination with technical support, • Immediate reaction to market changes, • Non-involvement of organization’s higher level managers in operational and routine decisions, • Less conflicts as a consequence of having a common goal within brunch.

Disadvantages:

• Comparatively higher expenses on coordination because of decentralisation and separate financing,

• In decentralized system there is evidence of lack of cooperation (supply, etc.).

Framework structure of management, as it is presented in Figure 8, is distinguished by the possibility of an employee to have more than 1 supervisor (one of them linear and the other – project).

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Figure 8. Framework structure in management focused on production

General principles of this organizational structure are:

• Limited areas of decision-making on separate level of management, • Multi-linear directive communication, • Higher expenses for coordination between separate levels.

Disadvantages:

• Regulation of tasks, competence and responsibility of managers, • Higher expenses for coordination, • Possible directive conflicts.

Multi-structural management combines various structures and applies them to different levels of management. For example, in a company as a whole, the branch-based management can be applied along with linear-functional or framework structure – for lower levels of management.

Board of Directors in Management

Board of the Company (Supervisory Board, Board of Directors) is a body which oversees the work of the company’s president, vice-president, etc.

Top managerial staff of the company and its functions

The top managerial level is represented by the board of directors (supervisory board) and governing board. The functions are divided among the board the following way: it elaborates a general policy for the company, whereas the governing board is responsible for its implementation.

The board of directors is elected during a general meeting of the stakeholders. The number of members of the board is defined by the charter of the organization and can subsequently be changed. The board of directors is headed by the board chairman.

The governing boardis formally elected during the meeting of the stakeholders, but actually it is appointed by the board of directors and operates under its direct supervision. It is headed by the

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president and consists of several members who are appointed by the board of directors and manage certain divisions attached to them or participate in decision making at the governing board meetings.

Functions of the Board of Directors

1. Advocating the interests of the investors - Work for the benefit of the investors and monitor on their behalf the company’s activities - Contribute to decision making in the company and make sure that those decisions are

agreeable by the investors - Inform the stakeholders on a periodical basis on financial management issues of the company

2. Financial Management and Monitoring

- Adopt and review financial programs - Define and distribute dividends - Define and monitor the policy on shares - Set the budget for the year - By the order of the president allow the stakeholders to elect independent monitor specialists

3. General Plans and Directions

- Monitor the executive order - Define the organizaion’s general policy - Influence the long-term projets’ content and quality - Make proposals to stakeholders regarding to restructuring or achievements

4. Working with Staff

- Follow up the changes in the structure of the company - Elect the president of the board and managers - Decide on responsibilities of the board and its president - Monitor the president’s work - Confirm the president’s appointments, as well as dismissals of managers under their own

supervision 5. Operative Control

- Confirm current budget and review projections on its fulfillment during the meetings - Define the necessary amount of information the president should submit to the board on a

regular basis - Elaborate tasks aimed at improving the company’s activities.

6. Other

- Decide on salaries, pensions and bonuses policy - Encourage a moral environment - Appoint, if necessary, committees on various specific issues

Companies in other countries can consist of a single company or can include number of companies joined by so-called system of participation, i.e. joined based on participation in the share capital of

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other firms. There is a need to have a certain portion of the company’s share to have control over the company. There are different types of control over companies:

- Full ownership, when total (or almost total) share of the company belongs to one person, a group of persons or one firm;

- Grand portion of the share, assuming ownership of 51% of the share; - Sub-ownership, when ownership of the grant portion of share of one company, which in turn

owns grand share of another company, leads to control over the both firms; - With small portion of share when the company’s share is sprayed out between multiple parties

and with a small portion of share it is possible to have control over the company.

The company supervising activity of others of the companies, is usually called as the Parent Company or Head. Depending on the sizes of the capital belonging to the parent company, and on legal status and subordination of the firm under parent company, the following company types are identified:

- Branches , - Subsidiary companies , - Associated companies (associated company - in England, affiliated company - in the USA).

- Branches do not have legal and financial independence. It doesn’t have own balance, charter, it

operates for and on behalf of the parent company and usually has similar name with it. Decisions on business related issues of branch are made the parent company. Almost full share of the branch belongs to the parent company.

- Subsidiary companies are legally independent. All transactions and documentation of subsidiary

companies (including balances) are conducted separately from the parent company. They have sufficient financial base and the property necessary to perform independent financial activities. At the same time the parent company carries out the strict control over activities of its subsidiary company. This is not only supervision and coordination of financial activities, but also participation forming the Governing Board and appointment of directors, who are responsible to follow the instructions from supervising company and reporting.

- Associated companies are legally and financially independent and is not under the control of the

company owning its share.

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Motivation The Nature and Development

When planning and organizing job activities, the manager decides upon the organization’s mission and upon who should do what. If this is carried out properly, it allows the manager to coordinate the efforts of a number of people and to fully use the potential of a group of people. Unfortunately, many managers tend to think that if some organizational strategies work wonderfully on paper, they should do so in reality, either. But that is not the case: in order to reach the program goals, the manager has to coordinate the activities and make the stuff to do accomplish tasks at hand. Sometimes managers are called executive officers, as somebody who is responsible for the work to be done.

Managers implement their decisions using the main principles of motivation. So, management can be defined as follows: Motivation is a psychological process which involves the experiencing of needs and drives and the behavior that leads to the goal which satisfies them. Approaching the definition of motivation from a psychological point of view does not give the precise picture of inner forces that make a person work. This becomes possible when researching the behavior of the employees at the work site. Motivation theories are divided into content and flow (process) theories. It is known that motivation content theories are based on those internal needs that force people to behave in a certain way. Most discussed theories are Abraham Maslow’s, David McClelland’s and Frederic Herzberg’s. Motivation theories are successfully employed to solve daily problems and have people do the work needed. To understand content or process theories of motivation, it is important to correctly assess underlying award need. Up to date there is no commonly accepted theory of motivation of human needs. Most of psychologists agree that needs can be divided as primary and secondary. Primary needs are physiological needs, such as food, water, breathing, sleep, sex etc. All these are inborn needs. Secondary needs are basically psychological. For example, success need, respect, power and the need for identification. Primary needs are determined genetically, whereas the secondary needs develop with experience. Since people possess different individual experience, their secondary needs vary much more than the primary needs. It is evident that it is impossible to observe or measure the needs directly. Their existence can be judged of only through observation of human behavior. A motive is a feeling of lacking of something and has a definite direction. It is expressed by human behavior and is focused on reaching the goal. In this respect, the goals serve as means for satisfying the needs. While reaching the goal, the human behavior can be influenced by the extent to which he or she is satisfied. Generally, people tend to repeat those particular patterns of behavior that associate with satisfaction of needs. It is known as the Law of Effect. It basically states that “responses that produce a satisfying effect in a particular situation become more likely to occur again in that situation, and responses that produce a discomforting effect become less likely to occur again in that situation. Therefore, managers ought to create such an environment, where people, while aiming at satisfaction their own needs, would thus accomplish the organization’s tasks. There is view, according to which the structure of human needs in a society is determined by their role and experience acquired. Hence, there is a wide variety of needs in people. Every particular need has a set of options of its satisfaction. With this regard the manager is to take into account the factor of responsibility.

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Need The result of satisfaction

(lack of something)

1. satisfaction

2. partial satisfaction

3. no satisfaction

motives and drives

Behavior

(aciton) Goal

Figure 1. A simplyfied model of behavior motivation through needs There is no such thing as the best means for motivation. What is effective for particular people may not work for others. We will analyze motivation problems to understand what pushes people towards productive activity and when rewards should be used. The concept of rewarding is not necessarily tied up with financial repayment or any other pleasing thing which it may refer to. A reward may include any possible thing that is regarded by a particular person valuable. Further, the sensitivity of people towards values varies from person to person and so also vary the rewards and their relative values. A manager deals with two major types of rewards – internal and external. Internal reward is executed job. For example, reaching goals, feeling importance of job, being respected. Friendship and respect emerging during job are also considered as internal reward. The easiest way to provide internal rewards is creating proper job conditions and correctly formulating tasks. External rewards come not from job directly, but from organization. For example, salary increase, promotion, etc. The source of external rewards is not the work itself, but the organization, for instance, the rise of salaries or promotion. When deciding on forms and extent of internal and external rewards for motivation, an organization should have a good knowledge of the needs of its employees. This is the core of Content Motivation theory.

Content Theories of Motivation Content Theories of Motivation are designed first of all to define those needs in people, which drive them to carry out certain activities, especially, the evaluation of the volume and content of the work to be done. The scientists who played a key role in developing these theories are F. Taylor, A. Maslow, F. Herzberg and D. McClelland’s.

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Taylor’s System

Taylor, the founder of scientific management, wrote in 1911 that the basis of a productive management are low costs and high salaries. These two factors contribute to transition from poor management to more productive one. To reach this goal he suggested:

1. Offer employees the type of work that they can do (the level task complexity and should correspond to employee ‘s competency)

2. The employees should be paid the amount necessary to sustain their own lives, as well as the

lives of their family members.

3. The employees are expected to be concerned about their promotion.

4. Employees should be satisfied with their job.

5. Employees should be encouraged to maximize their productivity. Further, Taylor offered a system of payment in two forms: per hour and per task completed, with conditions of their effective employment.

A. Maslow’s Pyramid of Needs Hierarchy

Figure 2. Maslow’s Pyramid Abraham Maslow was the first scientist to explain the impact of human needs on their motivation. When developing his theory of motivation in 40-s, he started with the premise that people have multiple needs. According to his theory, these needs can be grouped in 5 main categories. This idea has deliberately worked out by Maslow’s peer Murrell from Harvard University. They are as follows:

1. Physical survival needs: breathing, food, water, sleep, warmth, exercise and sex.

2. Safety/Security needs: physical safety, economic security, freedom from physical and emotional threats, as well as security of continuous satisfaction of physiological needs (confidence in the

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future, a good insurance package, a well-paid job with a perspective of high pension in the future).

3. Social/Belonging needs: affection, belonging to a group or an individual and acceptance from them, friendship.

4. Ego/Esteem need: Internally, they refer to self-esteem, self-confidence, independence, achievements. Externally, they include social status, recognition by others and attention paid by them.

5. Self-actualization: personality and professional growth, realization of one’s potential.

Maslow’s pyramid implies that the needs of lower levels tend to drive and influence one’s behavior faster than those of higher levels. A person seeks to fulfill those needs, which are the most actual for them at a particular point in time. When the basic (comparably strong and important) needs are satisfied, people go for satisfaction of the needs of a higher level. Due to ongoing development of potentials in a person, the need for self-actualization is never being fully satisfied. That is why, the process of motivation of human behavior through needs never comes to an end. A hungry person will first of all strive to find some food, prior to finding shelter. Having found a secure shelter, people will then try to socialize, win the regard of the social environment, giving further place for growing of higher needs along with higher potentials. However, the importance of particular needs may vary from situation to situation. For a higher need to emerge, it is not necessary that the lower needs be satisfied first. Thus the hierarchal levels are not discrete in nature. Although, at a specific moment certain need may prevail, nevertheless, it does not limit the factors stimulating human activities. Maslow’s theory is an important contribution to understanding the motives of an individual to work. Managers of all lines came to understand that the motivation is determined by a wide scope of specific needs. In order to stimulate an individual, a manager has to create for them opportunities to meet their own in such a way that will eventually lead to the fulfillment of organization’s goals. Up to recent times, managers would stimulate their staff almost exclusively by economic means, because they regarded human behavior determined primarily by lower needs. Today it is not the case. In developed countries thanks to labor unions and governmental interventions, people have higher salaries and other social benefits and a lower level employee of any organization can well be placed in the highest level of Maslow’s pyramid, according to their perceived needs. So, managers should closely explore their staff members’ needs so as to find stimuli that could apply to them. Since the needs of an individual may vary over time, it would be wrong to expect that a stimulus once successfully worked will always work. For higher needs to be satisfied, a manager should contribute to satisfaction of the following needs. The Need for Socializing

1. Give the employees a job that would allow them socialize 2. Create a team spirit at the work site 3. Periodically perform discussions with subordinates 4. Leave alone non-formal groups within the organization, given that they do not harm the

organization 5. Create various opportunities for the staff to socialize out of work.

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The Need for Respect

1. Give the staff a relatively meaningful work to do 2. Provide feedback in respect to their work done 3. Estimate and encourage of the employees for achieved results 4. Involve the staff in shaping the goals and decision making process 5. Grant the subordinates additional rights and charges 6. Support the subordinates in their self-promotion endeavors 7. Provide favorable conditions for their professional advancement.

The Need for Self-Actualization It seems that Maslow’s theory has given to managerial staff a good enough explanation of the motivation process. However, it has proven to be perfect. Evidently, people may be generally categorized according to their dominating needs as whether they are people of lower or higher level of Maslow’s hierarchy. Nevertheless, such a gradation is not precise. Further, it has not yet been proven the hypothesis of the most important needs. Satisfaction of a particular need does not necessarily lead to recognition of a higher need. The main pitfall of Maslow’s theory is that he failed to recognize individual differences in people. Being biased with own experience, one can falsely attribute someone else’s behavior as pertaining to higher needs for self-actualization, whereas it can be a mere strife for social safety and security. Therefore, a manager should be familiar with individual preferences of their employees in regard to rewards and what force them to quit their jobs and so forth.

McClelland Theory of Motivation David McClelland’s Model is another theory of motivation that stresses the needs of higher levels. He makes the point that people have basically three types of needs: Power, Achievement and Affiliation.

1. The need for Power stands for the desire to influence other people. Within the frame of Maslow Pyramid it could be placed between the needs for respect and that for self-actualization. People in whom this need is prevailing, have shown to be quite protective of their leading position, outgoing and welcoming any challenges.

2. The need for Achievement also lies between the need for respect and that for self-actualization.

In this case, to satisfy the need in question one does not have to hold or reach a status. Rather, they need to bring a work to an end. Individuals with a relatively high need for achievement are more reserved in taking risk and tend to favor such kind of situations where they could take responsibility and be rewarded for their visible achievements. According to McClelland, it is not important how strong the need for achievement is in an individual. They can never have the desired success if they are not provided with means necessary to make it possible, if their organization limits their freedom of activity and does not practice rewarding for achievements. Thus, if managers are to encourage such people by exploiting the need for achievement, they have to give them tasks with minimum risk of failure, provide them with certain opportunities and from time to time reward them for real achievements.

3. Motivating by the need for Affiliation, according to McClelland, is similar to Maslow’s motivation. Such people are more interested in making friends, in new acquaintances and mutual support. In relation to this need, people should be given the kind of job that would create favorable conditions for them to freely socialize.

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Two-Factor Theory of Herzberg In the late 50-s, Frederick Herzberg et al presented another needs based motivation model. 200 architects and other office workers were asked to answer the following questions: “Please describe to your best understanding, when particularly you felt bad yourself after you have completed your daily work?” “Please describe to your best understanding, when particularly you felt bad yourself after you have completed your daily work?” All the responses were thereafter divided by Herzberg et al in two major groups: Hygiene and Motivation.

Hygiene Factors Motivation Factors

Company Policy and Administration Work conditions Salary Status Relationship with subordinates

Achievement Advancement Recognition of achievements High Responsibility Opportunities for professional growth

Hygiene factors are determined by the environment, where the work is being done, whereas motivation is determined by the nature and type of the work. The researchers state that among the factors of raising productivity are as follows: good opportunities for professional advancement, higher salaries and recognition achievements by peers. Any job that is free from high stress levels and tensions, geographic proximity and welcoming environment of the work site that is free from noise and pollution and fair delegation of tasks. Theories of Herzberg and Maslow have some points in common. Hygiene factors of Herzberg correspond to the physiological needs and needs for security and safe future according to Maslow. Herzberg says that for an effective stimulus there has to be not only hygiene, but also stimulating factors.

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Conflicts There are several explanations on conflict notion in management theory Conflict ( Latin conflictus-encounter) can be described as expression of actions and relationship connected with different interests, point of views, goals and values of people In psychology §Conflict¦ is one of the forms of human relationship, based on peoples’ virtual, subjective and different notions. People try to solve this based on the emotions expression Conflict situation precedes the conflict, which consists of: -Conflict sides -Conflict object, which is the cause of disagreement Main forms of human relationship and cooperation are:

• Cooperation-same goal, team work, mutual sympathy • Competition-creates high activity, which brings to high productivity • Adaptation-tolerance to other people or social groups, agreement with other point of views • Conflict –encounter, combat, which has many forms of expression

Recent theories of conflicts differ two types of conflicts • Dysfunctional ¥destructive¤ –destruct collective work, interfere goals implementation • Functional ¥structural¤-they are desirable, characterized by information exchange, agreement of different

point of views and finding out the optimal solution of problem Main causes of conflicts in organizations 1. Limited resources 2. Problems interconnection 3. Differences in goals, point of views and persuasions 4. Differences in values 5. Differences in life experience 6. Insufficient level of communication 7. Emotional unacceptability (psychological point of view) Frustration or disappointment Each individual consciously or unconsciously formulates a positive end for set objectives in order to reach a goal. If something or somebody hinders to this, following frustration or disappointment can bring to conflict Frustration Frustration is a psychological situation of individual which takes place because of subjective acceptance of obstacles. There are obstacles which are possible to overcome, when the individual avoids them and through this tactic reaches the goal: When the individual meets an obstacle, which is impossible to overcome, he feels frustration. Types of frustration

1. Aggression Aggression is an explosion of feelings, which can be expressed by envy, malevolence or by avoiding of work. It is possible also the fact of damaging or destroying equipment or machines.

2. Regression Regression is seen in the behavior of people who are under the aggression of authorities. This kind of behavior reminds reluctance and childishness. Sometimes can be seen phenomena which is called

Fixation. People start to mutter, repeat some words or orders et cetera 3. Refusal or recession

This is a common form of frustration. It is developing in human conscience step by step taking away strength and will.

4. Improper Critique It is expressed by pressing or teasing people’s self-esteem by the administration during collective meetings. If there is no freedom of voice it is accepted as persecution and brings to the stress

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Conflict avoidance It is better to prevent disease than to cure One should previously eradicate the sources of conflicts. Better is organized the collective, less possible rising of conflict situation Role of manager The role of manager is huge in collective. He plays administrative and pedagogical role, which include following functions: Manager functions (for conflict prevention)

1. Clever and planned organization of everyday routine work 2. Good knowledge about staff and research programs and methods. 3. Uninterrupted individual work with subordinates and especially with those who are conflict oriented 4. Differentiated approach to each employee 5. 5. Good relationship creation between different individuals 6. 6. Careful investigation of employee living conditions 7. 7. Clever usage of critique and self-analysis

It is very important to predict conflict people behavior and to implement strategy for preventing conflict situation. There are two strategies: Competition and concession Strategies for conflict management

Competition Recession

Withdrawal Mutual comply Cooperation

Conflict person’s behavior 1. Acts without taking into account obstacles 2. Often times makes facts convenient for him 3. Looks for weak points in opponent’s view 4. Thinks that recession disparages him 5. Uses strategy of “mouth closing” 6. Considers himself as expert 7. Obscures his intentions (voice tone, behavior) 8. Thinks that victory is very important 9. Refuses discussion, if it is not going for his interest Strategy of compliant person 1. Usually lose in discussions and combats 2. Express their opinion with apologizing 3. Think that they will lose , if they will express disagreement to opponent 4. Feel anxiety if others do not understand their arguments

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5. Avoid directly express their disagreement 6. Emotionally accept difference in opinions 7. Think that there is no need to intervene into conflict situation 8. Often times are prone to comply 9. Think that people overcome conflict situation with difficulty 10. Never become zealous

Mediation process during conflict resolution Mediation is a unique form of communication which supposes process of problem solving between conflict sides through mediation of the third person Mediator During the conflict resolution as a professional mediator can act a person who has a status of mediator. It is possible that this person does not have any normative status but he can be an authoritative and acceptable for both sides of the conflict Official mediators

• State institutes of law (arbitrary court) • State councils • Organization’s administrators • Public organizations (Trade unions) • Professional mediators

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Process of communications and management efficiency

Communications are an art to be understood!

The head from 50 to 90 % of all time spends for communications. He is engaged in it to realize the roles in interpersonal relations, an information exchange and decision-making processes, besides administrative functions of planning, the organization, motivation and control. Since information interchange is built in all principal views of administrative activity communications name binding process. Inefficient communications - one of the main spheres of occurrence of problems. What is communication? Communication – information exchange between two or more people (Latin communicatio - pass). The major goal of communication is providing understanding of information exchange. Communications are important for heads on the following causes:

1) heads spend most part of time on communications so they should be interested in improvement the given kind of activity;

2) communications are necessary for management efficiency;

3) communications are necessary for the statement of authority and find expression;

4) well adjusted communications, promote maintenance of organizational efficiency. If the organization is effective in the field of communications, it is effective and in all other kinds of activity.

Communications between the organization and its environment. Different organizations and their departments are interconnected with information. Communications can be internal and external. Communications are formed first between departments. These communications can be vertical and horizontal. The organizations use various means for communications with components of the external environment. With available and potential consumers they are informed by means of advertizing and other programs of advancement of the goods on the market. The organizations submit to state regulation and fill thereupon written reports. In the annual reports any company gives the information under the finance and marketing. It only few examples from all variety of ways of reaction of the organization on events and factors of an external environment. By such way to the subordinated levels of management it is informed on current problems, change of priorities, the concrete tasks, recommended procedures, etc. Vertical communications can be descending (from higher levels to lower ones. Management subordinate levels receive information about current objectives, changing priorities, tasks, recommended procedures, etc.) and ascending (from lower levels to higher ones. Is a way for informing higher levels about situation at lower levels. This is a way for higher management to learn about current or potential problems, and offer possible ways to correct situation ).The organization needs communications on ascending, i.e. information transfers from the lowest levels on the higher which can influence productivity considerably. Communications on ascending also carry out

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function of the notification of top that becomes at the lowest levels. Such way the management learns about current or becoming ripe problems and offers possible variants of correction of a state of affairs. In addition to information interchange on the descending or ascending organization need horizontal communications. The organization consists of set of divisions, therefore information interchange between them is necessary for coordination of problems and actions. As the organization is a system of the interconnected elements, the management should achieve, that specialized elements worked in common, advancing the organization in the necessary direction. Additional benefits from communications across consists in formation of equal relations which are important making satisfaction of workers of the organization. Organizations also need horizontal communications. Organization consists of a number of departments and branches, thus information exchange is needed for coordination of tasks and activities. Management should strive for department work jointly moving organization in right direction. Forming equal relationships is an important part of job satisfaction of employees. Horizontal and vertical communications are internal communications. Along with use of official channels of communications workers of the organization satisfy the requirement for councils and support by mutual consultation. Consultation between persons at one level quite often has important consequences for organizations; the constant reference to each other behind council increase confidence of own decisions. As shows experiment, the comprehensive dependence on heads in reception of the information and is restriction and in most cases it can be avoided. Apparently, each head should be interested in circulation of information streams in all three directions - upwards, downwards and across/horizontal/. Communications on each of three directions actualize simultaneously. The most obvious component of communications in the organization are relations between the head and subordinates. These relations are connected with clearing of problems, priorities and expected results, maintenance of an involvement into the decision of problems of department, discussion of problems of overall performance, achievement of a recognition and compensation for the purpose of motivation, perfection and development of abilities of subordinates, with gathering of the information on a becoming ripe or real-life problem, the notification of the subordinate about future change, and also reception of data on ideas, improvements and offers.

These are communications between organization and environment. Organizations use various communication means to communicate with external environment. For example, each company provides financial and marketing information in its yearly reports. Organizations communicate with existing and potential consumers using advertising, exhibitions, and other promotional programs. Organizations are subject for state control and provide written reports about their activities.

Informal communications. The organization consists of formal and informal components. It is possible to name the channel of informal communications the channel of distribution of hearings. As on channels of hearings the information is transferred much faster, than on channels of the formal message, heads use the first for the planned leak and distribution of the certain information or type data "only between us". The reputation of the inexact information attributed to hearings remains and till today. But researches

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show that the information transferred on channels of the informal message, i.e. hearings, appears exact, instead of deformed is more often. In the table some versions of the information transferred on channels of distribution of hearings in the organization are listed.

Communication process

Information interchange covers different parts of the organization and corresponds with its efficiency, but information interchange not always so is effective, as followed. There are distinctions between heads of the higher, average and local levels in how they estimate efficiency of communications in their organization. Besides, in many cases the transferred message appears misunderstood and, hence, information interchange - inefficient. Only 50 attempts of information interchange lead to the mutual consent of the communicating. More often the reason of low efficiency consists in oblivion of that fact that communications are an exchange. Information interchange occurs only in that case when one party "offers".

In the process of information exchange there are four basic elements:

1. The sender – a person generating ideas or collecting information and transmitting it.

2. The message – information coded with symbols

3. The channel – information exchange mean.

4. Receiver – a person for whom information is intended and who is interpreting it

The Interrelated stages:

1. Idea generation

2. Encoding and choosing channel

3. Transmission

4. Decoding

Idea generation

Information exchange starts with formulating idea or information selection. Sender decides which idea or message should be a subject for exchange. For effective exchange it is important to consider many factors. It is important to be sure about appropriateness of ideas given situation and purpose.

Encoding and channel selection

Before sending information the sender has to encode it using words, digits, intonations, symbols, etc. Such encoding transforms idea into a message. The process is complicated since sender has establish sequence and define time intervals for information exchange. The sender also should choose a channel compatible with the type of symbols used for encoding. Well known channels are verbal and written

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transmission means, as well as electronic means, such as e-mail, computer networks, etc. Choosing the channel should not be limited to a single channel. It is desirable to combine two or more communication means. There are advantages of written communications: Well preserved, better formulate than oral communications. Important for contracts, programs, methodological directions, legal documents, etc. Shortcoming. People are often inattentive at formulating. Major advantage of Oral communications – quick information exchange. It is possible to ask questions and immediately receive answers. Shortcomings of oral communications are accent, tone, articulation (will speak about it in “Interpersonal relations”).

Transmission

Sending information (encoded ideas) to receiver. This is physical transmission which is often erroneously considered as communication process.

After receiving information receiver decoding it.

Decoding – is translating sender’s symbols into receiver’s thoughts. If symbols used by sender have exactly the same meaning for receiver, the latter will understand what exactly meant sender while formulating idea. If no reaction is need for sent idea, the process of communication is over.

Feedback and noise

When feedback exists, sender and receiver exchange their communication roles. Feedback is a response to heard, read, or seen. Feedback can increase effectiveness of managerial information exchange. It allows communicating sides to minimize noise, or whatever distorts information meaning. Sources of noise, that can create barriers for information exchange, vary from language (during verbal or non-verbal formulation) to differences in perception that can change the meaning during encoding and decoding, and differences in status of manager and subordinate that impede exact transmission. Feedback is important since it gives opportunity to understand whether your message received by receiver is understood in a way that you meant.

Interpersonal communications

Interpersonal communications inside organization are integral part of communication process

There are 3 functions of interpersonal communications

1.Function of mutual understanding (perceptive)

During communication views and conceptions are formed facilitating understanding

2.Interactive function

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During communication people receive an opportunity to combine skills and experience for organizing activities and reaching common goals

3.Communicative function (information)

People receive or send information directly or indirectly, orally or written

Listed three functions are impossible to divide from each other, each of them contributes to the effectiveness of others. The better we know the person whom we send information (know his status, interests, goals, relation to information), the more effective will be interpersonal communication. If the source of information is trustworthy, information sender and recipient will collaborate effectively.

Effectiveness of interpersonal communications - one of the major condition for interpersonal relationships is communicability of a person, i.e., ability to send information, and after receiving information to encode it correctly and provide feedback.

Elements of person’s communicability:

1. Ability to observe. To what extent the person can understand surrounding people (their desires, goals, interests, etc.) Ways to understand others.

• Identification. When person understands the other person by “putting himself into other’s shoes”

• Empathy. When person perceives spiritual state and mood of another person.

• Reflection. When person is concerned about how he will be perceived by others.

2. Self-expression. To what extent a person can correctly express thoughts and feelings.

3. Behavior. To what extent a person possesses common communication methods and rules.

Communicability is a very important quality for managers since communication with colleagues, subordinates and higher managers is an integral part of daily activity. Managers spend most of their time on communication thus they are interested in improving it 2)Communications are necessary for effective management 3) Communications are necessary for strengthening authority and expressing will 4) Good communication contribute to organizational effectiveness. If an organization effective in its communications it is effective in all types of activities.

The most common type of interpersonal communication inside organization is manager-subordinate communication. Types of communications between managers and subordinates:

1. Clarification of tasks, suggestions, results

2. Provision of department participation in problem solving

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3. Discussing effectiveness of job

4. Informing subordinates about changes, etc.

Manager – subordinate communication can be vertical and horizontal. Vertical system is based on linear subordination. Each decision made by manger is a must for subordinate. Difference in status gives manager an opportunity to get status of not only manager, but also leadership. Manager subordinate horizontal communication way is manager-contract- subordinate. Contract is a legal document intended for regulation of expected changes. Rights and responsibilities of manager and subordinate are documented in contract.

Manager - working group communication. Communication with working group allows manager to increase group effectiveness. Each member of working group has opportunity to think about new tasks and priorities, about working together, upcoming changes and possible consequences, etc.

Communication noise. Noise can appear at interpersonal communication, like at any type of communication.

1. Differences in perception

2. Meaning

3. Low quality feedback

4. Inability to listen (during practical exercise will do 10 rules for effective listening), etc.

People can interpreter the same information in different ways depending on experience, interests, demands, emotional state, surrounding people. Often people perceive only part of message. Information conflicting with experience or earlier acquired views either fully tears away or distorted according to existing views.

Verbal communication

It is effective and possible if there is no language barrier between information exchangers. Otherwise misunderstandings take place in information exchange network. These misunderstandings are of 4 types:

1. Sound. Incorrect spelling, articulation, intonation, voice modulations, etc.

2. Spelling. Not following grammar rules.

3. Style. Improper expressions, rudeness, arrogance

4. Logical. Each person has its own logic.

People exchange information not only orally or written, but also using gestures, mimics, posture. Often “body language” is more colloquial and trustworthy. Every manager concerned with improving interpersonal relationships should master secrets of mimics

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and gestures. Often low and mid-level managers convey to higher authorities only information that they would like to receive (prefer only positive information) To avoid it, managers should meet with employees, use surveys, give people opportunity to speak out. Completeness of information symbols called information language. Various information language units are used: words, digits, etc. Information should be clear, accurate and precise. Information sender should avoid using multi meaning words. Feedback systems used in organizations, are part of controlling information system. Feedback can contribute to significant increase of effectiveness of managerial information exchange. It allows to suppress noise, i.e., whatever distorts the meaning.

There are several types of feedback

• Survey, request to repeat received information, reveal type and degree of susceptibility

• Controlling results. Give an opportunity to assess how sent information is accepted and realized

• “Open doors” policy. Subordinates know that manager is ready to discuss any problems/questions

• Non-formal communications channel can e called rumors distribution channel. Since rumors’ channels work faster than formal information channels, managers use them for planned information drain and for distribution of information like “only between us”. Rumors have reputation of not precise information, however, research shows that information distributed through non-formal communication channels is often precise.

Information typically distributed by rumor channels: Upcoming staff reduction, new punitive sanctions for being late, changes in organization structure, upcoming moves and promotions, detailed summary of two managers’ dispute during the last meeting, employees’ dating. During information flow up and down within organization the meaning of messages somewhat distorts. Messages can be distorted unintentionally due difficulties in interpersonal contacts. Also information can be distorted intentionally. Information exchanger problems due to distortion can be result of filtration, i.e., message distortion during information flow.

Provision of effective communications

To avoid communication noise, each manager should:

1. Regulate information flows. Manager should assess his qualitative and quantitative information demands, as well other employees. He should define what is “too much” and :too little: for information exchange.

2. Mangers of all departments should clearly present their demands for information

3. Should professionally assess qualitative and quantitative sides of all information and clearly define its volume, time and periodicity.

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Ascending information flows (from lower levels to higher) should be within attention of a manager. There are 5 types of flows:

1. activity reports.

2. complaints and disputes. Manager should listen and resolve disputes between subordinates.

3. Problems and questions. Using them a manager learns about daily tasks.

4. Suggestions. New ideas and suggestions should reach managers.

5. Financial and accounting information. This information is of interests for higher managers.

Perfection of communications in the organizations

Regulation of information streams. The head should learn to estimate the qualitative and quantitative parties of the information requirements, and also other consumers of the information in the organization. It should define that such it is "too much" and "too little" in information exchanges.

Administrative actions. Regulation of an information stream – an example from among actions of the head on information interchange perfection. Planning, realization and control form additional possibilities of administrative action in a direction of perfection of an information exchange.

The systems of feedback created in the organization, make a part control - administrative information system. One of variants of system of feedback - moving of people from one part of the organization in another for the purpose of discussion of certain questions. One more variant - poll of workers.

Systems of gathering of offers are developed for the purpose of simplification of receipt of the information upward. The purpose of similar systems - decrease in a sharpness of a tendency of a filtration or ignoring of ideas on a way from below upwards. These systems can be realized in a variant of boxes for offers either through a telephone system or through creation of group of heads and ordinary workers which meet and discuss questions.

Newsletters which publish the large organizations, contain the information for all workers.

Modern information technology – the personal computer has already had huge influence on the information which heads, support personnel and workers dispatch and receive. E-mail gives the chance to direct written messages to any person to the organizations, also e-mail – a communication effective remedy between the people who are in different offices, different cities and the countries.

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Management in Pharmaceutical Enterprises Management of pharmaceutical enterprises in modern market economy evironment has become quite complicated, because both their rights and responsibilities has been brodened. Today pharmacies have to face such problems, with wich formerly they were not familiar. New types of economic relationships and functions bring about new requirements concerning professional management. It progressively plays more substantial role in solving economic and social problems. Management is, in a sense, an art of communicating with people and leading them. Pharmaceutical management, in particular, comprises the management of staff, finances and production process aimed at providing the society with effective medicines and medical supplies. 1. CONFLICTS – HIGH TENSION AREA

The term “conflict” is of Latin origin and stands for clash and collision. It can be described as absence of agreement between two or more members within a group. Conflicts take place when there is disagreement in views, thoughts or behavioral issues.

1.1. Classification of Conflicts 1.1.1. Conflict is defined as a mental struggle that arises from the simultaneous operation of

opposing impulses, drives, and external (environmental) or internal demands. Termed intrapsychic when the conflict is between forces within the personality, and extrapsychic when it is between the self and the environment. Two major types of conflicts are Interpersonal and Intrapersonal.

Intrapersonal conflicts develop when: - an individual experiences two opposing impulses or internal demands (e.g. going out with

friends and taking care of a family member); - an individual tries to secure two opposite outcomes (e.g. being compelled to reproach a

subordinate and longing for good relationships with them at the same time); - personal demands oppose the call of duty (e.g. one need to forgo their leisure to do the

boss’s emergent task); - an individual is expected to meet two incompatible requirements (e.g. a pharmacist-

controller is expected to simultaneously pay close attention to customers and control take control of the preparation of medicines);

Intrapersonal conflicts are directly linked to dissatisfaction with work, low motivation, stress, low self-esteem and low level of management. Interpersonal conflicts are as follows:

- conflicts between individuals (e.g. a conflict between colleagues or between a manager and their subordinate)

- conflicts between an individual and a group (e.g. complaints of the group concerning the overtime work of one of their peer)

- conflicts between two or more groups (e.g. conflicts between different departments within a company)

- conflicts between two or more systems (e.g. conflicts between pharmacies) 1.1.2. Conflicts by content

- conflicts for resources - conflicts for power - conflicts for status

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1.1.3. Conflicts by expression - hidden - open

1.1.4. Conflicts by outcome

- functional conflicts (e.g. resulting in higher productivity both of the group as a whole and individual staff members)

- disfunctional, resulting in lower productivity 1.2. Causes of Conflict All conflicts and collisions have underlying causes (see Table 1). Oftentimes, people, although, they recognize the very source of the conflict, nonetheless do not try to mitigate the situation. Moreover, they make it worse. The environment is, almost always, indifferent towards conflicts that are not devastating. Severe conflicts, on contrary, tend to expand and each conflicting side tries to pull into their own side those standing apart. All conflicts need to be managed. Whether or not this management will be successful, will determine the tendencies of future conflicts: will they become functional or disfunctional, which, in turn, will contribute to their extinguishing or proliferation. The Causes of Conflict Table 1 1. Scarcity of Resources Everybody wants to have it all. Effective conflict

management requires that managers distribute properly the financial and any other resources

2. Interconnectedness of Tasks Mismanagement in Storage Department may lead to failures in Sale Department

3. Differences in Aims Pharmacy Director has chosen to order another consignment of medicines using the money initially allocated for renovation work

4. Differencies in opinions and values Colleagues tend to jump to biased conclusions instead of using balanced judgement

5. Differences in behavior and life experience

There are types of personalty that cause tensions in their environment, which eventually lead to conflicts

6. Miscommunication Poor communication of information, failure to properly delegate the responsibilities

1.3. Conflict Process Model Management Situation Conflict Source Possibility of Conflict Escalation Response to Situation Conflict Exhausted Conflict Outburst Conflict Management Functional/Disfunctional Outcome

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1.4. Constructive Conflicts In functional conflicts the problem can be solved in such a way that the parties feel their own involvement in problem solving process. This can mitigate the tensions (hostility, unfairness) that arise while making decisions. Moreover, it will contribute to further partnership, instead of escalating enmity.

1.5. Destructive Conflicts Destructive conflicts may lead to low productivity, unfavorable psychic atmosphere and personnel outflow. Failure to find effective ways of conflict resolution may lead to the following:

1. Low motivation to work; personnel outflow 2. Strong attachment to the group and absence of fair competetion 3. Opponents treat each other like enemies 4. Minimization of cooperation and contact between conflicting sides 5. Outbursts between the conflicting parties 6. Parties strive for defeating the opponent, rather than for solving the problem

1.6. Management of Conflict Situation There are two major methods of conflict resolution:

- Structural - Interpersonal

There are four structural methods of conflict resolution.

1. Explaning job responsibilities. This allows each employee to know what they are expected and to clarify the criteria of work. 2. Exploiting coordination mechanisms. This method creates a management hierarchy. A confilct between two subordinate workers can be resolved by a decision of their manager which can satisfy both parties. 3. Coordinating goals This means directing staff’s potential towards reaching a common goal. If there is some disagreement between staff members, the manager has to draw their attention to solution of a mutual problem. 4. Exploiting reward system The use of this method directly influences human behavior and rises their motivation.

There are five Interpersonal methods.

1. Avoiding (people avoid such situations that bring forth conflicts). 2. Smoothing (“No need to get nervous, because we are a team”). The problems can be

smoothed, however, the drawback of this method is that the problem does not go away and after a while it can emerge anew.

3. Forcing (forcing the collegues to admit your own viewpoint, which can evoke the protest of younger or competent staff).

4. Compromiss (this method is highly valued in management and allows to meet the interests of both conflicting sides).

5. Problem Solving (solving the problem not in favor of the manager, but rather in favor of the best possible outcome for a given situation. Readiness to listen to others, tolerate

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different opinions and finally finding a mutually acceptable solution are at the root of this method).

Resolving of conflicts or problems by using the latter method (Problem Solving) is the most effective and is applied in several steps.

- Problem statement based on the goals - Defining the solution that would satisfy all parties - Focusing on the problem instead of individual characteristics - Creation of an atmosphere of trust, exchanging information and paying closer attention to

employees - Establishment of positive attitudes among the team members and giving no place to conflicts

Figure 1. The methods Interpersonal Conflict Resolution High Problem Solving Attention of the parties to the opposite opinions Smoothing Compromiss Avoiding Forcing Low 2. DECISION MAKING IN MANAGEMENT PROCESS Management process consists of managerial decisions. The effectiveness of management at any level of pharmaceutical enterprises depends on the quality of management. Decision making can be defined as making choices among action options. A manager takes decisions that can impact not only themselves, but also other people and the whole organization and the higher the managerial position, the higer is the moral responsibility of the manager. The process of making managerial decisions can be summarized as follows:

1. Choosing an action specifically suitable for a particular situation 2. Affirmation of the chosen option (making order, resolutions) 3. Implementation

In decision making and implementation managers have to start with objective information and real regularities, build on the premises of law and take into account all possible factors. 2.1. Classification of managerial decisions Managerial decisions are classified according to the following criteria: functional content, application field, management level, project organization, problems to be solved, causes etc.

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2.1.1. Functional Content

- Planning - Organizational - Stimulating - Regulating - Controlling

2.1.2. Application Field

- Economic - Social - Organizational - Technological

2.1.3. Management Level

- A department within a pharmacy - On a pharmacy level - On a pharmacy net level - On the level of all pharmacies in RA

2.1.4. Project Organization

- One-man decisions (made solely by the manager) - Collegial decisions (made by the manager and the experts) - Collective decisions (made by all staff members)

2.1.5. Problems to be solved

- Emergency (manager’s response to current changes) - Informational (based on the information evaluation) - Organizational (aimed at reaching a specific goal) - Strategic (for the future development of the organization)

2.1.6. Causes

- Situational - On one’s own initiative - On the direct order of the higher authorities

2.2. Requirements a decision should meet Regardless of the level at which the decision is to be made, it should have some features that determine the quality of the decision. The requirements are as follows:

- Specificity: solving a specific problem having a specific goal - Competency: make legitimate decisions that correspond to the competencies of the decision

maker - Timeliness: decisions are to be made within a time frame - Validity: decisions have to be based upon valid information, scientific evidence and so on - Absence of contradiction: the decision made should not contradict previos decisions - Efficiency and cost-effectiveness: reaching the goals with minimum cost possible

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- Simplicity/ Prciseness - Reliability: the decision has to be legitimate in different situations - Realistic: in order to be implemented, decisions need to be made taking into consideration

the real resources and conditions A decision can be viewed as optimal if they meet the majority of the above-mentioned criteria, are taken with the least financial input, have high chances of being implemented and possess no threats. 2.3. Decision Consequences The consequences can be: a) Political b) Economic: decisions must not raise the costs c) Technical: decisions must not minimize the quality d) Psychological: decisions must not damage the job satisfaction in employees e) Ecological: decisions must not harm the environment. 2.4. Technology of Decision Making in Management A managerial decision is a deliberate choice of goals, means and methods. The process of management is to be veiwed as a union of two components: decision making and its implementation. Decision making, whether or not by the manager alone or together with the staff, can be presented in the following way (see Table 2): Pre-Decision Making Stages in Management Table 2 # The Nature of Actions and their Sequence Players 1 Problem Statement First Line Managers 2 Problem clarification Second Line Managers 3 Preliminary collection of information; Situation Analysis Managers (experts if needed) 4 Elaboration of Solution Options Managers (experts if needed) 5 Analysis of Solution Options, Assessment, Outcome

Prognosis Managers (experts if needed)

6 Finalizing the Decision Making Process Manager 7 Decision Statement Managers (experts if needed) 8 Documantation Staff 9 Decision Affirmation (signing) Manager 10 Presentation of the Problems and Manager There are several managerial interventions needed for implementation of the decisions made. Here they are:

1. Necessary documentation 2. Explanation of the managerial decision to the staff 3. Specifying the problems 4. Appointment of people who are going to be in charge of decision implentation 5. Evaluation of the implementation

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2.5. The Process of Decision Making The process of decision making consists of several stages:

1. Problem Statement 2. Elaboration of possible solutions of the problem 3. Choosing the necessary solution 4. Decision implementation 5. Outcome evaluation

2.5.1. Problem Definition Any situation that requires a decision to be made, is regarded as managerial. There are two types of decisions: “programmed” and “non-programmed”. Probelem producing situations that demand emergent decision making are also of two types: structured and non-structured. Structural situations are oftentimes repeated problems that require a structured solution. Non-structured situations, vice versa, require a specific approach to their solution. To make a decision is not difficult. What is difficult, it is to make a good decision. Decision making is a psychological process, where the leading factor is sometimes the logic and sometimes are the feelings. While managers are making decisions, they are influenced by a range of factors, such as the social environment, work experience and personal value system. The types of decision making are the following three:

1. Decisions based on intuition 2. Decisions based on reasoning 3. Rational solution of the problem

1. Decisions based on intuition are made solely with involvement of emotions. Surveys revealed

that 80% of the higher managerial staff have identified their problems only using their intuition. 2. Decisions based on reasoning are made out of one’s experience and knowledge. Using their own

knowledge, managers try to make projections about the possible outcomes and pick up the best possible solution to thesituation. This kind of decision making is useful, because in managerial process they tend to repeat themselves.

3. The rational solution of the problem does not depend on one’s experience and consists of the following spteps:

- problem definition - setting criteria and acknowledging own limitations prior decision making - searching for alternatives - assessment of solution options - final decision.

In this particular type of decision making it is very important to define precisely what the problem is. To succeed in doing this means to successfully solve half the problem. Sometimes it is difficult to understand the whole issue because we deal with a bunch of complecated and interconnected problems. In order to make it easy, one need to collect all the necessary data related to internal and external factors and out of the whole set of data to select that which is useful in regards to the purposes, getting rid of all of the nonobjective information. 2.5.2. Processing Decision Options

Ideally, all decision options need to be went through. In reality, however, managers do not normally have all the knowledge and time necessary to do this. As far as making decision is quite time and often also money consuming, for this reason, managers condence all the possible solutions to several working options, from among which they pick up the best one.

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2.5.3. Choosing the Best Option In the next stage the manager gives their estimation each of the options, presenting their advantages, disadvantages and common features. In real a setting, managers are forced to compromise on making the decision because they recognize the following limitations:

- Legal - Resource scarcity - Social - Psycho-Moral

Every manager sets their own criteria for making decisions and among them those influencing the revenue are the most important. Entrepreneurship is simply aimed at making profit. In this respect, decisions can also be presented in financial terms by making prognosis of their possible impact on the levels of revenue. In non-for-profit organizations this notion can be restated as delivering best possible services at the lowest possible cost.

2.5.4. Implementaion of the Decision Decision implementation has several stages:

1. Presentation of the problem to key players 2. Implementation (propoganda, motivation, coordination, emergency interventions) 3. Monitoring and Evaluation

A decision made but not implemented has no value for the organization. In some cases it is more effective to let the key players decide on solution. If the decision is taken by the manager, they, at least, should explain to staff memebers the reasons of such a decision, try to convince them concerning the decision’s legitimacy and effectiveness. The chances of successfully implementing the decision increase with increasing the number of key role players in that implementation, who are involved in the decision making process. Thus, getting people involved in decision making process help the manager to pass their solutions among the staff. 2.5.5. Outcome Evaluation

Starting from the point when the final decision comes into effect, it is necessary to establish and keep feedback. In order that all the points in the implementation description be observed, an ongoing monitoring is necessary. In this stage the manager compares the projected indicators with real outcomes. In case if there are some deviations, the manager can make necessary changes to the implementation process so as to improve the situation. In a pharmaceutical enterprise, the effectiveness is heavily dependent on the appropriateness of the monitoring process. At the same time, trying to hold every minor detail under control and deprive the employees of the opportunity to act on their own initiative will destroy the creativity of the team and minimize organization’s effectiveness. There are several methods of monitoring. First, it is monitoring of the implementation of the higher authorities’ decisions. Here the managers hold meetings on a regular basis to make themselves familiar with ongoing monitoring process. Second, it is time monitoring. Every decision implementation is expected to have time limits. The manager creates a time frame, in which all activities are fit and they break implementation into steps which are expected of each member to carry out in a specific time frame. Every manager has to have their own effective, up to date system of monitoring. It is an uninterrupted process and is to timely make the necessary improvements into project implementation.

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2.6. Decision Making Methods For the managerial process to smoothly function, taking effective decisions is a mere necessity. While making a decision, a manager should base their judgement on scientific research evidence thus leaving out any chances of subjective interpretations and decisions and raising the quality and the value of the decisions made. Decisions can be made based upon different methods. The most widely accepted are: “Decision Tree”, “Work Play”, “Harmless Work Paradigm” and the method of expert evaluation. 2.6.1. Modeling

Modeling is a scientific problem solving method, which helps to make an idea of problem solutions in real world. There are three types of modeling. Descriptive: it describes in approximate terms what the problem is about. Analog: they differ from the real subjects by their size and characteristics. Symbolic: mathematic modeling. 2.6.2. “Decision Tree”

Here the problem solution is presented in astructured and broken down into phases. This method emphasizes two major points:

1. Processing the data collected during the preliminary phase of the problem solving 2. Recognizing the step-by-step nature of the process of decision making

2.6.3. “Work Play”

The usefulness of this method is that the employees can improve their skills through playing various roles in arranged working situations. This will also allow to make some observations of the level of staff members’ professionalism. 2.6.4. “Harmless Work Paradigm”

This method allows to control the expenditures during the decision making process and compare the costs with expected revenues. 2.6.5. Expert Evaluation

Expert evaluation can be performed by the manager alone, as well as together with the staff. Individual estimations are made

- by creating sequential criterea - using grading system - according to quantitative indicators

Team evaluations are performed in group discussions, where new ideas and proposals are freely welcomed. 3. STAFF MANAGEMENT STYLES

3.1. Leader

One of the challenges for managers is not only work planning or firing the employees, but also the current management of the stuff, necessary changes to their professional conduct in the direction best suitable for the organization. Leadership means to influence individuals and groups of people in order to fulfill the objectives of the organization. There are three approaches to leadership:

1. In regard to personality characteristics 2. Situational approach 3. Behafioral approach

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1. This style of management implies that the manager has to possess certain personality characteristics, such as: knowledge, impressive outlook, honesty, good logic, self-confidence, creativity and preferably a background in eithre social or economic sciences. Managers who fall in this category, are distinguished by self-education endeavors, their knowledge, being active and having a strong sense of responsibility and reliability.

2. Managers who exploit situational approach are good at taking into consideration the individual characteristics of the employees and the specificities of the tasks. This implies that this type of managers approach to each situation individually.

3. In this approach, the manager behaves differently with each employee. For every manager to be a leader is a priority, since it determines the effectiveness of all the process of management. To reach leadership one can employ different styles. A management style is the manager’s behavior towards their staff members aimed at influencing them. This determins how a manager applies their authority or how they care about their staff. An organization is a union of unique individuals, problems and goals. A manager has a unique personality plus a range of capabilities. 3.2. “One-dimensional” Styles of Management

“One-dimensional” styles are determined by a single factor: - Authoritative - Democratic - Liberal

1. Managers of authoritative style give orders to their staff regardless of their relation to

organization’s purposes, deciding not only on the content of the orders, but also the methods of their implementation. Those failing to meet the requirements are strictly punished and generally, they communicate with their employees in an emphasized formal manner. This style is effective when the subordinates are in full dependence from their manager (e.g. in military service) or when the subordinates unquestionably trust their manager (e.g. the actors trust their director or the sportsmen their trainer). An authoritative manager makes their subordinates to do the tasks mainly by force. At the root of the management lies the theory “X”, which consists of the following premises:

- People normally do not like working - In general, people avoid taking up responsibility and prefer to be managed - Most of all, people want to feel protected - In order to make people work, they need to be forced to, controlled and punished.

Taking into account all the above-mentioned, it becomes evident that this style manager holds the power in their hand and gives the subordinates no chance to take part in decision making. To ensure the smooth and ongoing process of organization’s operation, such managers are ready even to threat their subordinates or employ psychological terror against them. 2. A democratic style manager trusts their employees, is interested in their opinion, arranges

group discussions, asks for advice and does not employ a fully formal management style. This type of managers welcome their staff to participate in decision making. This style of management is regarded contemporary and is widely practiced in pharmaceutical enterprises. In those organizations, where the management style is the democratic one, the power is not concentrated in the hands of one person. The employees under this type of management are interested in participation in decision making process, because they feel encouraged to do so. This style of management has at its roots the theory “Y”, according to which:

- The work is a natural process and given the appropriate working conditions, the workers will not only readily take up responsibility, but also seek for it

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- If the employees have the feeling of belonging to a bigger structure, it will make them both have self-control and self-management

- Problems that require creativity to be solved, are numerous and the knowledge potential of the employees is not fully used.

So, this type of managers avoid pressing their staff with their own approaches. The staff members participate in decision making and are free in their activities. 3. Of the liberal style it is typical that the managers do not normally intervene the work of their

staff. They allow the employees to solve the problems on their own and are generally passive. This style of management is effective with experienced specialists (e.g. in this way the head of a university manages deans of departments or a pharmacy director – their experienced chemist-analyst). This type of management is not to be practiced with every worker and its advantage is that it allows the employee to realize their potential to the full and be creative. The only thing the manager does in this case, they set the problem before the workers, provide them with necessary means and no longer intervenes with their work. The manager in this case does not play a role of a controller, but rather, of an expert who evaluates the outcome.

Management Styles in Comparison Table 3

Features Management Styles

Authoritative Democratic Liberal

Decision making style One-person Discussion Guidelines Informing the staff about the decision

Order Proposal Request

Responsibility share Manager only Everybody according to competency

Manager only

Attitude towards workers’ creativity

Allowed Encouraged and employed

Totally left for the employers

The principle of hiring workers Get rid of strong competetors

Experienced and knowledgeful experts

None

Attitude towards knowledge believe they know everything

Studies continually and requires the same from workers

Indifferent

Attitude to communication Negative Actively involved in communication

No personal involvement

How staff is treated Mood dependant Equally friendly and demanding

Soft, non-demanding

Attitude towards discipline Highly formal Balanced Soft, formal Attitude towards encouragement

Rather punitive, seldom encouragement

Rather encouraging, seldom punishment

No style

3.3. “Multi-Dimensional” Styles of Management

Multi-dimentional styles of management consist of several complementary components, which can operate independently.

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1. “Double Management” Style – it is based on two kinds of approaches: - A manager should direct their attention to the work and raise the productivity - A manager has to pay close attention to their employees and raise the productivity with the

help of good human relationships Taken separately, these two approaches can hardly be as effective as they could be if employed altogether. 2. “Management Net” – a manager has to have their own managerial net, consisting of two

compartments: one is focused on organization productivity and the other on the employees (see Figure 2).

Figure 2 Attention towards employees High 9 1.9 – “Leisure Club” 9.9 – “Team” 8 7 6 5 5.5 – “Organization” 4 3 2. 1.1 – “Mutual Management” 1 9.1 - “Authority-Submission” Low Low 1 2 3 4 5 6 7 8 9 High Attention to productivity

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Any outcome in an organization is reached in the “force field”, which exists between the production and people. The first force line deals with raising productivity, where maximazing the revenue and minimizing the costs is a perpetual problem. But if maximizing the revenue goes at the expense of the attention to the staff, it will bring about adverse effects. Here comes into play the second force field which deals with employees. It is aimed at creating favorable conditions for the employees to work in and contribute to their full satisfaction with work. Between these two force fields there is some extent of contradiction and as it can be seen from the Figure 2, there exists a field of field. In that field of force there are gradations which determine five types of manarial behavior. Point 9.1 – “Authority-Submission”. This approach tries to maximize productivity without paying attention to staff workers. This is a very harsh style of management. The manager here is mainly occupied with controlling their staff. In this kind of circumstances subordinate workers try to avoid pressure and responsibility, which leads to outflow of personnel. 9.1 type of manager is a bad manager. Point 1.9 – “Leisure Club”. This kind of approach establishes friendly attitude of the manager to their subordinates and impose a relevant pace to the production process. Here the management is focused on human relationships and the work becomes of secondary importance. The negative effect of this type of management is that the employees are deprived of stimuli to work and be creative. Point 5.5 – “Organization”. This type of approach allows to have satisfactory results. Here the managers agree to a compromise fairly easily and thus block the opportunities for finding optimal solutions. This particular management style is adopted mainly by those managers who are satisfied with mediocre success (their gold formula is the compromise). From Figure 2 it becomes clear that the possible level of productivity here is 50% at a 50% interestedness. Point 1.1 – “Mutual Management”. This type of management pays minimum attention both to work and the staff. This type of managers do not strive to improve the production process or create good working conditions for employees. This is a rare type of managers. Point 9.9 – “Team”. Under this management style people forma a team of workers who are interested in the job and have a mutual goal. This management style is perfect as it reaches the maximum of potential productivity at the same time showing maximum care for the staff. Is this realistic at all? The answer is “Yes”. Every manager has to work towards reaching this level because it is well known that every worker’s need is to have success in work and experience professional growth. This style of management contributes to workers’ full self-actualization and their best usefulness. 4. SITUATION MANAGEMENT

4.1. Life Cycle Law

According to Paul Hersey and Ken Blanchard, the effectiveness of different management styles depends on the level of professionalism of the staff members and the most effective manager is the one who with applies different managerial styles corresponding to their subordinate’s level of professionalism. And the level workers does not depend on their age. The word “level” here means the feeling of responsibility, high motivation to reach the goals set, education and work

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experience. In this regard there are four types of management which correspond to the four levels of professionalism in employees (see Figure 3). Management Styles

Concentration on Human Relationships Figure 3

“Participation” “Sale”

S3 S2 S4 S1

“Control” “Giving Guidelines” Concentration on Problem Solving

The level of professionalism in emplloyees

High Low

Mature M4 M3 M2 M1 Low level

S1 – this management style is effective with those employees who lack self-motivation (M1) and

need relevant orders and strict control. S2 – in this case the manager is equally focused on the work and human relationships. Here the

employees strive for taking on responsibility but their middle level of professionalism (M2) does not allow them to do so. The manager offers problems for solution and at the same time they try to keep the staff’s motivation high, they encourage them to be initiative but at the same time ensure high level of control. S3 – in this case the employees have higher than middle level of professionalism (M3) but they

tend to avoid taking on responsibility and complete tasks on their own. It is obvious that these kind of workers can work on their own but they need to be encouraged, helped with self-confidence and be motivated. S4 – here the workers have a higher level of professionalism, they have the capacity to work on

their own and take on responsibility and need to be given freedom for creative work.

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4.2. Management styles according to V. Vurm and F. Eaton According to these American scientists, the management style may change from staff to staff, depending on situation, problem and they are basically the following five:

1. The manager makes decision on their own based on the information available 2. The manager makes the staff known about the problem, listens to their opinion and makes a

decision on their own 3. The manager makes the staff known about the problem, listens to their opinion and makes a

decision based on the conclusions they arrive from the discussion 4. The manager discusses the problem together with the staff and they make a decision as a

group 5. The manager cooperates with the team, which elaborates a set of decisions that are

afterwards admitted by the manager In order to choose from among the above-mentioned styles, it is necessary to take into consideration the following concepts:

- the sufficient experience of the workers - the requirements towards the decisions to be made - the structure of the problem - the relevance of the staff members to problems under discussion - the probability of the one-person decision made by the manager to be accepted by the staff - personnel taking interest in reaching the organization’s goals - the probability of conflicts arising after making the decision

5. THE REQUIREMENTS A AMANAGER SHOULD MEET

The requirements managers should meet cannot be the same for all situations. When working with staff whose level of professionalism is low, the manager can succeed only employing strict methods of management. However, managers have to know how to change their management style depending on changing situations and conditions. Managers’ skills, knowledge and personality traits provide them the following opportunities: 1. Knowledge is necessary in order that the managers know what to do 2. The skills provide the ways of doing what is to be done 3. Personality traits are can bring self-confidence in maing decisions.

For a pharmacy manager to be successful, they need to have appropriate knowledge about pharmaceutics, economics and management. The knowledge they possess need to be not just theoretical, but also be proven by practice and personal experience. The higher is the position of the manager, the higher are the requirements towards their level of knowledge. Knowledge is necessary but not sufficient for being a successful manager. They need to have also organizational skills. The higher the position, the better developed they should be (see Table 4).

Skill Requierments for Managers at Different Levels of Management

Table 4

# Co-worker Skills Economics Technical Organizational

1 Pharmacist (college)

10% 85% 5%

2 Pharmacist (university)

25% 60% 15%

3 Pharmacist-Controller

30% 45% 25%

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4 Head of Department

40% 30% 30%

5 Deputy of Director

35% 30% 35%

6 Director 45% 15% 40% 7 Chief Director 40% 10% 50%

Any manager, however hard working and gifted they might be, cannot succeed in their work if they cannot properly organize and plan their work and correctly prioritize between solution of emergency and distant problems. Managers need to be able to forsee possible tendencies of development and propose ambitious enough, yet realistic tasks for their staff. Another important quality of a manger is the efficiency, which is the quality of being able to do a task successfully, without wasting time or energy. Managers should be able to recruite the right people, delegate the tasks and responsibility properly and give them the chance to solve the problems on their own. It is necessary, therefore, to have the ability to understand the employees, have a realistic idea about their capacities and individual traits, to be able to listen to their opinions and encourage their self-motivation. Organizaitonal charactiristics allow the managers to develop a good team of workers with discipline, without which an organization cannot operate. This kind of discipline can be attained not by punishing or firing the workers, but by employing fair demanding and ability to motivate people. And all this to take place, ther should be mutual respect. In order to do any organizational work, a manager has to have:

- Independent thinking - Commitment - Initiative.

All these qualities can be acquired by managers only with time and experience. The psychological research shows that young managers tend to take on quick and oftentimes premature decisions. Managers of older (45-60) age usually make more well-balanced and well-reasoned decisions. Further, with higher age, the quality of decisions falls down. However, such workers are of high value as counselors thanks to their extensive work experience. Various research done have proven that in the kind of working environment, where the atmosphere is quite tense, the best age range for the manager is 50-60 years old. For a manager to be successful, they need to possess analytical thinking skills,be self-motivated and be able to establish good human relationships with the staff. Some personality characteristics essential to managers are as follows: politeness, balance, self-control, fairness and humanism. If a manager possesses all these qualities, they are very probably to enjoy the respect of their staff. Questions to Be Answered By the Candidates for a Managerial Position 1. Do I possess the necessary knowledge? 2. Do I have relevant work experince? 3. Am I hard working? 4. Do I have the capacity of understanding people? 5. Am I able to influence people? 6. Am a decisive, do I have a strong will? 7. Am I self-motivated?

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8. Can I delegate the tasks properly? 9. Am I well disciplined? 10. Do I have a good moral? 11. Am I well organized? 12. Am I striving for self-improvement? 13. Am I in a good physical shape?

A manager should possess the following skills:

- Organizational and Planning - Decision Making - Managerial - Good Oral and Writing Communication - Encouraging People to Work - Conflict Resolving - Objectiveness - Recruiting and Training the Staff - Being Lead by Others - Negotiation

A manager has to possess the following personality characteristics

- Analytical skills - Interest - Communication skills - Ability to handle stressful situations - Patience - Objective self-evaluation - Hard working - Self-management

A manager should possess the following knowledge

- Pricing policy - Formation and stimulation of demand - Market investigation - Prognosing - Budgeting - Marketing planning - Ways of product distribution - Production technologies - Market and buyers - Legal regulations - Labor code - Computer proficiency - Knowledge about the organization - Accounting - Macro- and micro-economics - Finances - External trade - Social responsibility - Material-technological basis

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- The company’s products and consumer scecificities 6. HUMAN RESOURSES MANAGEMENT. RECRUITMENT OF PHARMACEUTICAL

STAFF The issue of staff recruitment is a very serious one, because in case of failure the organization will not only lose time and money, but also face serious problems. Companies do not grow over night. It takes time. The higher the professionalism of the staff, the faster the organization will grow and develop. Statistical research has shown that the staff in any organization can be virtually divided into three groups:

- The best workers, who make 10% of total number of the staff - Good workers, 25% correspondingly - The rest of the workers – 65%

A recruitment mistake may cost an organization up to $10 000 – 84 000, but the most important thing is the missed opportunities, lost market share and customers, as well as decreased productivity. For this reason it is much better to make the recruitment right, rather than to correct its errors. Prior to recruitment process it is needed to set up the criteria, according to which the organization is going to hire people:

- Outlook - Education - Work experience - Personality characteristics

The recruitment process, during which the candidates are being examined in terms of their eligibility, consists of several phases (see Figure 4). The Phases of Staff Recruitment Figure 4 Vacancy opening Job Description Job announcement through

media or labor agencies Collection of applications Shortlisting

Interviewing Selection of the best 2 or 3 candidates

Making a work plan for 2-3 months by the candidates Interview with the manager

Final evaluation Job offer

When starting the recruitment process, a manager has to go through resumes and group them into three categories:

1. Candidates who have the same work experience as required for the job announced 2. Candidates who have relevant work experience 3. Candidates who qualify for the job announced

Here it is necessary to mention several points. Firs of all, experienced workers will be efficient if at the new work place they have high motivation.Further, the higher the vacant position, the fewer will be candidates with relevant work experience. It is also important to know that there are positions for which personality characteristics are far more important than work experience. During the interview

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managers should try to figure out as completely as possible, how the candidate would behave at work. For this purpose, they need to address the following points concerning the candidate:

- Biography - Work experience - Behavioral patterns from tha past - Questions for self-analysis - Practical assignments - Specialized knowledge - Additional - Behavioral patterns from the future - Stress interview - Hypothetical situations - Programmatic questions

Interview

Preparation to Interview

1. It is necessary to examine all the documents related to the candidate and select the point important for the job

2. Identify key biography points (or those points in the biography that are suspicious) 3. Preparation of relevant questions which are aimed at revealing the candidate’s characterics

and skills (see Table 5)

Table 5 Skills Questions

Decision making Give examples of interesting decisions you have made recently Bring examples of 2 successful and 2 unsuccessful decisions that you have recently made

Strategic skills What have you done during the year past in order to make yourself informed of latest innovations and new technologies

Risk taking Tell about situations in your work experience where risk taking brought up positive results

Initiative Bring examples of initiatives taken by you in the sphere of service Conflict solving How do you overcome emerging confrontations How to interview

1. Greet the candidate, introduce yourself 2. Explain the aim of the interview 3. Tell about the structure of the interview 4. Clarify on biography 5. Discuss pharmaceutical experience 6. Discuss non-pharmaceutical experience

When the interview is done it is necessary to expand the notes taken. It is highly suggested to take notes during the interview, but mainly on the points that are very important, so that the interviewer does not lose the connection with the interviewee. Note taking should be unnoteced by the interviewee. At the end, the enterviewer can ask additional questions and so they will have extra time to go through notes (e.g. “Now I would like to explain to us why we should select you namely”). While the candidate is thinking, the manager can go through their notes and find out the

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points which they would like to make clarifications on. Further, the candidate should also be given comprehensive information about the position and give them a chance to ask questions. Finally, they need to discuss the following terms of of the competition and make sure to thank the candidate for their participation in interviewing. When the interview is over, the manager evaluates the answers of the interviewee and compare them with those of the rest of the candidates. 6.2. Examples of questions for interviews

Communication skills Were there any cases when you got nervous because some of your colleagues could not understand simple things? Did it happen to you that you were sometimes forced to yell at somebody to make yourself heard? Mathemetic skills Do you often make mistakes when counting money? How do you handle numbers in form of diagrams or illustrations? Self-management Describe your latest disagreement with your boss If there is a problem at the work place, who is the culprit? Tell a case when you were able to make the employer know of your own opinion Social position When there are some drastic changes at your work place, how do you react to them? Tell about the situations that were stressful to you Ability to work in a team When your colleague is mistaken, how do you tell them about that? Bring exmples when it is better not tell the colleagues about your complaints How do you percieve those colleagues who do not tell what they mean Leadership skills Tell a case when your proposal was accepted by your colleagues In your opinion, which type of controlling is the most effective? Professional knowledge and experience Tell about a case when you had a success in the contrary to your colleagues What kind of difficulties do you face while selling? Tell about your planning the work Tell about a case when you were able to forsee some situation At your latest workplace what kind of competetors did your organizaion have? Tell about a case where you managed to increase the sales Name the latest successes and failures at your work 6.3. Interviewing Methods

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- Biography information - Work experience analysis - Questions for self-analysis - Examples of behavior from the past - Practical assignment - Examining professional knowledge - Stress interview - Examples of future behavior - Hypothetical situations - Programmatic questions

1. Collection of biography information - is relatively easy and creates an opportunity to quickly

make an idea about the interviewee Typical questions Tell us about your work experience Your marital status?

When did you graduate from the university? 2. Work experience analysis – this is a basic mehtod, but is irrelevant to unexperienced

specialists

Typical questions How many years have you been working in that position? What were your duties? How many people did you have under your own supervision?

3. Questions for self-analysis – these are the kind of questions that interviewees need to make

some self-reflection to answer them. This method allows to have an idea about the motivation level and the analytical skills. The disadvantatge of this method is that it often people have hihger opinion about themselves than they really are.

Tipical questions What doyou like in your work? Which characteristics of yours would you like to develop? What kind of decisions making do you experience difficulties? Why did you choose this specialty and how would you evaluate your progress? What kind of professional goals do you have for the next five years?

4. Examples of behavior from the past - in this method STAR model is used.

Tipical quesions Bring some examples of successful negotiation performed by you

S – Situation – what kind wituation it was? T – Target – what was your goal in that situation? A – Action – what steps did you take? R – Results – how did the situation changed; what kind of achievements did you have?

Compulsory

Advisable

Possible

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5. Practical tasks. – the candidate is given a task to complete, which will allow to have an idea

about their professional skills necessary for their work Typical questions Sell me this pen Answer the following contradictions

6. Testing professional knowledge – in this method the interviewees are given written and oral

professional questions Typical questions How are distinguished the sale to the final consumer and to the supplier? What is the reason that when advertizing detergents “counselors” are used, but when

advertising elite items, advertisement makers leav the decision to be made by the consumer? 7. Stress interview – this method is used when the offered job is potentially full of stressful

situations. The interviewer behaves quite aggressively and tries the self-control of the candidate. Typical questions Why did you come here? Don’t you think that your clothing is too freestyle? You know, I can’t figure out why I am sitting here and wasting time with you I think our company is too good for you Make a cup of coffee for me, please The interviewers simply keep silence during the first five minutes The interviewer leaves the room without making any explanations and returns after a while

It is very important to make an excuse at the end of the interview and explain to the candidate the reasons of your bahavior. Make sure no residual negative feelings are left in the candidate. The disadvantage of this method is that the only thing you are able to test using this method is the abilitiy to handle stressful situations. Because the interview in itself is quite a stressful event, additional stressful situations purposefully created by the interviewer can develop negative attitudes in the interviewees regarding the company and may even serve a reason for the candidate to refuse the offered position. 8. Behavioral examples that may possibly be in the future – the interviewee is offered a

situation that can take place at work in the future and is asked to tell about their action to solve it. Of course, the candidate will try to give socially acceptable answers and here you can have an idea of how wll they fit your organization. Typical questions What would you do if your boss gives you a meaningless, in your sight, task? What would you do if the consumer asks you for a discount, but you cannot afford it? Imagine you suprevise a group of workers which has an informal leader, who tries to compete with you. What would you do?

This method is especially effective for unexperienced candidates, but the disadvantage of this method is that people not always behave the way they describe. 9. Hypothetical situations - in this method the candidates are offered situations not related to

work and are asked to tell their possible actions. This method differs from “Behavioral examples from the future” in that here there are no right or wrong answers. These kinds of

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questions allow you to have an idea about the viewpoints of the candidates and their system of value. Typical quesions Imagine you have got a big deal of inheritance. What would you do? Imagine yourself going in the public transport and as you are preparing to go off, you discover that you do not have money with you. What would you do?

10. Programmatic questions – in this case the candidate is asked to comment on some people or situations. Trying to address these kinds of questions the candidates build their reasoning on their own experience and personality characteristics and thus allow the manager to have an idea about these issues concerning them. Typical questions Why a person choses this or that particular profession? Describe an ideal work Describe an ideal manager What are the cases when you have to fire the worker without any delay?

6.4. Mistakes the interviewers often make

- A positive or negative impression got from one characteristic can bias the attitude

towards the rest of the characteristics - Subjectiveness of the first impression - Because of age, gender or social the interviewee may be attributed the corresponding

traits - If the candidate resembles an already familiar person, in that case all the positive as well

as negative feelings that exist toward that person, the interviewer may project on the interviewee.

- People like to deal with people similar to them 6.5. Difficult communicators

Talkative communicators It is quite difficult to control the conversation with too much talkative people who not only annoy their companions, but also kill their time. When dealing with such people it is necessary to change the topic of the conversation. If needed, you can frequently interrupt your mate. Negatively predisposed communicators Oftentimes, employers encounter such interviewees who behave in an arrogant and hostile way because of their belief that they would not be admitted. In such a case it is necessary to immediately find out the reasons for hostility, otherwise the interview will be ineffective. If you do not manage to calm down the interviewee, ask them the questions and quit the interview.

Anxious communicators

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Moderate anxiety and excitement are natural to the interviewees. It is necessary to try to find out whether this mood is temporary and situationally linked the the interview or it is their personality characteristic.You need to help the interviwer to overcome their anxiety. If your friendly attitude does not help, tell them that there is nothing to worry about. Non-talkative communicators There are some cases, when the interviewer give very short and concise answers to the questions. One of the reasons for this may be the unique characteristics of a particular person or poor vocabulary. In such cases the manager needs to remind the interviewees about the objective of the interview. Dishonest communicators Oftentimes there can be communicators who purposefully give wrong answers. If you suspect that this can be the case, step by step clarify the answers of the cadidate, at the same time trying to figure out the way of their thinking and responding to your questions. It is also important to pay attention to those cases when the interviewer willingly tells their own achievements but refuses to tell about their weak points. In any matter, it is necessary to avoid confrontation and consistently clarify the suspescious points. 6.6. Useful advice

- Pay attention to increased use of junk words by the interviewee which makes you think of

genuinness of what they said (“mmm...”, “well...”, “you know...”) - Pay attention also to such expressions, as “may be”, “I would say that..”, “you can say

that...”, “in general..”. Those people who use these expressions too much, avoid taking on responsiblitiy for their actions.

- Non-verbal signals are very difficult to control and the body language, blush and closed posture can tell you a lot about the candidate.

- Do not allow the candidate to avoid answering the question or giving the same answer all over again.

- If the interviewer presents themselves as heroes, this shoul make the employer to be rather suspiscious about them.

- Avoid asking standard questions because you will get already prepared answers. - Use neutral words or expressions during the interview which will help the conversation keep

going (“I see..”, “That’s intersting..”) - Repeat the words of the candidate when you need to clarify something - Try to employ non-verbal communication methods while taking interview.