Management style is influenced by the goals and purpose of the organization, which are in large part established by the type of business being managed.
Management in For-Profit Organizations
A for-profit business is an organization engaged in the trade of goods, services, or both to customers with the goal of earning profit to increase the wealth of the business's owners. Managers have to direct their efforts towards achieving that goal.
Management in Non-Profit Organizations
In contrast, a non-profit organization is legally prohibited from making a profit for owners. All income generated by a non-profit's activities must be used to achieve the charitable or educational purpose defined in the organization's bylaws. The managers of non-profits must always be aware of that charitable purpose and ensure that the organization's operations conform to those purposes.
One component of nonprofit management that contrasts with the for-profit model is the existence of volunteer workers. Non-profits' lack of free-flowing capital means they rarely have the resources to staff the organization sufficiently. In this scenario, managers often reach out to individuals passionate about the organization's mission to contribute through monetary donations or volunteer hours. Managing volunteers is different than managing employees, as there is essentially no contract or agreement governing the relationship. This means managers must motivate by community-building and a sense of shared accomplishment.
Management in Mutual-Benefit Organizations
A mutual-benefit non-profit corporation can be non-profit or for profit. However, mutual benefit corporations are usually formed for nonprofit purposes like managing a condo association, a downtown business district, or a homeowners association. A mutual is therefore owned by its members and run for their benefit; it has no external shareholders to pay in the form of dividends, and as such does not usually seek to generate large profits or capital gains. Managers in mutual benefit organizations are, therefore, more concerned about improvements in human and environmental well-being than maximizing profits for external shareholders.
Comparing Management in For-Profit, Non-Profit, and Mutual-Benefit Organizations
The management of all three types of organizations (for-profit, non-profit, and mutual-benefit) may have similar responsibilities, such as drafting a budget and ensuring that the organization generates enough revenue to fulfill its operational needs. Management will need to plan, organize, direct and control the business's activities. All three types require that management motivate employees.
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Management processes
Management styles vary among types of organizations, but they still follow the main steps of planning, organizing, directing, and controlling.
However, the approach managers take will vary based on the type of organization. For example, a manager of a for-profit company may be able to motivate employees through bonuses for sales targets or profit sharing. This strategy cannot work for a non-profit or mutual-benefit corporation. In those cases, management must either appeal to the employees' sense of duty to the mission of the non-profit or to the benefit they would receive from a well-run mutual-benefit corporation. While every organization poses different challenges, effective managers consider the type of organization and adjust their style to fit those circumstances.