Management Practices: A Comparative Analysis of For-Profit and NPOs

This essay delves into the similarities between management approaches used in for-profit and non-profit organizations, despite their differing goals. It highlights how essential management theories, such as contingency and system theory, are applied across both sectors. The essay emphasizes that while the specific objectives of these organizations may vary, the fundamental management practices, including organizational structure, leadership, and strategic decision-making, remain largely consistent. It explores how these theories help manage resources, human capital, and stakeholder relations, illustrating that the core processes of balancing books, engaging stakeholders, and defining missions are shared. The analysis underscores that the choice of management theories doesn't necessarily change based on the organization's goals, but rather, the procedures are adapted to suit specific objectives, aiming for success through efficient organizational structure and systematic workflows.

Running Head: Management
Management

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“Despite aiming for vastly different goals, the approaches to management used in for-profit
And not-for-profit organizations are largely similar.”
Management of an organization refers to the process of dealing with, controlling and analyzing
the activities of the business. The management process controls and initiates all the activities
related to the business such as managing human resource, natural resources, social responsibility
etc. A non for profit organization refers to the organization which has been formed by a group of
people with a purpose to initiate activities of the business but with non-profit goals. The
activities of such organization are done with an aim to provide benefits to the community
without gaining any personal benefit from it. Whereas a corporate refers to the organization
formed to carry the business activities in the market with an aim to generate profits from the
business (Armstrong, & Taylor, 2014). “The essay further explains about different management
theories which are used by organizations (both not for profit and corporate) to manage their
business activities. Also it states that change in goals of the organization does not mean that the
managerial theories shall also differ.”
It shall be noted that whether it is a not for profit or profit making organization, the activities
conducted in the management are same. Although there is difference in the taxation rates and
government jurisdiction but the management practices of nonprofit is same as other corporates.
The organizational structure may be slightly different but the major mandatory activities are to
be followed by both types of organization like balancing the books, contribution of stakeholders
in the business operations, mission and objectives of the management etc. (Conaty, 2012).
Certain management theories are to assist the management activities of an organization. Further
the non for profit organizations also accepts such models and theories with slight change. Further
some of the theories which apply to all types of organization are as follows:

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Contingency theory of management: it refers to the organizational theory which helps the
company to lead and strategic decisions for the better handling of the management. The theory
suggests the manager to apply the right leadership decision on the adequate situation in the
organization. Further the approach gives an idea in a nutshell that, all organizations shall be
flexible to adapt changes in the environment also they shall take corrective measures in response
to the change in the market of the company (Benevene, & Cortini, 2010). The three dimensions
reviewed under this theory are:
Leader-member relationship- leader shall generally accept and consider the suggestion of the
employees; also the decision of leader shall also be followed by subordinates.
Degree of task structure: the structure of the task shall be well organized resulting degree in this
dimension.
Leader’s position power: it refers to the powers and authority of leader’s position in the market
(Novak, 2010).
(Organizational structure of NPO)

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The aforementioned is a structure of a NGO which is similar to any other profit making firm. In
a not for profit organization the contingency strategy works well to increase the effectiveness and
efficiency of an organization. Every organization will work efficiently only when there is a
formal organizational structure. The NPOs also require a formal organizational structure to
manage their business activities. The goals of a profit making corporate might differ from that of
a NPO but the activities initiated to achieve the goals are same (Lewis, 2017). Like, the origin
foundation NGO, initiates to provide maximum satisfaction to the stakeholders of the company
with their activities. So the foundation also applies the same management theory to attain success
like any other organization applies to achieve success (Ditlev‐Simonsen, & Midttun, 2011).
This theory gives a specific view of the structure of the organization along with the distribution
of power and authorities for instance in case of Robin Hood Foundations a definite management
system of the company formed due to strong organizational approach. So in case of a corporate it
is important that the employees shall agree with the terms of their leader and the leader shall also
initiate to provide better level of satisfaction to the employee. Similarly, the contingency theory
is used in the NPOs to maintain decorum and provide a better organizational structure to the
mangers. Thus, it can be said that the goal of the organizations are different but the approach
through which the goal is to be achieved is same (Hofmann-Wellenhof, Lichtenegger, & Collins,
2012).
System theory of management: management of an organization includes activities like
procurement of raw material, management of human resource, maintain organizational structure,
and initiate to attain mission ad vision of organization. The system theory explains that the
system of the organization is the most important factor which affects the growth of the
organization. The formation of the system is the key factor through which positive change is

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adapted in the organization. The system of the organization is interdependent with different parts
of the organization. Change in one part of the organization affects the whole system of the
organization, thus the system shall be formed and controlled inn such way that in case of
fluctuations the organization’s core values are no disturbed (José & Cobo, 2017). The theory also
suggests a set of dynamic principles long with tools which shall be followed in order to maintain
jurisdiction in the organizational culture. In order to attain success the mechanism shall be
designed in such a way that it aims to fulfill the values of the organization like in the case of
Melinda Gates Foundation the system theory is applied in the management process.
Discussing the case of a not for profit organization, such organization also have their different set
of standards and goals which are made and amended to comply the objectives. The system theory
helps the company to manage the activity in such a way that it provides guidelines to the
company which they shall follow and achieve their desired goals (Daft, 2012). The system theory
explains that organizations working are closed interconnected with each other, any change in the
external factors of the market affect the internal system of the organization as well. Thus, the
theory suggest that the business system shall be formal along aligned with well specified goals.
Companies like Toyota and ford also used the same system management theory which other
foundations used which states that there is no difference in the management of corporations.
Formal system of management in the business tends to have higher degree of positive aspects to
achieve success. However, all types of organizations require a systematic flow of information
and power in the organizations (Armstrong, & Taylor, 2014). The theory helps the organization
to form a system concerning the attributes of the organization like in sunflower foundation; the
management of the foundation is efficient due to formal and systematic flow of work and
knowledge. the fact shall be considered that both not for profit an profit making organization

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require a proper flow of work in the organization, and to maintain peace in the organization and
remove hindrance, the company need a proper system for the organization which shall be
complied by all. Thus, this process assists all types of organization to manage their business
activities (Australian Government, 2017).
Concluding the above statements it shall be concluded that in order to initiate proper flow of
organizational culture in the management, the companies need to initiate the management
theories in its workings. Also it shall be noted that if the goals and standards of an organization
are different then the company shall note apply different management theories; instead,
management processes of all organizations are same, but the procedures change depending upon
the goal of the organization.

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