Organizations: what they are, types, models and characteristics

We explain what an organization is and what its characteristics are. We also explain the types of organizations and their operating models.

In an organization, members work together to achieve a common goal.

What is an organization?

An organization is a group of people who work in a coordinated manner to achieve a particular objectiveThe management area is responsible for managing the performance of the different members of the organization and administering the use of resources, infrastructure and daily tasks that must be carried out.

The organization constitutes a social institution, that is, a human group that requires certain norms and a certain order to coexist appropriately and achieve its objectives. These aspects are established through an organizational culture that allows an organization to perform and endure over time.

Characteristics of an organization

Among the main characteristics of an organization are:

the staff. It can be made up of two or more members who work in a coordinated manner to meet an objective, and includes all human resources, such as employees and collaborators.
The hierarchical structure. It can be defined vertically, with a management team in charge that makes all decisions, or horizontally, with management that delegates certain responsibilities to other areas.
The objectivesThey can be commercial or non-profit, short-term or long-term. They must be clear and real, since they are what keep the organization on track.
The mission and vision. The mission An organization’s purpose is the purpose that gives it meaning and where the company wants to go in the distant future. For example: Being the leading brand at a national level of sustainable clothing that does not generate a negative impact on the environment. vision It determines the path you will take to achieve your purpose. For example: working on continuous improvement to stay at the forefront as a company that preserves biodiversity and society.
Organizational culture. It is the system of norms and behaviors that give identity to the organization.
The activity or sector. There may be a single activity or several. For example: offer products and also services. Your work must always maintain specific and planned objectives to last over time.
The geographical scope. It can be local, national, international or multinational, depending on various factors: its place of origin, its scope of productivity, its capacity for expansion and its commercial alliances.
Legal personality. Determines whether it is a civil association, a public limited company, among other legal forms. Every entity must be registered legally, so it has rights and obligations to comply with.
The resourcesThey can be: economic resources (available capital, which includes investments or credit capacity), human resources (employees) and material resources (infrastructure, equipment and supplies so that each employee can perform their tasks).
The size. It can be small or medium (for example, SMEs or Small and medium businesses), or large (for example, organizations with more than 200 employees). The hierarchical structure will depend on the capacity of resources available to you.

Types of organizations

There are three main types of organizations depending on their purpose:

For-profit organizations. They are companies that exist to generate economic profits for their owners and shareholders. Their purpose is to obtain more money than invested.
For example: private capital corporations, groups of companies (or holdings of its name in English), public limited companies or cooperatives.
Non-profit organizations. These are institutions that exist to provide a particular service to the community and receive contributions from members and donations. Although they can raise money, this cannot be distributed as profit among the owners of the organization.
For example: non-governmental organizations (NGOs), civil organizations and foundations.
State organizationsThey are public bodies that exist to implement the administrative management of a nation. For example: the ministries, the secretariats and the collecting entities.

Furthermore, there are state-owned companiesalso called public companies, which are owned by the State and operate for profit to provide basic services and improve the quality of life of citizens. For example: public transport companies, electricity, drinking water or postal mail

Operating models

The main operating models that an organization can exercise are:

Linear or vertical model. It is the oldest model and is still in force in some very bureaucratic entities. Command is exercised formally through orders from a superior directed to all areas of the entity and without the possibility of another area intervening in decision-making.
Functional model or Taylorism. It is the model based on Frederick Taylor’s scientific theory on the division and specialization of tasks, with the aim of achieving greater efficiency in the production process.
Line-staff model. It is the model that combines certain aspects of vertical and functional organization. Command continues to be centralized in an administrative directive, although certain departments enjoy freedom and have responsibility for making decisions that concern the tasks of their area.
Committee model. It is the model in which the board that makes the main decisions is made up of a group of shareholders who decide based on the election of the majority. In addition to the committee, the organization may have management and other area leaders to whom it delegates responsibilities for daily tasks.

Importance of organizations

The organizations They must make a positive contribution to societyin addition to having the ability to achieve objectives and obtain results in order to endure over time.

It is not only non-profit organizations that seek to solve a specific problem that must generate a positive impact on the world. For-profit companies, which aim to increase profits, must also generate a positive impact on society to last over time.

For example: a private company that only makes profits at the expense of the extinction of natural resources or generating a high level of pollution cannot develop over time or should not do so for the well-being of biodiversity.

Examples of organizations

Some examples of real organizations are:

For-profit organizations

America Mobile. It is a private multinational company based in Mexico. It offers telecommunications service, such as telephone and internet, to 18 countries around the world.
Soriana S.A. Stores. It is a private Mexican company and is the main supermarket and warehouse chain in the country.
Novey. It is a private company in Guatemala that produces construction materials.

Nonprofit organizations

Aquae Foundation. It is a Spanish non-profit organization that works in education and information dissemination. It promotes the human right of access to drinking water in Latin America.
Doctors without bordersIt is a non-profit organization that provides medical and humanitarian services internationally. It helps victims of natural or man-made disasters with assistance and supplies.
crew foundationIt is a Spanish non-profit organization that works and fights for the conservation of ecosystems and endangered species in various parts of the world.

State organizations

Ministry of Economy of El SalvadorIt is a public body of the Republic of El Salvador that collects information on the country’s trade policy and the development of trade negotiations with foreign countries.
Ministry of Culture of Mexico. It is a public institution that is responsible for promoting and disseminating the artistic and cultural expressions of the nation. In addition, it works on raising awareness and preserving cultural heritage.
Ministry of Education of Peru (MINED)It is a public organization that promotes educational opportunities and solutions of equal quality for all citizens of the nation.

State-owned enterprises

PemexIt is a Mexican oil and natural gas producing company, owned by the Mexican state.
Ecuador postal services. It is a nationwide postal logistics services company, owned by the Ecuadorian state.
CEL Group (Lempa River Hydroelectric Executive Commission)It is an energy producing and electricity marketing company owned by the state of El Salvador.

Continue with: Organizational behavior

References

“Fundamentals of organizational behavior” Robbins, SP, & Judge, TA (2009). 13th Edition. Pearson. Mexico.
Types of organization and organizational structure” Castellanos, M., C., A., (2014). in Gestiopolis.
“Two basic types of organizations: For-profit (business) and Nonprofit” McNamara, C. (2022) in Management help.