As an Organisation Admin you can create several types of Contact Flags.
Once a type of Contact Flag has been created, you can add that Flag to one or more contacts from the Contact Profile page of that contact.
Make sure that you have turned on Contact Flags in your organisation: How to turn on Contact Flags
Steps
Select My Apps in top menu
Select Contacts
Select More Options
In the dropdown select Flags
You arrive on the Contact Flags page
Press the Create Flag button
You arrive on the Create Flag page
Give the Flag a name and choose a colour
Press Save