Primary organization

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The primary organization is the - mostly hierarchical - basic structure of an organization and consists of organizational units , such as positions and departments , that have existed over a long period of time . Communication within the primary organization is usually vertical. It can best be described on the basis of the design parameters used, the characteristics of which can be combined in different ways. These were standardized in organizational theory in order to arrive at a manageable number of basic forms. Often there is an overlay or addition by the secondary organization , which is supposed to increase efficiency and solve interface problems.

Forms of primary organization

The primary organization mainly deals with routine tasks.

In contrast, new and complex problems are mostly dealt with in the secondary organization .

The following forms of organization and organizational principles are the basic structure of the job structure, the distribution of competencies and the superordinate or subordinate relationship, with one- line systems dominating in practice.

Basic forms of line systems

The following organizational forms can be distinguished on the basis of the type and scope of the specialization of positions (functional and object-oriented), on the basis of the subordination relationships (single or multiple subordination) and on the basis of the authorizations (full competences, partial competencies):

Single line system

In the single-line system , each position has only one superordinate / superior position, i.e. That is, it receives instructions from the entity to which it is connected by a line. Full competence prevails at every hierarchical level.

If you follow the line from the top to the bottom level, you get what is known as the official channel that must be followed. Instances of the same hierarchical level can only communicate with each other via jointly higher-level instances.


  • Clear instruction and formation lines
  • Clear powers and responsibilities


  • Longer information channels
  • For large companies, it may be excessive demands come
  • Frequent overloading of superiors

Multi-line system

While in the single-line system, according to the principle of placing orders, the department is subordinate to only one superior and thus a clear command channel prevails, in the multi-line system several superiors of equal rank have authority, which corresponds to the principle of the shorter route.

Staff line organization

The staff line organization , which integrates part of the secondary organization , is a special form of superordinate organization . Staffs can also appear in addition to all other forms of organization.

Members have a supporting function in relation to the line instances without any time limit. You advise them, but you have no decision-making power. Members are assigned to the line instances. They are useful if the instance owner does not have the necessary specialist knowledge or cannot do so because of the complex matter.

Staffs can be divided into generalists and specialists. Generalistic staff are, for example, management assistants. Specialized staff can be the legal department or project organization, for example.


  • Use of specialists
  • Relief of the line organization


  • Bad image ("Get involved everywhere and have no idea")
  • mostly no organizational power
  • Conflicts with the line organization

For temporary, complex, meaningful and innovative tasks that require different specialist knowledge to fulfill, the project organization is suitable, which solves complex tasks in teams for a limited time parallel to the primary organization.

Basic organizational principles

The following organizational principles can be distinguished based on the type and scope of the specialization of positions (functional and object-oriented):

Functional organization

In accordance with the performance principle, the functional organization seeks to combine activities of the same type as possible. It is divided into functional areas, such as procurement, production, sales and administration, and is usually implemented in the form of a one- line organization . For the company, specialization means both a great advantage and an enormous disadvantage, insofar as this form of organization often leads to an overload of the top management, especially with increasing complexity of the company. Small and medium-sized enterprises in particular are often functionally organized.

Divisional organization

In the case of divisional organization, also divisional organization or division organization, there is a breakdown according to certain structural features on the second management level, with an attempt to combine objects of the same type as possible in one organizational unit.

It divides the company into several divisions (business areas) depending on regions , technologies, products, markets, projects or customer groups, which are usually functionally organized themselves. These divisions act autonomously, take responsibility for profits, losses and production and are very flexible and adaptable. However, due to the specialization of the divisions, they require extensive coordination and more qualified managers.

In addition to these divisions, however, the company also needs central areas that stand above the divisions and safeguard the common interests of the company and provide certain functions and various services for the divisions.

This form of organization arises above all when the company management is overwhelmed by growth of the company and strong diversification.


  • Divisions are smaller as units and therefore more flexible
  • greater transparency of business activities
  • better performance rating
  • separate purchase and sale


  • higher administrative effort
  • Differences of opinion between business and central areas

Further organizational principles

The following organizational principles can be distinguished on the basis of the authority of positions (full competence and partial competence):

Matrix organization

The matrix organization is a multi-line system and uses two structuring principles at the same time. This creates an interwoven structure in which one body is subordinate to two or more organs.

A functional organization normally forms the line dimension, while the second dimension is object-oriented. This multi-line system is characterized by fast communication, but has the major disadvantage of overstepping competencies and double assumptions. It only works reasonably smoothly if the managers are in harmony with the employee.

Tensor organization

The tensor organization is a further development of the matrix organization, in which not just two, but three or more structuring principles are combined, such as function, product and region. For example, it is possible to expand a matrix organization into a tensor organization through segmentation based on regions, which often happens especially with international corporations. The advantages of adaptability, flexibility and customer orientation through the inclusion of the region as a third dimension are relativized by the disadvantages of confusion, multiple insinuations and the resulting potential for conflict.

Holding organization

Holding organization refers to the permanent investment in several legally independent companies (subsidiaries) that are managed by a group headquarters, the parent company. While the subsidiaries are responsible for the creation and utilization of services, the holding organization takes on the distribution of tasks and competencies between the group headquarters and the subsidiaries.

There are three types of holding companies:

  • Operational holding: Group headquarters takes on strategic and operational management
  • Management holding: Group headquarters only assume strategic management
  • Financial holding: Group headquarters leads by setting monetary target values

Network organization

The network organization is a younger form of organization and has gained increasing importance in theory and practice in recent years. It is made up of autonomous members who pursue an overarching, common goal in the long term and work together in a coordinated manner. The network organization often has a less formal structure; This means that the actors in the network can retain their legal independence and the interaction can be much less strictly regulated by law. There is hardly any hierarchical structuring. The participants acting in networks can be organizations, companies or individual actors and are often consciously or unconsciously actors in several independent (social) networks.

The network can be created internally, as in the case of the modular organization, or externally through cooperation between legally and economically independent companies. The cooperation can relate to individual parts of the business activity, while the companies otherwise remain in competition, or affect the entire business activity. Frequently encountered forms of network organization are:

  • The joint venture : In this case, an independent company is founded by two or more independent companies to work on a project together .
  • The Franchising : A licensee receives from the franchisor given the right to exploit the brand or product. The franchisor can make his name and product known at low cost.
  • The subcontracting : operations are outsourced to legally independent companies that provide long-term contracts on the basis of performances.
  • The virtual organization : In this case, the members appear to outsiders like an independent company. However, they remain legally independent.

An extreme example of a successful network is the development community for open source and free software , in which the property of self-organization is very pronounced. Each actor in this network enjoys a high degree of individual freedom (decision about what, when and where to do, as well as belonging to the network). Hierarchical structures, if necessary, are formed here on a meritocratic or democratic basis: Linus Torvalds, for example, has no legal claims to the project management in Linux kernel development (except naming rights), but is generally recognized as an authority due to his skills in technical and social areas.

The reasons for the increasing spread of this form of organization are often identified as the modern communication media as well as a stronger motivation of the actors through greater independence and responsibility.

Further to this network theory , small world phenomenon , scale-free network and self-organization .

Virtual organization

From a pool of legally independent companies and / or individuals, suitable companies come together for a certain period of time in order to jointly produce or create a product for the customer. The virtual organization appears to third parties or clients as a single company.

Modular organization

The modular organization is the newest form of organization. This largely dispenses with hierarchical systems and increasingly relies on flexibility. For this purpose, the company is broken down into relatively small units that have extensive decision-making powers and responsibility for results. These systems are strongly process-oriented and thus guarantee a high level of adaptability.


The organizational forms and organizational principles described are to be regarded as ideal types. In practice, the transitions are fluid, for example, staffs can be found in almost all organizational forms. Changes in the organizational form over time are primarily necessary due to changes in company size, production processes, the economic situation, the needs of employees and many other influencing factors.

In addition to this consciously designed formal organization, which is defined in organizational charts, there is also a so-called informal (also informal) organization . This is defined by relationships between employees that are not intended by management. Such informal relationships as informal groups, informal communication or also informal power relations have an important influence on the formal organization, can support or also hinder it.