What is organizational slack, and why slack is important?

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What is organizational slack?

Slack resources within a firm are those resources that are not fully being used. There is some degree of built-in slack, where resources such as employees, have some degree of free or discretionary time available. This is in comparison to a firm that has no spare resources – everyone is always fully utilized, with no time to deviate from assigned tasks. 

Why is can some degree of organizational slack be important for firms?

While it is easy to think of slack as being some degree of wastage, having some degree of slack resources within a company can be a good thing. Some of the advantages that come from having slack resources include:

Experimentation, and exploring new areas

One of the key advantages of having some slack resources is that it allows you to experiment and explore new possibilities. This may include research into new opportunities, for example, speaking with your customers to identify areas that can be improved.

Capitalizing on identified opportunities

As well as helping identify new opportunities, slack resources can be necessary to actually capitalize on the new possibilities. If there is no slack within an organization, it is difficult to be able to quickly capitalize on the new opportunity. The firm may have to wait to hire new employees or forego the opportunity. 

Making improvements to the efficiency of the firm

It seems paradoxical, but slack resources may actually help the firm improve its efficiency. if everyone in the company is tied up, fully occupied by their assigned task, this leaves little room for people to notice or implement improvements. Slack resources may give individuals some freedom to reconfigure their jobs to improve their overall effectiveness. 

The limitation of slack

While there are many benefits that come from having slack resources, it is also useful to recognize that having substantial organizational slack is not necessarily a good thing for firms. Having too much slack may bread inefficiencies, with individuals not motivated to think of ways that their roles can be improved.

Final thoughts: Identify an appropriate level of slack for your firm

Rather than seeing slack as a good or a bad thing, it is more useful to consider an appropriate level of slack and to consider where in your firm having some slack would be most useful. Depending on your organizational needs, having some free resources in development may for example make the firm more responsive to new opportunities.