Definition of slack

Slack was defined for the first time by Cyert and March in 1963 as "the difference between the payments required maintaining the organisation and the resources obtained from the environment by the coalition".

Generally slack can be an explicit or a tacit resource, which an organisation has acquired and which is not committed to necessary expenditure. Explicit slack includes all the resources employed with sub-optimal profitability (such as high cash reserves – commonly referred to as a ‘war chest’, which allow a company to react quickly to new challenges) and are visible on the balance sheet. Tacit slack exists mainly for three reasons. First because of general uncertainty in planning resources; second because of situations where only sub-optimal planning is possible (for instance if growth opportunities are too few to exhaust the resources already in place for expected growth); or third because employees usually have a better understanding of their detailed resource consumption than their managers do and ‘obfuscate’ to their managers when fixing objectives. Slack can be used, for example, in R&D as bootleg projects, which draw heavily on the availability of overhead slack. [1]