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In their well-known book A Behavioral Theory of the Firm, R. Cyert and J. March (1963) [1]proposed the notion of “organizational slack”, a notion central to their understanding of the firm as a coalition of competing and yet interdependent actors. This refers to (hidden) reserves (or redundancies) of resources which enable actors to escape the constraints that management imposes on their behavior in order to align and, possibly, optimize their performance with the overall objectives of the firm. From their perspective, organizational slack is a more or less pervasive ingredient in the functioning of any organization : It is the reverse of, as well as the means for, the leeway actors in organizations try to preserve in order to be able to negotiate the rules of the game which will regulate their interactions and exchange-relations with all the other members of the organization on whom they depend for the accomplishment of their tasks.
Examples of organizational slack
The most immediate and concrete example are the many unofficial or semi-official stock-piles that tend to accumulate in different sectors of a factory to prevent any production disruption by unforeseen problems in supply chains. These “buffer-stocks” served a positive function: they enabled production systems to sustain minor problems in the (internal as well as external) supply-chains until those problems were solved. They thus contributed to loosen interdependencies, but also developed reactivity and autonomy in these sectors.
Other examples could have been chosen in different sectors of any organization: slack can be human resources that are not totally aligned with actual work-load; it can be found in the suspension of this or that organizational rule which frees resources otherwise used in time-consuming paper-work. It can be just any other kind of (dormant) material or human resource that can be mobilized without delay in case of an emergency, when “normal conditions” of functioning are in jeopardy. Slack is the surplus-energy that members of an organization can mobilize in order to respond to a situation of crisis. This was the case in most public hospital systems during the Covid crisis. In France, experts feared that the hospital system would crumble under the pressure of case-loads, but to everyone’s surprise, it succeeded in mobilizing the hidden resources that could be found once bureaucratic complications (higher management) was absent from the sites, and in the surplus energy that field level actors invested in their day-to-day work. So stock-piles are just one very simplistic but also telling example of what slack consists of: in its essence, its effect is increased autonomy, as it loosens the injunctions of interdependence by partially decoupling any actor’s task performance from their partners’ performance. Organizational slack is always equivalent to a leeway, but also the necessary resource enabling organizational actors to (re)negotiate and come to terms with their partners.
Negative perceptions
At the same time, and maybe for that very reason, it was always negatively perceived by management in search of efficiencies. Indeed, it became the designated enemy of managers when the Japanese total quality and just-in-time management style swept over western capitalism. Managers were taught to do away with any idea of buffering, to hunt for all superfluous “organizational slack” labelled “organizational fat”. Any zealous manager tried to do away with what they perceived as sleeping resources (i.e.as cost factors). Supply chains were streamlined, and interdependencies increased to reduce costs and optimize resources. More precise anticipation and planning, streamlined cooperation and optimized logistics were deemed necessary to efficient management in a globalizing world. “Organizational slack”, the natural by-product of any functioning firm was considered not only superfluous; indeed, it was considered to be incompatible with efficient, i.e. stream-lined, “lean” management.
Over reliance on a principle
As with all good things, what in itself is an interesting principle becomes counterproductive if pushed beyond reasonable limits. Just-in-time techniques did succeed for a while to do away with “organizational slack” and to make organizations leaner and more agile. In the beginning, that was easy, as a lot of “organizational fat” had accumulated. Doing away with it seemed a very promising project, which in the short term did improve overall performance. But keeping this up, the suppression of more (this time, useful) slack created increased tensions and friction within the organization, generating organizational vulnerability and increasing the fragility of production systems in the face of inevitable disruptions in the ever more complex and “optimized” supply chains.
Post Covid Enlightenment
This is what management finally discovered in the aftermath of the shutdowns under Covid. It is now common-place to bemoan the fragility of globalized supply-chains and the dependencies they created. The buzzwords now in many western economies are the relocalization of industries and the reconstruction of the industrial base, without much consideration of the cost.
And this is where resilience comes in. Organizations have to become more resilient, meaning more robust in the face of discontinuities und unforeseen events. Lean management and just-in-time philosophy collide with the requirements of resilience. As more than a buzzword, resilience calls for a renewed and more sophisticated understanding of the role organizational slack plays in the fluid functioning of organizations and firms. It requires to accept, and to create the conditions for, the transactional nature of organizations.
Resilience is created locally
A resilient organization might well require the recreation of more of the useful organizational slack, that can ease tensions, avoid useless frictions and facilitate cooperation by allowing actors the leeway (autonomy) to renegotiate with their partners the rules of the game in the face of unexpected events in their respective task-environments.
Resilience, if the notion is to be meaningful, cannot be created top down. It is a mode of functioning that relies on a collective capacity to overcome adversity. Thus, it can only be a distributed capacity, one that relies on the creativity and reactivity of all levels of an organization to reorganize and realign behaviors in such a way as to overcome whatever adversity it faces. This calls for a different style of management which thrives on local autonomy capable of mobilizing resources to locally manage emergencies and increase the firm’s overall resilience.
Resilience is like commitment.
Resilience cannot be created by top-down decisions, any more than the commitment of organization members can be created by top leadership alone. Resilience is a systemic quality in which the constituent parts of a firm, each at its level and in its domain, are capable of facing up to emergencies and of overcoming them at their level. That this needs cooperation between contexts and sectors is obvious and self-evident. The task of higher management is precisely to bring it about.
It also critically implies the reconstruction of local capacities and autonomies, putting the line management (the decried “context managers”) in charge of organizing resilience locally and daily. To some extent, the call for resilience is a renewed call for the de-bureaucratization of firms, a call for empowering the indispensable lower level “context managers” any well-functioning organizations relies on. It calls for the recognition of the basic fact that in order to go about their job and create organizational resilience at their level, “context managers” need at least some degree of the slack which classic management has been hunting down for years.
About the Author:
Erhard Friedberg is Professor Emeritus of sociology and former director of the Master of Public Affairs at Sciences Po, Paris
[1] R. Cyert and J.G. March (1963) : A Behavioral Theory of the Firm, Englewood Cliffs, NJ, : Prentice-Hall.