The organizational cost of insufficient sleep The organizational cost of insufficient sleep

Previous McKinsey research has highlighted a strong correlation between leadership performance and organizational health,2 itself a strong predictor of a healthy bottom line. In a separate study of 81 organizations and 189,000 people around the world, we have found that four types of leadership behavior are most commonly associated with high-quality executive teams: the ability to operate with a strong orientation to results, to solve problems effectively, to seek out different perspectives, and to support others.3 What’s striking, in all four cases, is the proven link between sleep and effective leadership (exhibit).

To do this well, it’s important to keep your eye on the ball and avoid distractions, while at the same time seeing the bigger picture—that is, whether your company is heading in the right direction. Scientists have found that sleep deprivation impairs this ability to focus attention selectively. Research shows that after roughly 17 to 19 hours of wakefulness (let’s say at 11 PM or 1 AM for someone who got up at 6 AM), individual performance on a range of tasks is equivalent to that of a person with a blood-alcohol level of 0.05 percent. That’s the legal drinking limit in many countries. After roughly 20 hours of wakefulness (2 AM), this same person’s performance equals that of someone with a blood-alcohol level of 0.1 percent, which meets the legal definition of drunkenness in the United States.

Before introducing new policies, businesses should start a conversation among their leaders to determine which ideas will best suit the organization, particularly bearing in mind the fact that working cultures differ.

Travel. Companies should encourage flexibility—for example, by allowing employees, if possible, to take an earlier plane (rather than an overnight “red eye” flight) to get a good night’s sleep before an important meeting.

Team working. Companies must increasingly be responsive 24/7, but this doesn’t mean that specific people should bear the brunt of the burden single-handedly. IT help desks in many global organizations have shown the way—shifting location every eight hours. Likewise, other groups should work to alleviate the pressure by creating “tag teams” of employees who seamlessly hand over the reins to other teams, in different time zones, at the end of their shifts. Phone calls and home-based videoconferences do run the risk of extending the workday but, used judiciously, can cut unnecessary travel-to-work time. Leaders should set an example by being mindful of local times (and the time preferences of the people involved) when scheduling global calls. Simply knowing the participants’ preferences can help reinforce a sleep-friendly culture.

Emails. A number of companies have imposed blackout times on work emails. A large European car business, for example, programs the smartphones of its nonmanagement employees to switch off work emails automatically between 6 p.m. and 7 a.m. In many companies, particularly knowledge-based ones, this would be disruptive and counterproductive—but provided there are overrides, such a policy can send a clear signal of management’s intent.

Work-time limits. Some companies known for a “long-hours culture” have been implementing rules to curb working very late at night. One major financial-services business, for example, specifically required its summer interns to leave the office before midnight each day to ensure that they were not subjected to “all-nighters.” This organization’s full-time employees have been told to stay out of the office from 9 p.m. Friday to 9 a.m. Sunday.

Mandatory work-free vacations. A US software company gives employees a $7,500 bonus if they follow two rules: (1) They have to actually go on vacation or they don’t get the money. (2) They must disconnect, and hence cannot work, on vacation.

‘Predictable time off’ (PTO). Leslie Perlow, a professor at Harvard Business School, introduced a good way to catch up on lost sleep: a planned night off, with no email, no work, and no smartphone. A large global consulting firm found that productivity went up when it tested this approach, which is now the basis for a company-wide program.

Napping rooms or pods. The image of a sleeping manager is easy to mischaracterize. Research has shown that a short nap of 10 to 30 minutes improves alertness and performance for up to two and a half hours.9 Over half of the leaders in our survey wanted their businesses to imitate the large technology companies and telcos that have already successfully adopted sleep pods and nap rooms.

Much attention has been focused on the importance of sleep for top-performing athletes, musicians, and even politicians. Expert violinists, for example, have cited practice and sleep as two of the most important drivers of performance. (One study shows that the top performers consistently take a nap and get over half an hour more sleep than their less well-regarded peers do.) Former US president Bill Clinton once admitted, “Every important mistake I’ve made in my life I made when I was tired.” Business people have often lagged behind others in both their willingness to acknowledge the issue and their readiness to act on it.

A recent Harvard Medical School study surveyed senior leaders and found that 96 percent reported experiencing at least some degree of burnout. One-third described their condition as extreme.10 It’s time for organizations to find ways of countering the employee churn, lost productivity, and increased healthcare costs resulting from insufficient sleep. If it is true that some millennials care less about high salaries and more about work–life integration, the next generation of employees will demand solutions even more strongly.


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