Why Sleep-Deprived Employees Cost Businesses Millions Every Year

A Chief People Officer's Perspective from Nest Bedding

By Trevor Davis, Chief People Officer, Nest Bedding

As Chief People Officer at Nest Bedding, I spend my days thinking about people—how we recruit them, develop them, care for them, and create a culture where they can thrive.

Working for a company dedicated to helping people sleep better has also given me a unique perspective on something many organizations overlook.

Sleep isn't just a health issue. It's one of the most underappreciated drivers of business performance.

Over the past several years, I've helped lead teams through a global pandemic, economic uncertainty, supply chain disruptions, and rapid organizational change. During every season, one truth has remained consistent: people perform their best when they're healthy, mentally sharp, and emotionally resilient.

The research overwhelmingly supports this.

The National Safety Council estimates fatigue costs U.S. employers more than $136 billion every year in health-related lost productivity, much of it through presenteeism—employees who are physically at work but operating well below their potential.

Source:
National Safety Council – Fatigue Cost Calculator
https://www.nsc.org/work-safety/safety-topics/fatigue/cost

Sleep isn't simply about feeling rested.

It's about helping people become their best—and helping organizations perform at their best.

The Hidden Cost of Sleep Deprivation

According to the Centers for Disease Control and Prevention (CDC), more than one in three American adults do not get the recommended minimum of seven hours of sleep each night.

That means roughly a third of every workforce begins the day with impaired cognitive performance.

The CDC links insufficient sleep to:

• Reduced attention and concentration
• Poor decision-making
• Increased workplace injuries
• Lower productivity
• Chronic disease
• Depression
• Higher healthcare utilization

Source:
CDC – Sleep and Work
https://www.cdc.gov/niosh/work-hour-training-for-nurses/longhours/mod2/03.html

The Productivity Problem Is Measurable

One of the largest workplace sleep studies ever conducted followed nearly 600,000 employees across multiple industries.

Researchers found that employees receiving approximately eight hours of sleep experienced the lowest levels of absenteeism and presenteeism, while productivity losses increased significantly as sleep duration declined.

The conclusion was simple:

Better sleep consistently correlated with better work performance.

Source:
Rosekind MR, et al.
Sleep, Health, and Predicted Productivity in 598,676 Employees.
https://pubmed.ncbi.nlm.nih.gov/28823195/

Poor Sleep Is Expensive

Many executives assume fatigue simply causes people to feel tired.

The financial reality is much larger.

According to the National Safety Council, an organization with 1,000 employees can expect annual fatigue-related costs exceeding:

• $272,000 in absenteeism
• $776,000 in presenteeism
• More than $500,000 in additional healthcare expenses

That's well over $1.5 million annually before considering quality issues, customer experience, turnover, or safety incidents.

For larger organizations, those costs multiply quickly.

Source:
National Safety Council Fatigue Calculator
https://www.nsc.org/work-safety/safety-topics/fatigue/cost

Sleep Supports Our Five Cs

At Nest Bedding, our culture is built around our Five Cs:

Character. Chemistry. Capacity. Courage. Competence.

As I studied the research on sleep, I couldn't help but notice how closely it aligns with the culture we're trying to build.

Character

Character often reveals itself during stressful moments.

Unfortunately, those are the exact moments when sleep deprivation works against us.

Researchers at Harvard Medical School have shown that insufficient sleep affects the prefrontal cortex—the area of the brain responsible for judgment, self-control, and decision-making. At the same time, emotional centers of the brain become more reactive.

That means tired employees are often more impatient, more impulsive, and more likely to react emotionally rather than thoughtfully.

Character isn't easier when we're exhausted.

It's harder.

Research:
Harvard Medical School – Sleep and Mental Health
https://healthysleep.med.harvard.edu/

Chemistry

Culture isn't built during quarterly meetings.

It's built in everyday conversations.

Sleep affects empathy, patience, listening skills, communication, and emotional intelligence.

Those are the very ingredients that create strong workplace chemistry.

When employees consistently experience quality sleep, they're better equipped to collaborate, coach, encourage, and serve one another.

Healthy people build healthy cultures.

Capacity

Every leader wants employees who have greater capacity.

We often invest in software, training, and technology to improve performance.

Yet one of the most powerful performance enhancers is completely free.

Sleep restores attention, memory, creativity, learning, and resilience.

The American Academy of Sleep Medicine has stated that chronic sleep deficiency affects nearly every aspect of human performance and should be viewed as a significant public health issue.

Source:
American Academy of Sleep Medicine
https://aasm.org/

Courage

Leadership requires courage.

So does innovation.

So does accountability.

Yet research has found that sleep deprivation can impair judgment while increasing impulsive decision-making.

Courage requires clear thinking—not simply bold thinking.

Sometimes the best leadership decision begins the night before.

Competence

This is where the business case becomes undeniable.

Competence isn't measured by hours worked.

It's measured by consistently delivering excellent work.

Well-rested employees:

• Learn faster
• Make fewer mistakes
• Solve problems more creatively
• Retain information longer
• Adapt to change more effectively

The organizations that consistently outperform competitors rarely do so because they simply work longer.

They perform better.

What HR Leaders Can Do

As HR leaders, we don't need to tell employees when to go to bed.

But we can create workplaces that support healthy performance.

That means asking questions like:

• Are workloads sustainable?
• Do leaders unintentionally reward burnout?
• Are after-hours emails creating unnecessary pressure?
• Are managers modeling healthy recovery?
• Are wellness initiatives giving sleep the same attention as nutrition and exercise?

The answers to those questions shape culture far more than any employee handbook ever could.

Final Thoughts

One of the things I appreciate most about serving at Nest Bedding is that our mission isn't simply to manufacture mattresses.

It's to help people experience better sleep so they can live healthier, happier, and more productive lives.

As Chief People Officer, I've come to believe that mission extends beyond our customers.

It applies to every workplace.

When employees sleep well, they don't simply work harder.

They demonstrate greater Character, build stronger Chemistry, expand their Capacity, lead with greater Courage, and consistently perform with greater Competence.

The science supports what we've believed all along.

Better sleep doesn't just improve lives.

It improves businesses.

References

• National Safety Council – Fatigue Cost Calculator: https://www.nsc.org/work-safety/safety-topics/fatigue/cost
• Centers for Disease Control and Prevention – Sleep and Work: https://www.cdc.gov/niosh/work-hour-training-for-nurses/longhours/mod2/03.html
• Rosekind MR, et al. Sleep, Health, and Predicted Productivity in 598,676 Employees. https://pubmed.ncbi.nlm.nih.gov/28823195/
• Harvard Medical School – Healthy Sleep: https://healthysleep.med.harvard.edu/
• American Academy of Sleep Medicine: https://aasm.org/