What if I told you that a good night’s sleep can help companies save billions of dollars?
I have been amazed by statistics on sleep and its impact on global finances, most pointedly set out in Matthew Walker’s book “Why We Sleep”. Most people who know me, know that I love speaking about this book because I feel it is a must-read for people from all walks of life.
In this piece I will highlight some statistics on how sleep affects corporations in a major way, what companies are doing to enhance productivity through improving their employees’ sleep habits and which companies are leading the charge in the deep sleep revolution.
Sleep is an activity we spend 33% of our lives doing so why should we take this for granted?
Along with good nutrition and fitness, sleep forms the third pillar of life. We cannot focus on only 1 or 2 of these pillars as they are all interconnected.
I have done a comprehensive twitter thread regarding the basics of sleep, in the attached link below:
A few basic benefits of sleep:
· Improved Memory
· Stronger Immune System
· Higher Energy Levels= Better Productivity
· Better Mood
All these effects eventually spill over towards what kind of day we are going to have at work. It is evident that sleeping well leads to better work performance, which leads to improved productivity, which in turn leads to a boost in profitability for companies. Corporations should therefore move towards incentivizing company employees to get a good night’s sleep, as a simple cost-effective technique to get the best out of the company’s most important assets, their employees.
Netflix CEO Reed Hastings has said that sleep is Netflix’s biggest competition and has claimed that they are winning against sleep. Binge watching shows throughout the night or consuming that latest Friday Night Netflix show of 10 episodes in one shot has become a common occurrence now. The only thing stopping this activity- Sleep.
Global Sleep Statistics
In the United States, 100 years back almost 2% of the population slept less than 6 hours a night. Today almost 30% of the population sleeps less than 6 hours a night. The sleep deprivation epidemic has been slowly catching up on us and we can expect this to get worse going forward. Although we cannot solely blame problems such as obesity, mental health issues and stress solely on lack of sleep, it has certainly played a role in the rapid rise of these issues.
Data from the RAND Corporation states The U.S. sustains by far the highest economic losses (up to $411 billion a year, which is 2.28 per cent of its GDP) due to the size of its economy, followed by Japan (up to $138 billion a year, which is 2.92 per cent of its GDP). Germany (up to $60 billion, 1.56 per cent of its GDP) and the UK (up to $50 billion, 1.86 per cent of its GDP) have similar losses. Canada has the lowest financial losses due to lack of sleep (up to $21.4 billion, which is 1.35 per cent of its GDP).
Small changes in sleep duration could have a big impact on the economy. For example, if individuals who slept under six hours started sleeping six to seven hours, this could add $226.4 billion to the U.S. economy. It could also add $75.7 billion to the Japanese economy, $34.1 billion to the German economy, $29.9 billion to the UK economy, and $12 billion to the Canadian economy.
The Mckinsey Institute posted some interesting data through a photo chart laying out of how the sleep loss epidemic is affecting the global economy:
The rise of technology in the sleep industry
Be it hardware or software, technological solutions, such as consumer wearables and mobile applications have been addressing the decline in sleep levels globally. The global market for multiple sleep devices is expected to reach around 32 billion dollars by 2026, from the 20 billion dollars that it stood at in 2020 (Source: “Sleep Tech Devices Market Forecast Report 2020–2026,” Global Market Insights, November 2020.).
Mobile Applications for addressing the sleep loss epidemic:
Calm:
Calm is a holistic app which focuses on sleep quality, meditation, mental health and many more topics. There is a paid and free version of this app. The exercises on the app are really useful.
The company was valued at 2 billion dollars in December 2020. 100 million people have downloaded Calm and more than 4 million users have subscribed to the app.
https://www.calm.com/
Headspace
A close competitor to Calm is Headspace, an app that focuses on meditation, sleep, and mindfulness.
The company was last valued at 1 billion dollars as on 2020. It has more than 2 million subscribers and close to over 3.5 million downloads across users.
https://www.headspace.com/headspace-meditation-app
Ultrahuman
Ultrahuman is an app that combines the science of workout, mindfulness and sleep in one platform. A friend who is now working at the company had introduced me to this app. You will have to subscribe on the app and be on the waiting list to get the device for monitoring your activity.
https://ultrahuman.com/
Devices that monitor sleep:
Oura Ring
This ring uses infrared light photoplethysmography (PPG), which reaches deeper than the green light LEDs found in most other wearables like a Fitbit or any other smartwatch,
Apart from the conventional waking hours and deep sleep time, the ring goes deeper into giving data on the heart and respiratory systems to help provide accurate guidance for the quality of our sleep.
https://ouraring.com/
Smart watches
All forms of smart watches these days have sleep monitoring systems embedded in their systems.
Notable names are the Apple Watch and the Fitbit range of watches.
I personally use a Fossil smartwatch.
Corporations that are taking unique steps to incentivize sleep
Aetna
Aetna, a US based insurance company, has incentivized its employees to get 7 hours of sleep every night.
“Being present in the workplace and making better decisions has a lot to do with our business fundamentals,” said Aetna Chairman and CEO Mark Bertolini. “You can’t be prepared if you’re half-asleep.”
For every 20 nights an employee sleeps seven hours or more, Aetna rewards them with $25. This is limited to $300 within a 12-month period.
The Huffington Post
Arianna Huffington, the founder of The Huffington Post, is a great advocate of sleeping on the job. Having collapsed from exhaustion at her desk one night — and broken her cheekbone in the process — she decided to make health and wellness in the workplace a top priority. In Huffington’s own words, “employees’ health is one of the most important predictors of the company’s health.”
To prevent further accidents and foster the health and well-being of their employees, the company dedicated two rooms to napping in its New York City offices.
Here’s a video of her addressing the issue. She also mentions some funny anecdotes.
https://www.ted.com/talks/arianna_huffington_how_to_succeed_get_more_sleep?language=en
Uber
Uber has dedicated nap rooms in its San Francisco headquarters. On days when the workload is is at maximum levels, these rooms serve as a means for employees to rest and recover, and thereby become more productive in their work.
Google is one of the companies known to provide a multitude of perks to its employees and one of them is freestanding nap pods in their Mountain View headquarters in California.
Procter & Gamble, Goldman Sachs
Corporations like P&G and Goldman Sachs have installed lighting systems in their offices, these lighting systems help regulate melatonin, the sleep hormone, to help employees switch off in the evenings.
Nike
Nike has followed a system which offers flexible work times to employees to suit their chronotype – the internal clock that programmes your ideal sleep time and dictates whether you are a morning person or a night owl.
I have covered genetic chronotypes extensively in my twitter thread:
Jeff Bezos on Sleep
Our work also requires us to be creative and creativity flows only when the mind is rested enough. Jeff Bezos covers this aspect beautifully. He says that he prioritizes 8 hours of sleep and, among other things, it helps him to think better. He says that a senior executive is required to make a small number of high-quality decisions, not thousands of decisions every day. Say someone who gets 4 hours of sleep on one day has 16 hours of waking time as opposed to 12 hours of waking time on a normal day. That equates to around 33% more time to make decisions. As a result, instead of 100 decisions, the person can make 133 decisions. But what is the point if the quality of those decisions comes down.
In the profession of investing, fewer high quality conviction decisions are much more important to generate big returns rather than multiple average decisions. Warren Buffet says that he makes around 3 decisions per year.
Bottom Line:
The benefits of sleep have been highlighted in this article. A simple 1-2 hours of additional deep sleep can incrementally produce a massive improvement in performance and thereby boost profitability.
While for many of us, the nature of our jobs maybe demanding and therefore we may sometimes miss out on the ideal number of hours required to sleep. Working towards a healthier lifestyle will help to improve the quality of deep sleep that we can achieve even in those few hours that we may have and thereby increasing our productivity in the work we do.
Simple hacks like wearing blue light blocking glasses help to reduce the impact of blue light emitted from our laptops or mobile phones and this in turn helps to improve the secretion of melatonin, the sleep hormone. Excessive exposure to blue light slows down the rate of melatonin secretion thereby disrupting our sleep cycle. Noting down a link of Lenskart for blue light glasses, personally I have been using the blue light glasses from Lenskart and my stamina in front of the screen has gone up multifold and P.S. I do not have glasses for people wondering if they may develop a number after wearing these glasses.
https://www.lenskart.com/cms-blu-smartphone-lenses
On a lighter note, in the world of investments in the public equity markets, the field in which I am working, the industry often talks about companies receiving higher multiples for their stocks when they focus on efficient capital allocation, margin expansion, earnings growth and free cash flow growth. Will we one day start assigning higher multiples to stocks that have management speaking about the importance of sleep for employees, because focusing on sleep would probably have a trickle down effect on all the other factors mentioned above?
Great write up...
Fabulous content with lots of take home lessons. Going to get the app for my son