Organizations are committing significant resources to wellbeing programs to drive performance, offering everything from flexible work arrangements to crèche services.

Healthier, happier employees are more engaged, make fewer mistakes, work more efficiently and are less likely to take sick days or leave the organization, directly boosting productivity and performance outcomes.

Yet despite good intentions, many companies aren’t seeing the expected results. Why? Because true performance drivers go beyond perks, they start with fundamentals.

In 2024, Australian organizations invested approximately US$196 million in corporate wellness services, according to IBISWorld. But despite this significant investment, burnout remains a pressing issue, with 44 percent of employees experiencing burnout and nearly half citing decreased performance.

For CEOs and senior leaders aiming to boost team performance, this disconnect reveals a critical truth: While valuable, many current approaches miss the deeper factors truly driving employee performance.

What if the foundation of sustained performance doesn’t start at work but at home, with sleep?

The missing part of the puzzle

Sleep affects every aspect of employee performance – cognitive function, decision-making, innovation, emotional regulation and collaboration. It influences health, safety, engagement and productivity.

Yet, for decades, sleep has been the missing piece in the performance management puzzle, overlooked in favor of strategies aimed at managing fatigue rather than tackling what drives it. Because fatigue is just a symptom, the root cause is poor sleep.

Many organizations rely on workplace health and safety and human resources initiatives to tackle fatigue. Fatigue management systems, in-cab driver sensors and compliance-driven policies abound.

While these measures mitigate risk, they are often reactive.

Truly effective leaders focus on preventing fatigue before it starts.

The latest data on the sleep health of Australian workers highlights several issues:

• 66 percent report at least one sleep problem, including trouble falling asleep, staying asleep or waking up too early.

• One in five has a diagnosed sleep disorder, with many more likely undiagnosed or not seeking treatment.

• 60 percent say poor sleep affects their daytime performance.

If 66 percent of Australians experience at least one sleep problem, it’s likely that a large portion of the workforce is also dealing with at least one sleep-related problem, which could be putting their mental and physical health and workplace performance at risk.

Sleep impacts workplace performance

Although sleep is a natural process, its quality and patterns can be impacted by various behavioral and environmental factors that disrupt the body’s natural sleep–wake cycle. Additionally, our sleep requirements and patterns can change as we go through different life events and stages.

And here’s the challenge: Sleep has traditionally been viewed as a personal responsibility, something that happens outside of work hours and beyond an employer’s influence.

But the reality is that what happens inside the workplace directly impacts an employee’s ability to achieve quality sleep. Long work hours, unpredictable time off, constant connectivity to work and company culture can all disrupt an employee’s ability to rest and sleep.

And when sleep suffers, so does workplace performance, creating a cycle that organizations can’t afford to ignore.

When employees get enough quality sleep, the benefits to the business are profound.

• Sharper focus and fewer errors

• Higher engagement and collaboration

• More innovative thinking and problem-solving

• Reduced absenteeism and presenteeism

• Lower rates of workplace accidents

On the flip side, chronic sleep deprivation is linked to increased sick days, lower productivity and higher staff turnover. According to the Sleep Health Foundation, sleep-related issues cost the Australian economy US$42.5 billion annually through lost productivity and healthcare expenses.

Simply put: Sleep impacts every key business metric – from productivity to safety.

How managers can support better sleep

Most Australians value their sleep and believe change is achievable, yet many lack a thorough understanding of how to optimize their sleep or balance life’s demands with the need for adequate rest and sleep. A ‘Sleep Index Survey’ by the Health Insurance Fund revealed that 74 percent of Australians want to learn more about sleep and 47 percent want to improve their sleep.

But where can people turn to learn more about sleep? Unfortunately, with sleep education missing from standard school curricula, many rely on Google, TikTok or other platforms that may offer unreliable and conflicting information.

A more effective approach is to provide evidence-based sleep education in the workplace, enhancing wellbeing and organizational performance.

Educating employees about the importance of sleep – and, crucially, how to improve it – has the potential to outperform any other corporate wellness strategy. When people understand how to prioritize sleep and when their workplace supports that goal, the results are transformative.

Investing in sleep health isn’t just about personal performance – it’s about business performance. Forward-thinking companies are expanding their programs to include sleep education, coaching, and recovery strategies. Why?

Because prevention is more effective and cost-efficient than reactive management. Benjamin Franklin said it best: “An ounce of prevention is worth a pound of cure.”

Here are five practical initiatives that empower managers to support better sleep and, in turn, boost employee performance:

1.  Prioritize sleep in onboarding

Managers can advocate for including sleep education in onboarding programs. By supporting practical workshops, they equip their teams with strategies to build healthy sleep habits, improving attention and productivity from day one.

2.  Promote work–life boundaries

Encourage your team to disconnect after hours by encouraging the removal of work apps from personal devices – and, importantly, model this behavior yourself. As a manager, respect predictable time-off policies to foster a culture where rest is valued.

3. De-stigmatize power naps

Support short (10–20-minute) naps during break times by creating quiet spaces. Better yet, lead by example, showing your team that rest and recovery are performance strategies, not signs of laziness.

4. Respect natural sleep patterns

When scheduling work, consider team members’ chronotypes – their natural preference for morning or evening activity. Managers who offer flexible start times help employees work when they’re most alert, boosting performance. Night owls can be just as effective as their early bird colleagues when working in sync with their body clock.

5. Lead by example

Managers play a pivotal role in shaping culture. By prioritizing your own rest, openly discussing the importance of sleep and leaving work on time, you set a standard your team will follow.

Sleep isn’t just a personal matter – it’s a leadership and business performance imperative. Prioritizing team rest isn’t a luxury, it’s a smart, strategic decision that drives measurable results.

Poor sleep is a critical workplace issue, undermining both employee wellbeing and organizational performance. It leads to higher absenteeism, costly mistakes, reduced productivity and weakened innovation.

Under-slept employees are more prone to errors, poor decisions and stress-related illnesses, all of which directly impact an organization’s bottom line. Yet, the workplace gives employers a powerful opportunity to change this through targeted education and smart work design.

Leaders who champion quality rest will be ahead of the curve, improving workplace performance literally with their eyes closed.

A holistic approach

It’s time to expand your employee wellbeing strategy to include sleep – the most overlooked but essential pillar of health. By taking a holistic approach that covers physical, mental, social, financial and sleep health, you create a culture that supports the whole person and drives a healthier, more productive workforce.

Prevention isn’t just cost-effective – its performance enhancing. Organizations that prioritize sleep now will gain immediate benefits and long-term competitive advantages. Don’t let fatigue drain your team’s potential. Make sleep your secret weapon and watch performance soar.

Opinions expressed by The CEO Magazine contributors are their own.