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The exhausted boss of Lloyds Banking Group, Antonio Horta-Osario, got a clean bill of health this week. He had stepped down, suffering from exhaustion; there had been some thought that he might never return. In order to reclaim his job, he needed not just approval from his doctors but also by his board. Infamous for his tendency to micro-manage, he has apparently seen the error of his ways and returns to work a new man.

Whether or not someone running a vast, complex organization should hold the top job with such question marks over his management style is debatable. I can’t think of many executives who keep their positions after they’ve demonstrated that they can’t handle it. But Horta-Osario has learned the hard way what many executives never learn: Sleep matters.

Apparently the CEO worked so hard that, at night, he couldn’t sleep for more than two to three hours. Eventually he became so exhausted that he couldn’t function and checked himself into a clinic. “I understand now,” he said, “why they use sleep deprivation to torture prisoners.”

Sleep isn’t just good for you. It changes quite substantially how – and whether – you think. Missing just one night’s sleep leaves your cognitive capacity as impaired as if you were over the alcohol limit. Continue to go without sleep and it’s like you just keep drinking. Other effects of sleep deprivation include tunnel vision, an inability to think widely or creatively and losing the capacity for critical thinking — you can see problems but not understand them. These are all mission-critical capabilities for executives at almost any level. Trying to work without them constitutes a serious business risk, yet Horta-Osario himself says that “The official figures are that 30 percent of the population suffers sleep deprivation at some time – but my specialist says it’s more like 50 percent.” That’s a lot of executives working with the cognitive capacity of a drunk.

Horta-Osario took sick leave after just seven months on the job. Now, after just two months, he’s planning to return. That’s a quick fix for a chronic problem and I’d hate to think what the odds are that it will prove successful. More critical still is the question: How far will Horta-Osario as an employer extend to his team the leniency he received from his board?

About the Author: Margaret Heffernan has been CEO of five businesses in the United States and United Kingdom. A speaker and writer, her most recent book Willful Blindness was shortlisted for the Financial Times Best Business Book 2011. Visit her on www.MHeffernan.com.