2021 CORPORATE RESPONSIBILITY AND SUSTAINABILITY REPORT
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2021 CORPORATE RESPONSIBILITY AND SUSTAINABILITY REPORT
A LETTER FROM
SHELLY IBACH
To Our Stakeholders, • In collaboration with our diverse, independent board, we enhanced
our robust, long-standing and highly admired corporate governance.
Quality sleep is vital to health and wellness. Its life-changing benefits
improve our physical, mental and emotional wellbeing, increase our • We strengthened our relationships with suppliers and continued our
energy levels, boost our immunity, and strengthen our resilience. engagement with shareholders through consistent communication.
This knowledge is fundamental to our purpose and our strategy. • We joined the United Nations Global Compact, pledging our intent
Sleep Number has, for years, invested strategically in sleep science- to further incorporate their Ten Principles on human rights, labor,
based innovation, digital technologies, an agile go-to-market environment and anti-corruption into our company’s strategy,
strategy and brand accelerators. We have positioned digital health culture and day-to-day operations, and engage in activities that
at the core of our product and customer experience and built a advance the United Nations’ broader sustainability goals.
beloved brand that has improved more than 13 million lives.
• We made progress toward reducing our environmental impact –
tracking metrics to better understand our performance in areas
Throughout 2020, our purpose, to improve the health and wellbeing
such as waste, energy and water usage and setting initial goals to
of society through higher quality sleep, sustained and inspired
ensure our ongoing accountability.
us. The global pandemic and civil unrest highlighted the intrinsic
merit of our culture, founded on individuality. Our dedication to • And, with our purpose, values, strategy and business model in
our mission of improving lives by individualizing sleep experiences clear alignment, we delivered record financial results and superior
remains fundamental to our decisions and expedient actions. stakeholder value.
In a year of challenge and change, Sleep Number accelerated our The crises of the past year have illuminated serious issues in our
life-changing innovations, health-related advancements and inclusive society, while demonstrating the benefits of purpose and good
culture. As detailed in this report, we further realized – and business. Our passionate, dedicated and resourceful team, working
championed – the benefit of higher quality sleep with our team, together in our communities, bring about positive change. We all
consumers and communities. We see a direct correlation between share this world, and we must all act with resolve to sustain it. This is
our purpose, the relevancy of our brand experience and our creation our opportunity and our imperative. And it is why every member of
of superior long-term stakeholder value. Highlights include: the Sleep Number team takes seriously our responsibility to improve
lives through quality sleep and create a kinder, healthier and more
• We invested in the wellbeing of our team, including gifting each of
inclusive world.
our nearly 5,000 team members a Sleep Number 360 smart bed.
®
•W
e underscored our belief in the strategic importance of diversity, Sleep well, dream big,
equity and inclusion (DEI) with our administration of a self-identity
survey and creation of a DEI Council comprised of our diverse team.
• We extended our partnerships with leading nonprofit organizations
to support individuals and families in our communities who were CHIEF EXECUTIVE OFFICER, SLEEP NUMBER
deeply affected by the pandemic and have been impacted by social SLEEP NUMBER ® SETTING 40
injustice. And we are more than halfway to achieving our commitment
AVERAGE SLEEPIQ ® SCORE: 82
of improving the wellbeing of 1 million young people by 2025.
SLEEP NUMBER 2021 CORPORATE RESPONSIBILITY AND SUSTAINABILITY REPORT 2
CONTENTS
WHERE WE OPERATE 4 Map of Stores and Facilities
5 Purpose, Mission and Vision
8 Commitment to Ethical Business
HOW WE LIVE Practices and Legal Compliance
OUR VALUES 10 Human Rights Policy
12 Conflict Minerals Policy
13 Board and Team Member
Demographics
17 Talent Planning
HOW WE WORK 18 Diversity, Equity and Inclusion
WITH EACH OTHER 22 Team Member Engagement
24 Training and Professional
Development
28 Team Member Health and Safety
31 Shareholders
HOW WE WORK 32 Communities
WITH OTHERS 36 Suppliers and Other Stakeholders
37 Enterprise Environmental Policy
38 Product Quality and Safety
41 Innovation Awards
HOW WE PROTECT
and Recognition
OUR BRAND AND
42 Supply Chain Evolution
THE ENVIRONMENT 43 Waste and Toxicity
46 Energy Efficiency and
Climate Impact
ABOUT THIS REPORT 47 Forward-Looking Statements
SLEEP NUMBER 2021 CORPORATE RESPONSIBILITY AND SUSTAINABILITY REPORT 3
4
6 3
1
5
2
WHERE WE OPERATE
AL 11 Stores ME 2 Stores OH 21 Stores
AK 1 Store MD 13 Stores OK 5 Stores
AZ 11 Stores Assembly Distribution Center 3 OR 7 Stores
AR 5 Stores MA 11 Stores PA 23 Stores
CA 67 Stores MI 18 Stores RI 1 Store
Sleep Number Labs 1 MN 15 Stores SC 10 Stores
Assembly Distribution Center Corporate Headquarters 4 Manufacturing Facility and
CO 14 Stores and Bedding Collection Assembly Distribution Center 5
CT 6 Stores Fulfillment Center SD 2 Stores
DE 2 Stores MS 6 Stores TN 17 Stores
FL 43 Stores MO 12 Stores TX 55 Stores
GA 21 Stores MT 4 Stores UT 7 Stores
HI 1 Store NE 4 Stores Manufacturing Facility and
ID 3 Stores NV 5 Stores Assembly Distribution Center 6
IL 21 Stores NH 4 Stores VT 1 Store
IN 11 Stores NJ 14 Stores VA 17 Stores
IA 7 Stores NM 3 Stores WA 15 Stores
KS 7 Stores NY 20 Stores WV 4 Stores
KY 8 Stores NC 21 Stores WI 11 Stores
LA 9 Stores ND 3 Stores WY 2 Stores
Customer Service Center 2
SLEEP NUMBER 2021 CORPORATE RESPONSIBILITY AND SUSTAINABILITY REPORT 4
HOW WE LIVE
OUR VALUES
PURPOSE MISSION VISION
Improve the health and wellbeing of Improve lives by individualizing Become one of the world’s most
society through higher quality sleep. sleep experiences. beloved brands by delivering an
unparalleled sleep experience.
SLEEP NUMBER 2021 CORPORATE RESPONSIBILITY AND SUSTAINABILITY REPORT 5
OUR PASSION for making a difference
and changing lives:
INTEGRITY to always do the right
thing:
SHARED
• We go above and beyond because • We treat others with kindness and
we care. respect.
VALUES
• We love representing our brand with • We are honest, fair and sincere.
our customers and our communities.
• We live our code of ethics every day.
• We are the champions of sleep at
the center of a healthy mind, body
and soul.
INNOVATION to find a better way: COURAGE to embrace challenge: TEAMWORK that celebrates
individuality and the joy of working
• We live and breathe innovation. • We take risks, learn and adapt.
together:
• We leave nothing to chance. • We are confident and take action.
• We are unstoppable when we
• We see innovation everywhere and • We are resilient, persistent and work together.
ours will help shape the future. fearless in our pursuit of excellence.
• We laugh and learn and trust
each other.
• We are all individuals, but together …
we are Sleep Number.
SLEEP NUMBER 2021 CORPORATE RESPONSIBILITY AND SUSTAINABILITY REPORT 6
INDIVIDUALITY IS OUR FOUNDATION We celebrate individuality in each other, in our own lives and in our customers’ lives. We embrace every individual’s unique talents, perspectives and experiences, and strive to create an environment where we can be our best selves. Valuing diversity, equity and inclusion makes us stronger, smarter and fuels our innovation and teamwork. Individuality connects us to our vision of becoming one of the world’s most beloved brands by delivering an unparalleled sleep experience. SIGNATORY TO THE UNITED NATIONS GLOBAL COMPACT WE SUPPORT In 2020, Sleep Number became a signatory to the United Nations Global Compact (UNGC), demonstrating our support for the Ten Principles related to human rights, labor, environment and anti-corruption. We are committed to making the UN Global Compact principles part of our strategy, culture and day-to-day operations, and we are proud and eager to engage in collaborative projects, which advance the broader development goals of the United Nations, particularly the Sustainable Development Goals. In this report, we describe the actions we have taken – or are taking – in keeping with this commitment. SLEEP NUMBER 2021 CORPORATE RESPONSIBILITY AND SUSTAINABILITY REPORT 7
COMMITMENT TO
ETHICAL BUSINESS
PRACTICES AND
LEGAL COMPLIANCE
Laws and regulations touch all aspects that our team members comply with the company’s expectations regarding
of our business – from how we make, applicable laws, engage in ethical and a wide range of conduct, including
market and sell our products to how safe conduct in our work environment, anti-bribery and anti-corruption.
we disclose our financial results; avoid conflicts of interest, conduct our Our Code of Business Conduct directs
from how we treat one another to business with integrity and high ethical team members who observe or suspect
how we do business with third parties. standards, and safeguard our unethical or illegal behavior to report
Sleep Number requires strict adherence company’s assets. All team members it to their management, Human
to the letter and the spirit of all laws are required to annually acknowledge Resources or our Chief Legal and Risk
applicable to the conduct of our their commitment to this Code. A copy Officer. The company also offers a
business. of the Code of Business Conduct is confidential Business Abuse Hotline for
included in the investor relations section team members. The hotline is operated
We are also committed to the highest
of our website at https://ir.sleepnumber. by an independent third-party service
standards of ethical business practices
com/overview/default.aspx. to ensure confidentiality and 24-hour
throughout our company. Our company
accessibility. On a quarterly basis, senior
values, team member training, company We also train our team members on our
management shares reported concerns
policies and culture underscore our equal employment opportunity,
with the Audit Committee of our board
expectations for integrity and provide non-harassment and standards of
of directors, demonstrating our
clear guidelines for business decisions conduct policies to foster a culture of
accountability and governance practices.
and behavior. We have a Code of diversity, inclusion, dignity and respect,
Business Conduct, provided to all team and ensure adherence to our high
members, which instructs and requires standards of integrity. Our annual Code
of Business Conduct training addresses
SLEEP NUMBER 2021 CORPORATE RESPONSIBILITY AND SUSTAINABILITY REPORT 8
As part of a larger strategy to bolster including hazardous substances,
our compliance and prevention efforts conflict minerals, waste disposal and
related to bribery and corruption, we recycling; and Legal and Ethical
conduct annual training in key functions Practices. Compliance with the
where team members may interact with principles described in our Code of
foreign entities and officials, increasing Conduct for Business Partners is a
their vulnerability to Foreign Corrupt condition of doing business with
Practices Act (FCPA) issues. Members Sleep Number. We ask our suppliers
of the Direct Materials and Bedding to agree, in writing, to the terms and
departments are among those who conditions of our Code of Conduct for
participate in the training which Business Partners. In addition, the
includes how to identify and refuse contractual terms that are applicable to
bribery or “agent” payments. the vast majority of Sleep Number
suppliers include language that requires
Sleep Number expects our suppliers
each supplier to represent and warrant
and third-party business partners to
“that it will, at all times, comply with the
uphold high standards of business
Code of Conduct for Business Partners
integrity, reputable business practices
as may be amended from time to time.”
and sound ethical judgment. To ensure
Suppliers representing approximately
all of our suppliers are aware of their
90% of direct spend are audited
responsibilities, we provide our Code of
annually for compliance with the
Conduct for Business Partners to all
Sleep Number Code of Conduct for
active business partners and suppliers
Business Partners and are asked to
of goods and services. This Code
renew their written adherence to
articulates Sleep Number expectations
the Code. Our Code of Conduct for
for performance that align with the
Business Partners is publicly available
company’s Code of Business Conduct
at sleepnumber.com/vendor.
for its team members and describes our
rights to monitor and enforce supplier
compliance. The Code of Conduct for
Business Partners contains provisions
that explicitly address business partner
responsibilities related to: Labor and
Human Rights, including fair treatment
of workers, nondiscrimination in hiring
and employment practices, strict
prohibition of underage and involuntary
labor and human trafficking, respect for
freedom to associate, and fair and
timely compensation; Health and
Safety, including training, injury
prevention and workplace environment,
including, but not limited to, safeguards
from physical hazards, access to
potable water and sanitary facilities, fire
safety, and adequate lighting and
ventilation; Environmental Issues,
SLEEP NUMBER 2021 CORPORATE RESPONSIBILITY AND SUSTAINABILITY REPORT 9
HUMAN RIGHTS
At Sleep Number, our values of passion, integrity, innovation, courage and teamwork are our
compass and guide our decisions. We expect Sleep Number team members and our business
partners — both key stakeholders in the implementation of our Human Rights policy — to act with
the highest ethical standards and treat others with respect every single day. Their conduct should
be in accordance with standards set forth in our Code of Conduct for Business Partners, our Team
Member Code of Business Conduct, our Team Member Handbook, the expectations of the UN
Global Compact of which Sleep Number became a signatory in 2020 and the principles detailed
below. These principles provide guidance to ensure that our business practices and processes
support our commitment to human rights, and that our team members and business partners
understand their role in – and responsibility for – upholding human rights and equality in the
workplace. No Sleep Number team member or business partner should ever be complicit in human
rights abuses or ethical violations of any kind.
Our commitment to human rights, which is overseen by the Sleep Number board of directors and
senior leadership team, include the following principles:
CHILD LABOR EQUAL AND
RESTRICTIONS NONDISCRIMINATORY PRACTICES
Sleep Number prohibits child labor in all forms. We believe that attracting, employing and
When employing persons under the age of 18, retaining a diverse team, including people from
managers must comply with all Sleep Number- all backgrounds, ethnicities, genders, lifestyles
established and legally required limitations on and belief systems – and maintaining an
minimum hiring age, work hours and tasks environment that is welcoming and respectful
performed by these team members and ensure of this diversity – is foundational to our mission,
that any work performed does not interfere with business strategy and financial performance.
the team member’s health, safety, mental or We are committed to providing a work
physical development, education or morals. environment free from all forms of
We maintain data on the age of all team unlawful harassment and discrimination. At
members for auditing and reporting purposes. Sleep Number, we recruit, hire, compensate and
promote team members based on qualifications
and performance. We do not tolerate any
conduct that creates an intimidating, offensive
or hostile work environment.
SLEEP NUMBER 2021 CORPORATE RESPONSIBILITY AND SUSTAINABILITY REPORT 10communicating and encouraging adherence to
HUMAN TRAFFICKING, SLAVERY
company-based safety procedures and by
AND FORCED LABOR
complying with all federal, state and local laws
We do not employ involuntary labor of any kind
regarding safety in the workplace. We address
and will not knowingly conduct business with
and remediate identified accident, injury or
any partner who does. Involuntary labor includes
health risks, and believe that safety is everyone’s
prison, indentured or bonded labor or labor
responsibility at Sleep Number.
obtained through human trafficking or slavery.
We are partnering with suppliers to monitor
their performance where appropriate and
working to ensure that our supply chain includes We take violations of these principles seriously.
no child, forced, trafficked or slave labor. Team members should report, in accordance
with the process described in our Code of
Business Conduct and as they are reminded in
WAGES AND WORKING HOURS the annual training on the Code, any behavior or
We adhere to all applicable wage laws and conduct by a Sleep Number team member or
regulations. All workers must be paid at least business partner that they observe or suspect is
the legal minimum wage. In addition, workers a potential violation of our human rights policy
must be compensated for overtime hours at a or principles.
rate legally required by local laws and must
To align our suppliers – all of whom are subject
exceed regular hourly compensation.
to the Sleep Number Code of Conduct for
Business Partners – with our company’s human
RIGHT TO FREEDOM OF rights commitments, to build compliance with
ASSOCIATION AND COLLECTIVE our expectations for performance and to
BARGAINING promote safe and secure working environments
for all workers, Sleep Number continues to
We recognize and respect the right of all team
monitor supplier performance related to our
members to freedom of association and the
human rights policy. We have updated our
right to join unions or other work-related
business scorecards to include human rights
associations as well as the right to bargain
violations and will begin auditing all new direct
collectively, as permitted by, and within the
materials suppliers on human rights issues by
limits of, local laws. All team members should be
2023. In addition, we will continue to expand
able to assert their right to freedom of
and enhance supplier training and audits that
association and their right to remain
will increase compliance and improve work
independent without fear of retaliation or
conditions for at-risk workers.
termination.
HEALTHY AND SAFE WORKPLACE Sleep Number reserves the right to amend this
As a purpose driven company in health and policy at any time. Nothing in this policy says or
wellness, the safety and wellbeing of our team implies that a contract exists between the
members is paramount. We strive to provide company and its team members or that
and maintain a safe work environment for all our compliance with these principles is a guarantee
team members and partners by establishing, of continued employment with Sleep Number.
SLEEP NUMBER 2021 CORPORATE RESPONSIBILITY AND SUSTAINABILITY REPORT 11CONFLICT MINERALS
In 2010, the United States enacted the Consistent with our Human Rights • Annually certify whether the materials
Dodd-Frank Wall Street Reform and policy, we fully support the aims of they provide to Sleep Number
Consumer Protection Act (Dodd-Frank Section 1502 of the Dodd-Frank Act. contain conflict minerals, and if so,
Act), including Section 1502, which is
As described in our Conflict Minerals • Provide written documentation of
commonly referred to as the Conflict
Rule Policy, Sleep Number does not their due diligence efforts and the
Minerals rule and which took effect on
directly source 3TG from mines, source of each mineral.
January 1, 2013. The law requires
smelters or refiners. As a result, we have
publicly traded companies who use
clearly communicated our expectations To comply with our Dodd-Frank Act
gold, tantalum, tin, and tungsten
to suppliers who provide materials to annual reporting requirement,
minerals (known as 3TG) in products
Sleep Number that may contain 3TG. Sleep Number conducts a reasonable
manufactured or contracted to be
We rely on them to: country of origin inquiry to determine
manufactured by such companies to
if any 3TG necessary to the functionality
report annually to the Securities and • Source their materials from ethically and production of Sleep Number
Exchange Commission whether the and socially responsible sub-tier products may have originated in the
3TG used in their products originates suppliers and to apply a nationally or DRC or neighboring countries. We
from the Democratic Republic of the internationally recognized due survey all active suppliers about the
Congo (DRC) or a neighboring country, diligence framework within their presence of 3TG in their materials,
where armed groups exploit the mining supply chains to determine the origin carefully review their responses and
and trade of 3TG to help finance of the 3TG they use. follow up to obtain additional
conflict in the region.
information or clarification about the
content and origin of their materials
as necessary.
SLEEP NUMBER 2021 CORPORATE RESPONSIBILITY AND SUSTAINABILITY REPORT 12HOW WE WORK
WITH EACH OTHER
Making the world a better place through proven quality As evidenced by our top-10 ranking in the Russell 3000 Index
sleep is core to who we are at Sleep Number. Our board for Gender Diverse Boards, Sleep Number values diverse
of directors, management, and nearly 4,700 Sleep Number perspectives in all areas of our company. We have a female
team members are dedicated to the company’s mission CEO, a diverse senior leadership team, board of directors, and
and values of passion, integrity, innovation, courage team member population – in terms of gender, race, ethnicity
and teamwork. and age – and 60% of our board directors are female.
BOARD DIVERSITY
TOTAL NUMBER OF BOARD DIRECTORS: 10
GENDER MALE FEMALE NON-BINARY UNDISCLOSED
NUMBER OF DIRECTORS BASED ON GENDER IDENTITY 4 6
NUMBER OF DIRECTORS WHO SELF-IDENTIFY AS:
AFRICAN-AMERICAN OR BLACK 1
ALASKAN NATIVE OR AMERICAN INDIAN
ASIAN
HISPANIC OR LATINX 1
NATIVE HAWAIIAN OR PACIFIC ISLANDER
WHITE 3 5
LGBTQ+ 1
UNDISCLOSED
SENIOR LEADERSHIP TEAM (SLT) DIVERSITY
TOTAL NUMBER OF SLT: 8
GENDER MALE FEMALE NON-BINARY UNDISCLOSED
NUMBER OF SLT BASED ON GENDER IDENTITY 5 3
NUMBER OF SLT WHO SELF-IDENTIFY AS:
AFRICAN-AMERICAN OR BLACK 1
ALASKAN NATIVE OR AMERICAN INDIAN
ASIAN
HISPANIC OR LATINX 1
NATIVE HAWAIIAN OR PACIFIC ISLANDER
WHITE 4 2
LGBTQ+
UNDISCLOSED
SLEEP NUMBER 2021 CORPORATE RESPONSIBILITY AND SUSTAINABILITY REPORT 13TEAM MEMBER
DEMOGRAPHICS
2020 TEAM MEMBER % BY AREA
Sleep Number is a vertically integrated company –
with team members across a range of functional areas,
including retail, manufacturing, customer service and
management/administrative.
SALES, 48%
FIELD SERVICES, 18%
CORPORATE, 15%
MANUFACTURING, 11%
CUSTOMER SERVICE, 9%
GENDER JOB GRADE, LOWEST TO HIGHEST
2,507 Male 61% 87%
1–7
1,580 Female 39% of Team Members
286 59% 10%
61% MALE 8–10
200 41% of Team Members
2,862 Team Members
69 65% 2%
39% FEMALE 11+
1,817 Team Members
37 35% of Team Members
Percentages may not total to 100% due to rounding
SLEEP NUMBER 2021 CORPORATE RESPONSIBILITY AND SUSTAINABILITY REPORT 14TEAM MEMBER
DEMOGRAPHICS
TENURE IN YEARS GENERATIONAL
GENERATION Z (1997+)
908 Male 61% 32%TEAM MEMBER
DEMOGRAPHICS
RACE AND ETHNICITY
WHITE (NOT HISPANIC
1,699 Male 63% 58%
of Team
OR LATINO) 997 Female 37% Members
BLACK OR AFRICAN 464 53% 19%
AMERICAN (NOT of Team
HISPANIC OR LATINO)
409 47% Members
368 67% 12%
HISPANIC OR LATINO of Team
178 33% Members
ASIAN (NOT HISPANIC
124 58% 5%
of Team
OR LATINO) 90 42% Members
TWO OR MORE RACES 109 60% 4%
(NOT HISPANIC OR of Team
LATINO) 73 40% Members
I DO NOT WISH TO 55 56% 2%
ANSWER/HAVE NOT of Team
IDENTIFIED 43 44% Members
AMERICAN INDIAN OR 25 71% 1%
ALASK AN NATIVE (NOT of Team
HISPANIC OR LATINO) 10 29% Members
NATIVE HAWAIIAN OR 18 51% 1%
OTHER PACIFIC ISLANDER of Team
(NOT HISPANIC OR LATINO) 17 49% Members
Percentages may not total to 100% due to rounding
SLEEP NUMBER 2021 CORPORATE RESPONSIBILITY AND SUSTAINABILITY REPORT 16TALENT365
While elements of the talent planning life cycle at Sleep Number are discrete, we take a holistic view to planning and execution –
encompassing the entire range of activities that are important to attract, motivate, develop, reward and retain a talented and
diverse team, as illustrated in our Talent365 model below. These interconnected elements drive team member experience,
career advancement and productivity and are key factors in our ability to achieve annual and five-year enterprise and functional
area priorities. Our approach deliberately creates and sustains a work environment that allows Sleep Number team members to
realize their full potential while fulfilling our company’s mission. Talent365 is owned by every leader in the company in
partnership with Human Resources. Leaders are responsible for designing the appropriate organizational structure and
ensuring they have the right talent in the right roles, establishing relevant processes, systems and tools, appreciating
individuality, managing the pace of change within their teams, empowering team members and holding them accountable,
and providing meaningful recognition, incentives and rewards to create and sustain a work culture that consistently delivers
superior results. In sections of this report that follow, we provide additional detail about our TEAM MEMBER ENGAGEMENT
and expansive team member TRAINING AND PROFESSIONAL DEVELOPMENT programs.
TEAM MEMBER
TALENT & WORKFORCE
VALUE PROPOSITION
SUCCESSION AND ANNUAL OPERATING
PLANNING PLAN PLANNING
ORGANIZATION RECRUITMENT AND
DESIGN SELECTION
TOTAL
ONBOARDING
REWARDS
COACHING GOAL AND
AND MENTORING OBJECTIVES
SETTING
PERFORMANCE TRAINING AND
MANAGEMENT DEVELOPMENT
PROGRAMS
ENGAGEMENT LEADERSHIP
& WELLBEING DEVELOPMENT
CAREER DIVERSITY, EQUITY
PLANNING & INCLUSION
SLEEP NUMBER 2021 CORPORATE RESPONSIBILITY AND SUSTAINABILITY REPORT 17DIVERSITY, EQUITY AND
INCLUSION (DEI)
We are committed to creating a work and Inclusion Council that is comprised Sleep is at the center of wellbeing and
environment where team members are of team members from diverse improves performance in every aspect
treated fairly and with respect, and backgrounds and aligns with our of life. Our pulse of individuality fuels
apply this same philosophy to the way broader DEI strategy. our mission of improving lives by
we engage with our customers, individualizing sleep experiences.
Individuality and DEI are also
communities and business partners.
foundational to our mission and Our Salt Lake City plant is a shining
In 2019, we formally and proudly shared innovation strategy. We strongly believe example of how individuality makes
our Individuality Statement with every that each person’s sleep experience Sleep Number better. As of year-end
Sleep Number team member. must be individualized to achieve 2020, 32 countries are represented by
quality sleep. plant team members and 23 languages
Consistent with this commitment to our
are spoken in this high-performing
culture of individuality and wellbeing, in
manufacturing center.
2020, we formed a new Diversity, Equity
SLEEP NUMBER 2021 CORPORATE RESPONSIBILITY AND SUSTAINABILITY REPORT 18DIVERSITY, EQUITY AND
INCLUSION STRATEGY
While Sleep Number has a long-held commitment to
diversity, equity and inclusion (DEI), we initiated a new, more
deliberate strategy in 2018 to strengthen our unique culture.
Specifically, we are focused on deepening awareness of DEI
opportunities, advancing our commitment throughout our
organization and driving accountability. We invest in each of
these areas concurrently over time and expect objectives
within each focus area to evolve as our organization and
culture continue to mature.
We continue to develop a better understanding of our team
members through surveys and focus groups and provide
meaningful programming that enhances inclusion. Our
efforts include both formal training and informal social and
educational experiences. At the same time, we are enhancing
the tools, partnerships and communications that support our
diversity, equity and inclusion commitment, and increasing
reporting and analytics to measure our progress.
To advance DEI throughout our company and enable future
progress, Sleep Number took the following actions in 2020:
“It doesn’t matter who you
INDIVIDUALITY
are, Sleep Number • Individuality is a company-wide commitment and is
allows you to be the best referenced as a guiding principle within the annual
priorities that are shared with all of our team members.
you possible … most • We launched a self-identification survey to learn how our
of my success comes when
team members truly identify and how they want to be
appreciated as individuals, allowing us to understand
I am 100% authentic. I love
intersectionality at Sleep Number. We are working towards
adding self-identification information to our Workday®
working for a company that
functionality (Workday® is our Human Resources
management platform).
allows me to express
myself unapologetically.”
CRAIG LARTER, SUPERVISOR
CUSTOMER RELATIONSHIP CENTER
SLEEP NUMBER® SETTING 35
SLEEP NUMBER 2021 CORPORATE RESPONSIBILITY AND SUSTAINABILITY REPORT 19• We are prioritizing wellbeing to make • Sleep Number remains actively • We launched a DEI Council in 2020,
sure that our team members can engaged with organizations and comprised of 13 self-nominated team
bring their true and whole selves to initiatives in our communities that members and supported by a senior
work every day. The tenants of our are focused on attracting, engaging, executive advisory group, to foster
wellbeing strategy encompass and retaining talent from positive change. Key objectives
physical, community, financial, career underrepresented populations, include establishing a forum to
and emotional wellbeing. including BIPOC (Black, Indigenous influence decisions that support DEI,
and People of Color), and ensuring increasing awareness and impact of
equality for all team members. We DEI initiatives and building advocacy
AWARENESS routinely participate in GREATER and ownership of DEI commitments
• As part of our Learning Management MSP, a regional economic and results. The inaugural DEI
System (LMS) learning paths, we offer development partnership Council members were selected in
conscious inclusion training to all encompassing our 15-county metro 2020 using a blind application
people leaders at Sleep Number, area, through its MAKE IT. MSP. and process and an unbiased review with
building on our strong foundation of BE MSP talent initiatives. MAKE IT. support from a third-party facilitator.
conscious inclusion training to our full MSP. is a strategic initiative of the Members reflect 12 different job
board of directors, our senior team GREATER MSP Partnership to make titles, eight different job family
and every operating leader. the Greater Minneapolis-Saint Paul groups, and six people leaders
region one of the country’s top and the following self-described
• We purchased and are implementing performers in attracting, welcoming identities:
an eLearning module to educate our and retaining people. BE MSP
Talent Acquisition team, people focuses on helping organizations
Community
managers and Human Resources advance diversity, equity and African American Black/Brown Volunteer &
Activist
business partners on inclusive hiring. inclusion within their workplaces.
• We are deeply involved with the Graduates of
First Generation Historically Black International
COMMITMENT Minnesota Business Coalition for American Colleges and
Universities (HBCU)
Upbringing
Racial Equity (MBCRE), formed in
• We reiterated our commitment to
mid-2020 following protests in the
ensuring appropriate gender Lesbian, Gay, Bi,
Twin Cities, to increase racial and Intersectional Transgender, Multiracial
representation in our senior Queer (LGBTQ+)
social justice and help transform our
management and workforce,
hometown into a stronger, more
including achieving gender balance
equitable, inclusive, resilient, and
in our retail stores by 2025. Muslim Military Spouse Neurodiverse
innovative city. Sleep Number also
• We celebrated Juneteenth, Pride, holds a board seat and actively
and Hispanic Heritage Days and participates with the MAKERS Women in Science,
Technology,
included DEI as a key agenda topic at organization, which explores ways Parents Puerto Rican Engineering &
Math (STEM)
our national sales and services to accelerate equality for women.
conference. We also conducted Our involvement reinforces our
listening sessions with team members commitment to greater diversity,
following increased social unrest in equity and inclusion in our company
2020, ensuring that our team and communities.
members feel safe and heard.
SLEEP NUMBER 2021 CORPORATE RESPONSIBILITY AND SUSTAINABILITY REPORT 20ACCOUNTABILITY • We are working towards establishing • Although we recognize that we
key metrics that will show progress have more work to do, our survey of
• Our commitment to take meaningful
against our commitments. Workday Sleep Number team members on
action is strong, and we’ve
will help us measure and monitor inclusion and belonging topics in
developed a multi-year roadmap to
practices around who we are hiring, 2020 returned the following results:
help us prioritize the most important
who is departing, and who we are
actions to strengthen our inclusivity.
promoting. This will provide useful
data to establish a strong baseline
of measures for accountability.
Sleep Number Inclusion Index is strong and well above the benchmark
Team members feel included Sleep Number is a place for people like me Sleep Number is open to different points of view
100% 100% 100%
73% 73% 75%
67% 63%
59% 56% 56%
50% 50% 50%
0% 0% 0%
Inclusion Index National Benchmark 2018 2019 2020 2018 2019 2020
SLEEP NUMBER 2021 CORPORATE RESPONSIBILITY AND SUSTAINABILITY REPORT 21TEAM MEMBER
ENGAGEMENT
As a purpose driven company, we’ve created a special
culture that attracts and retains people who want to make
a difference. Our team members want to feel fulfilled in
their support of our mission to improve lives through
individualizing sleep experiences, and we know that
team member engagement and wellbeing enhance
their performance.
At Sleep Number, we have a continuous listening strategy
to ensure we stay connected to the voice of our team
members at critical times of the team member experience.
The key touchpoints are new hire, pulse check-ins, annual
engagement survey and exit surveys.
We have consistently demonstrated our commitment to
inviting and listening to team member ideas and feedback
for 16 consecutive years – through engagement surveys and
various other touchpoints during the team member lifecycle.
In 2020, we maintained our commitment to listening to the
voice of our team members, using a modified approach due
to COVID-19. Our goal was to capture real-time insights from
our team members and address their feedback in the face of
2020’s increased uncertainty, anxiety precipitated by the
global pandemic and heightened emotions driven by the
widespread movement for social justice.
SLEEP NUMBER 2021 CORPORATE RESPONSIBILITY AND SUSTAINABILITY REPORT 22The topics covered by the five pulse surveys varied: remain connected to team members’ feedback and
1. Crowdsourcing the importance of benefits offerings, experience, and our strong commitment to team member
wellness needs and self-identification engagement, we work hard to create a workplace of mutual
trust — where team members don’t want or need union
2. Capturing team member sentiment around productivity,
representation.
priorities and communication
3. Assessing readiness and ability to return to the workplace Team member feedback directly influences company
decisions and actions, resulting in changes that enhance their
4. Seeking to understand impact and emotions around
experience and increase the company’s holistic
racism and social unrest
understanding of who they really are and what matters
5. M
easuring belonging, inclusion, self-care and most to them.
communications
To conduct our team member engagement surveys:
Though we do not have full annual engagement survey
results for 2020, our pulse survey design intentionally carried • We partner with a leading survey/analytics provider.
through questions that are commonly included in our annual Our survey design considers the reciprocal nature of
survey. Sleep Number results on these questions strongly engagement – that you get what you give.
exceeded benchmark results. All cultural indicators remain
• Team member participation is best in class. Our high
strong, despite a year of unprecedented challenges for our
participation rates signal that our team members feel like
team members, including personal and professional fatigue
their voices matter.
and uncertainty. While there is always room for improvement,
these pulse survey results validate and reinforce the • We are transparent about the results of our surveys,
importance of our unique and special culture and the sharing them with team members and our board
deep commitment of Sleep Number team members to make of directors.
a difference and support our purpose through their work.
• We examine results at the enterprise level – and segment
In keeping with our Human Rights Policy, we recognize and the data across a range of cross-sections, including level in
respect the right of all team members to freedom of the organization, department, gender, generations and
association and the right to join unions or other work-related racial diversity – to understand team member feedback.
associations as well as the right to bargain collectively. All
• We host working sessions at various levels of the
team members should be able to assert their right to
organization – including senior management, operating
freedom of association and their right to remain independent
team, and department – to review results, identify
without fear of retaliation or termination.
opportunities for improvement and develop action plans
Sleep Number is dedicated to a spirit of teamwork and to address them. Leaders have access to data specific to
respect that delivers a superior experience for our customers, their areas so they can individualize their action plans.
partners and team members. Through our culture of The tools available to our leaders are simple, intuitive and
individuality, our continuous listening strategy to ensure we widely used.
Continuous listening is driving positive change in team member experience
Onboarding
Conducting new hire surveys at 7, 30 and 90 days
to increase productivity and retention
Exit interviews and Surveys Ongoing Check-ins
Voice of
Executing exit touchpoints to clarify Measuring team member sentiment
reasons for departure and for insights
Team through pulse and on-demand
into retention strategies Member surveys based on need
Annual Engagement Survey
Annual formal check-in to measure
overall engagement sentiment
SLEEP NUMBER 2021 CORPORATE RESPONSIBILITY AND SUSTAINABILITY REPORT 23TRAINING AND
PROFESSIONAL
DEVELOPMENT
Our nearly 4,700 Sleep Number team • Providing our team members with All onboarding experiences can be
members are at the heart of our culture training and development when and delivered through a digital experience
and the disciplined execution of our how they need it. to accommodate our geographically
consumer innovation strategy. dispersed and remote workforce. Each
• Building training that is both
Attracting, motivating and retaining the hiring manager uses a comprehensive
competency and experience based
right talent is critical to our success, and approach to help prepare for the new
to drive productivity.
providing ample professional team member’s first day, first week, first
development opportunities and a • Investing in our team members’ desire month and first 60-90 days in their new
superior work environment throughout for professional growth, providing role. The process ranges from ensuring
the entire employment experience at cutting-edge tools and learning that the new team member has access
Sleep Number is critical to their growth, experiences that empower them. to critical technology and tools on day
satisfaction and engagement. We one, to actions that help the new team
demonstrate this commitment to team Our approach begins with a robust member feel welcome and included by
member wellbeing through our focus onboarding process that is tailored to the new team, to training opportunities
on creating a learning culture. We the new team member’s level and and establishment of communication
support our learning culture by: function (e.g. consumer-facing, and coaching routines.
corporate, manufacturing).
SLEEP NUMBER 2021 CORPORATE RESPONSIBILITY AND SUSTAINABILITY REPORT 24Our process includes check-ins and formal assessment at • A Customer Relationship Center listening session
seven days, 30 days and 90 days to ensure that we are aware to broaden awareness of the nature and scope of
of each team member’s early onboarding experience and customer inquiries.
that we are able to course-correct, if needed, to increase
All headquarters team members also participate in a new hire
their engagement and ultimately their retention.
orientation that includes a direct conversation with our CEO
To educate and immerse new headquarters team members and our senior team.
in our business, we encourage them to participate in three
As evident below, new team members overwhelmingly
key experiences:
articulate positive reasons for choosing Sleep Number and
• A store visit to understand our selling approach. demonstrating high levels of engagement, consistent with
the company’s core values:
• A field services ride-along to observe our in-home
interactions with customers.
Opportunity
IntegrityIntelligent
Values
Innovation
e
Experience Comfort
m v
ve
Tea essi
Change Leadership
Mission Individuality
r
Culture
og
ati
Health
Pur
Pr
Growth
Teamwork
ov
Wellness
pos
People
Product
Role
e
Engaged
Inn
Trusting Stability Upgrade
C hall Commitment
Caree
Passion eng Referral
Flexibility e
Re
Challenging
r
pu
Community
tat
Passionate
ion
Dedication
New hire orientation word cloud, December 2020
SLEEP NUMBER 2021 CORPORATE RESPONSIBILITY AND SUSTAINABILITY REPORT 25Once we hire and onboard new talent, we apply a 70/20/10 areas of the company – to support cultural awareness,
learning philosophy by providing simple and connected role effectiveness, product knowledge and productivity.
development experiences to build future skills and enable For example, for our customer-facing roles, training topics
career mobility. The responsibility for professional include sales, customer service, product, field service, and
development is shared by each team member, their manager an array of personal development courses. Within
and Sleep Number – with 70% of learning on-the-job, 20% manufacturing, we offer individualized “how to” work
of learning through social interaction with leaders, peers instructions that are designed by engineers with personalized
and others, and only 10% as the result of formal training or training delivered by peer coaches to enable cross-training.
individualized professional development.
In addition, as part of our annual Code of Conduct training
In support of this philosophy, we employ a multi-level each spring, we currently deliver information security training
learning strategy that provides deep functional and technical to all team members with more in-depth training for
training paths and customized training programs for different headquarters and Sleep Number Labs team members.
70 20 10
Learning in the flow of work Learning together Learning on purpose
Collaboration and dynamic learning is Multi-disciplinary teams Individualized learning curriculum
our new normal
Knowledge-sharing-enabled Leadership levels and career
Rapid learning accelerates meaningful decision making architecture to support upward
business solutions mobility
More transparent communication
We believe everyone is a leader, not just those with In addition, we continue to encourage utilization of our
responsibility for others, so we offer: enterprise learning management system (LMS), which is
available to every team member, with a variety of content
• TRUE PRINCIPLES of LEADERSHIP on demand, including
that is intuitive and easy to use, dynamic, mobile-accessible,
Leadership 101, available across the enterprise.
and enables us to track training and better manage
• CULTIVATE, our program for senior managers to accelerate institutional knowledge. In addition to specific functional
their effectiveness and increase their readiness for broader content to enhance competencies and performance, topics
roles, especially director. in our library include legal and ethical compliance training
and personal brand and leadership development training.
• THRIVE, our program for new operating team leaders, We continue to expand our online training offerings – and
either newly promoted directors or external hires at or add to our digital content to strengthen coaching capabilities
above director level. for leaders.
SLEEP NUMBER 2021 CORPORATE RESPONSIBILITY AND SUSTAINABILITY REPORT 26INTERN PROGRAM TEAM MEMBER involuntarily terminated, we offer the
We are cultivating a diverse pipeline of
CORRECTIVE ACTION opportunity to appeal their termination
AND TURNOVER through our turnover appeal process by
talent through our college relations
Sleep Number invests significant time inviting them to provide additional
strategy, of which our intern program is
and energy in hiring, onboarding and information that was not considered at
a signature component. Since 2017, our
training team members to thrive and the time of the termination.
internship program has more than
doubled. Our 2019 intern class was 31% grow at our company. We measure
Our team members also have an
racially diverse, and 40% female. overall team member retention and
avenue to share their opinion through a
Thirty-two percent of interns were new hire retention on a rolling three-
confidential hotline in the event they
converted into full-time talent, an eight month and 12-month basis with a
are not comfortable sharing their
percentage point increase over 2018. dashboard generated within Workday
concerns with their manager and/or
for increased visibility. However, some
Human Resources.
Due to the global pandemic, our intern team member turnover is part of our
program was temporarily halted in the normal course of business. Sometimes
spring/summer of 2020, but was a team member who has been a strong
reactivated by late fall and is expected performer elects to leave the company,
to be fully operational again in 2021. and sometimes we must terminate a
For five years, we have partnered with team member – either as a result of
GenesysWorks to provide pathways to failure to improve performance over
career success for high school students time in keeping with a corrective action
in underserved communities, including plan or immediately due to an
skills training and meaningful work egregious violation of company policy.
relationships and experiences. We also For team members who depart
support college students through voluntarily for personal or professional
programs offered by Dougherty Family reasons, we conduct an exit interview
College summer enrichment programs to ensure we learn from their
and The BrandLab, a program experience and take action to reduce
dedicated to helping diverse students unwanted turnover in the future. For
build marketing careers. team members who have been
SLEEP NUMBER 2021 CORPORATE RESPONSIBILITY AND SUSTAINABILITY REPORT 27TEAM MEMBER
HEALTH
AND SAFETY
“I just wanted to take At Sleep Number, we’re constantly • We survey team members to
striving to create a workplace culture understand what wellbeing means to
a moment and thank of innovation and individualization – a them, how effective our programs are
culture where unique talents, and what is missing.
… the company for the perspectives and experiences are
• We provide appropriate equipment,
valued. One way we demonstrate our
certificate towards a appreciation for Sleep Number team
safeguards, personal protection,
training, and administrative support
new Sleep Number bed. members is through our emphasis on
to protect team member safety and
maintaining a safe and healthy work
health in the workplace.
I cannot wait for the environment that contributes to
their wellbeing. To underscore • Reflecting our commitment to team
delivery of this bed. It our commitment: member wellbeing, we are investing
in new climate control systems in
speaks volumes for the • With quality sleep at the center of our
several of our manufacturing and
team members’ wellbeing, we
company, especially invested more than $11 million (retail
distribution facilities in 2021 — to
improve working conditions.
value) in our 4,700 team members in
in a year like we are all 2020, offering each the gift of quality • We invest in ergonomic workstations
sleep with a new Sleep Number 360®
experiencing. Again, throughout our headquarters and
bed with integrated base. In addition, have staff trained in assessing
thank you so much, it is we offer team member discounts on individual workstation setups for
additional Sleep Number ® beds and proper ergonomics, including
very much appreciated.” other products that help to ensure automatic standing desks and
the benefit of life-changing sleep and ergonomic chairs. In response to
STORE MANAGER demonstrate the importance we large segments of our team members
place on team member wellbeing.
SLEEP NUMBER 2021 CORPORATE RESPONSIBILITY AND SUSTAINABILITY REPORT 28team generated new ways to connect WORKERS’ COMPENSATION
safely with customers while delivering CLAIMS AS % OF HEADCOUNT
solutions that helped them continue
to achieve proven quality sleep with YEAR %
our proprietary sleep innovations.
2014 4.8
Our digital investments enabled
rapid, work-from-anywhere 2015 3.5
capabilities across the business,
2016 4.3
including sell-from-anywhere options
for our sales professionals. We also 2017 4.1
implemented new store protocols,
2018 4.8
including additional sanitizing
procedures, mask-wearing and 2019 3.8
private customer appointments to
2020 3.2
limit exposure to the virus.
• Our A Workplace Accident and • We collect and analyze workplace
Injury Reduction Program Policy injury and accident information
(AWAIR) creates clear expectations across all our locations and take
working at home as a result of the
for how each Sleep Number team appropriate steps to reduce incident
pandemic, we offered team members
member contributes to a safe and rates, number of workers’
the opportunity to receive Home
healthy workplace. compensation claims and lost work
Ergonomic Assessments. Based on
days. Since 2014, our workers’
recommendations from those • In early 2020, Sleep Number
compensation claims as a percent of
assessments, we shipped appropriate implemented workplace safety
total team member headcount has
equipment directly to each team policies and procedures to protect
improved meaningfully, reflecting
member, resulting in improved team members and the public from
specific actions we have taken in our
comfort and ergonomic positioning COVID-19 infection. Protocols include
retail and home delivery business
for our team members while working daily wellness self-checks for all team
units. Our manufacturing plants
from home. members, temperature screening for
continue to deliver best-in-class
manufacturing team members, and a
• Sleep Number team members are safety performance. Sleep Number
recent COVID Prevention Program in
trained to work safely and are has recently received the following
California and an Infection Control
empowered to drive actions that awards for safety and operational
Plan in Oregon in line with state
ensure we maintain a safety-first excellence:
OSHA requirements.
culture and are in compliance with – Our Irmo, South Carolina, facility
all safety rules and standards. • We offer a comprehensive array of received the 2019 South Carolina
benefits, including family support OSHA and Department of Labor,
• Throughout 2020, our mission driven Licensing and Regulations Safety
benefits and a health hotline for
team remained focused on keeping Achievement Award. The award
team members and their families.
themselves and our customers safe. recognized the Irmo site for
In light of forced store closures and achieving 1 million work hours
social distancing requirements, our without a lost workday injury
or illness.
SLEEP NUMBER 2021 CORPORATE RESPONSIBILITY AND SUSTAINABILITY REPORT 29– In recognition of safety CORPORATE GOVERNANCE Sleep Number has for many years
performance at our Salt Lake City, AND EXECUTIVE maintained exemplary corporate
Utah, facility, the Sleep Number COMPENSATION governance principles, which are
team was honored with the 2019 Our management team is responsible publicly available at https://ir.
Utah Manufacturing Alliance for leading the company’s sleepnumber.com/governance/
Workplace Safety Award. This environmental, social and governance governance-documents/default.aspx.
award recognizes our efforts to (ESG) strategy, initiatives and results. Among the strengths of our corporate
increase team member Our board is responsible for overseeing governance profile are:
engagement using the hazard the company’s ESG approach. The
recognition program and • Our commitment to long-term
senior management team engages with
achievement of low recordable shareholder value creation.
the entire board, and each of the three
and lost workday incident rates. standing board committees in ESG • Our independent and highly diverse
discussions annually, quarterly and board of directors.
– For the 2nd consecutive year,
on an interim basis, as appropriate.
Sleep Number was awarded the
These discussions include: • Our strong track record of pay for
Supply Chains to be Admired
performance alignment.
Award in 2020 by independent • environmental impact, such as those
organization Supply Chain Insights. related to carbon, climate, natural As we disclosed in our Compensation
Sleep Number was recognized for resources, waste and toxicity; Discussion and Analysis of the 2020
transforming its supply chain while Proxy Statement – and will disclose
delivering unprecedented levels of • social matters and talent management again in our 2021 Proxy Statement – our
speed and flexibility throughout the initiatives, such as team member Annual Incentive Plan (AIP) is the
supply chain network. engagement, wellbeing, diversity, variable pay program that covers our
equity and inclusion, and community executive officers as well as our
involvement; and non-commissioned team members.
Awards made under the AIP are earned
• governance and audit topics, such as
solely based on the company’s financial
succession planning, executive
performance (EBITDA) relative to
compensation, cybersecurity,
pre-established goals. The company’s
enterprise risk assessment, corporate
financial goals, investments and
policy development, internal controls,
decisions incorporate our commitment
and investor outreach.
to ESG initiatives and are designed to
On matters related to information deliver sustainable profitable
security, management briefs our board performance over time.
of directors or committees at each
quarterly meeting and on an interim
basis, as needed.
SLEEP NUMBER 2021 CORPORATE RESPONSIBILITY AND SUSTAINABILITY REPORT 30You can also read
