Holistic wellbeing strategy: The physical health advantage

Key takeaways

• Physical health is the foundation of a holistic employee wellbeing strategy that addresses the interconnected nature of physical, mental and financial health
• Strong employer support for physical health leads to measurable improvements in mental health scores and workplace productivity
• Financial stress directly impacts employees' ability to prioritise physical health, creating a cycle that affects overall work performance
• A whole-person wellbeing approach addresses root causes of employee disengagement rather than treating isolated health issues
• Flexible work arrangements and manager support are critical enablers for employees to maintain physical health alongside other responsibilities

Exploring the interconnected elements of health

Part two: The role of employee physical health and its impact on productivity and morale.

Read part one of our holistic health series: The case for mental health support

To be energised, you need exercise. That holds true for everyone, and it's why employers should help support employee physical health if they want to help enhance performance and productivity in the workplace.

One study found that implementing workplace health programs can reduce workers compensations costs by 41 per cent, while reducing absenteeism by 25 per cent. It also revealed that with only 2.5 hours per week of exercise during work hours, employees can reach the same or higher levels of productivity as their less physically active coworkers.

So why is physical activity important for employees? In short, it's because there are numerous factors that contribute to someone's overall wellbeing, and they're all interrelated. Some of the main components of health are mental, physical and financial health, though there are other factors and social determinants in play as well. That's why a whole-person wellbeing approach is essential for building resilience in your workforce.

Here's a closer look at physical health, and how it intersects with other elements of health to impact employee engagement, productivity and performance.

What is physical health?

Physical health is how well the body is functioning, covering everything from fitness to illness. Maintaining good physical health involves getting the right quantity and quality of sleep, moving regularly, eating a nutritious diet, limiting alcohol consumption and avoiding tobacco and drug use. Preventive care also includes annual physicals and biometric screenings.

In order to improve and sustain physical health, physical activity is important. According to the TELUS Mental Health Index (MHI), workers in Australia who report low interest in improving their health and wellbeing lose almost five additional weeks of productivity each year—63.9 working days versus 40.9 working days—compared to those reporting high interest in this area (September 2024). Top areas for self-improvement that workers report include physical fitness and sleep quality.

Exercise helps workers feel more engaged and mentally acute, which reduces errors and increases productivity. It also improves the immune system, leading to fewer sick days. Physical activity releases endorphins that make people feel happier and less sluggish, boosting mental health and decreasing presenteeism.

The connection between physical health and mental health support

Poor physical health also affects mental health. Workers who report feeling dissatisfaction with their physical health have a mental health score 23 points lower and lose an additional 19 working days in productivity each year compared to their peers who are satisfied with their physical health (September 2024).

This is because when a person suffers from a mental health condition such as anxiety or depression, it affects mood, motivation and energy levels, as well as disrupting sleep cycles, immune function and hormone balances. That cycle can be intensified by chronic stress, which can further undermine resilience and raise the risk of employee burnout. In fact, according to the MHI, 28 per cent of workers in Australia rate their employer's support for physical wellbeing as fair or poor, and those workers have a mental health score nearly 16 points lower than those reporting excellent support (September 2025).

When you support physical health in the workplace, you're simultaneously supporting mental health and creating a culture where employees feel valued.

The connection between physical and financial health

Employees' sense of financial health and economic stability can also be a major source of stress in their life if they're struggling to save money and pay bills. Research shows that Australians recognise the link between financial, physical and mental health, with almost half (47 per cent) saying that financial worries impact their physical wellbeing.

A similar Australian study found that over one-third of respondents were stressed and overwhelmed by dealing with money. In the study, 39 per cent of people said they spend two or more hours during their work week thinking about their finances.

More recently, 88 per cent of Australians who experience moderate or severe financial stress say their finances affect their productivity at work. These kinds of stressors can raise stress levels, limit the time people devote to caring for their physical health and take a toll on the energy and motivation necessary to do so.

This is why a holistic wellbeing strategy—one that addresses physical, mental and financial health together—is so important. When organisations support employees across all three areas, they're addressing root causes rather than treating symptoms in isolation.

How employee physical health influences productivity

Harvard Business Review cites a series of studies that were conducted to identify how physical health affects workplace performance and productivity. The researchers found that daily physical activity brings physical, affective and cognitive improvements through a series of mutually reinforcing next-day benefits that they refer to as "resource caravans.".

By enhancing sleep quality and protein synthesis, physical activity primes people to excel at work by increasing their energy, vigour and focus. More energy can give them the stamina to do their best work without getting worn down. Greater focus can enable them to be alert, pay attention and be more creative in their problem solving, while also improving their ability to retain and concentrate on information.

Why companies need to advocate for physical health

It can be difficult for employees to maintain a physically active lifestyle when they’re balancing their time at work with managing other everyday commitments. That means employers have both a responsibility and a vested interest in treating employee wellbeing as a strategic priority, not just lifestyle support.

Building more flexibility into employees' schedules through adaptable working arrangements is a relatively straightforward and impactful change employers can make to support work-life balance. Granting people autonomy over their schedule means they can take time for healthy eating and frequent exercise. Additionally, this permission enables them to access care when and where it best suits them.

Beyond schedule flexibility, leadership involvement is also crucial, and organisations should train managers alongside HR professionals to champion employee wellbeing and implement effective wellness initiatives that shape organizational culture. When line managers understand the link between physical health and productivity, and the broader context of how financial stress and mental health challenges affect physical behaviour, they're better equipped to help support their teams. 

In practice, that can include mental health support, stress management, resilience building and an inclusive work culture, to help ensure employees feel safe seeking help. This cultural shift, where wellbeing is a shared priority across the organisation, creates an environment where employees feel empowered to prioritise their health.

According to the TELUS Mental Health Index, 36 per cent of employees would prefer better support for their wellbeing over a 10 per cent increase in salary (January 2025). This tells us that employees value a workplace culture that invests in their holistic health. 

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Frequently asked questions

How does physical health connect to mental health and financial wellbeing?

Physical, mental and financial health are deeply interconnected. Financial stress prevents employees from focusing on physical health due to time and energy constraints. When organisations address all three areas together through a holistic wellbeing strategy, they can address root causes of employee disengagement rather than treating symptoms in isolation.

Why should employers take a holistic approach to employee wellbeing instead of offering individual programs?

Individual programs—like a gym membership or meditation app—don't address the underlying interconnections between physical, mental and financial health.A whole-person wellbeing approach recognises that an employee struggling with financial stress might not have the energy or motivation to exercise, which can affect their mental health and work performance. Holistic strategies create lasting improvements by treating the whole person.

What's the business case for investing in employee physical health programs?

The evidence is clear: implementing workplace health programs can reduce workers' compensation costs by 41 per cent and absenteeism by 25 per cent. Additionally, workers with high interest in health and wellbeing have better attendance and productivity. Employees with dissatisfaction in their physical health lose 19 more working days per year in productivity compared to those satisfied with their physical health, making physical health investment a direct driver of business performance.

How can flexible work arrangements support employee physical health?

Flexible work schedules give employees the autonomy to prioritise physical health activities like exercise, healthy eating and accessing healthcare when needed. This flexibility removes a major barrier to maintaining physical health, can reduce stress levels and support mental health days when needed, and signals to employees that the organisation values their wellbeing. Managers who understand and support this flexibility create a culture where health is a shared priority.

What role do managers play in supporting a holistic wellbeing culture?

Managers are critical enablers of wellbeing culture. When trained to understand the interconnections between physical, mental and financial health, managers can have meaningful conversations with employees about their wellbeing needs. They can also model healthy behaviours, champion flexible arrangements and create psychological safety where employees feel comfortable discussing challenges.