Balance Score Card Philips
The Balanced Scorecard at Philips Electronics
By Andra Gumbus and Bridget Lyons
Strategic Finance It's used to align company vision, focus employees on how they fit into the big picture, and educate them on what drives the business.
When a management tool becomes popular, it’s only logical to question whether it’s a fad or the future. One performance measurement tool—the balanced scorecard (BSC)—has broad appeal. Approximately 50% of Fortune 1,000 companies in North America and about 40% in Europe use a version of the BSC, according to a recent survey by Bain & Co. The number of software and consulting firms currently providing BSC-related products and services supports these statistics. But do companies think the BSC is here to stay? Philips Electronics does. This worldwide conglomerate has gathered its more than 250,000 employees in 150 countries around the card because it sees this tool as the future—not a trendy tool. The key benefit for Philips: Management can streamline the complicated process of running a complex international company with diverse product lines and divisions. Here’s how it cascades throughout the organization.
The drive to implement the balanced scorecard at Philips Electronics came from the top down—as a directive from the Board of Management in Europe to all Philips divisions and companies worldwide. The directive went to each of the companies and their quality departments, with the effort in the medical division headed by the Quality Steering Committee that reports to the president of Philips Medical Systems. (Later we’ll look specifically at the experiences of the Philips Medical Systems North America (PMSNA).) Philips Electronics has used the balanced scorecard to align company vision, focus employees on how they fit into the big picture, and educate them on what drives the business. An essential aid to communicating the business strategy, the BSC works as a vehicle to take key financial indicators and create a
By Andra Gumbus and Bridget Lyons
Strategic Finance It's used to align company vision, focus employees on how they fit into the big picture, and educate them on what drives the business.
When a management tool becomes popular, it’s only logical to question whether it’s a fad or the future. One performance measurement tool—the balanced scorecard (BSC)—has broad appeal. Approximately 50% of Fortune 1,000 companies in North America and about 40% in Europe use a version of the BSC, according to a recent survey by Bain & Co. The number of software and consulting firms currently providing BSC-related products and services supports these statistics. But do companies think the BSC is here to stay? Philips Electronics does. This worldwide conglomerate has gathered its more than 250,000 employees in 150 countries around the card because it sees this tool as the future—not a trendy tool. The key benefit for Philips: Management can streamline the complicated process of running a complex international company with diverse product lines and divisions. Here’s how it cascades throughout the organization.
The drive to implement the balanced scorecard at Philips Electronics came from the top down—as a directive from the Board of Management in Europe to all Philips divisions and companies worldwide. The directive went to each of the companies and their quality departments, with the effort in the medical division headed by the Quality Steering Committee that reports to the president of Philips Medical Systems. (Later we’ll look specifically at the experiences of the Philips Medical Systems North America (PMSNA).) Philips Electronics has used the balanced scorecard to align company vision, focus employees on how they fit into the big picture, and educate them on what drives the business. An essential aid to communicating the business strategy, the BSC works as a vehicle to take key financial indicators and create a