Philips: a socially minded company

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On April 16, 2005, Frits Philips’ hundredth birthday was celebrated in impressive style. For that one day the city of Eindhoven was officially renamed ‘Frits Philips City’ and, amongst other things, it had a Frits Philips train station as well as its own currency unit – ’t Fritske – and the Philips Symphony Orchestra performed the Frits Philips overture in the Frits Philips Music Center. Eight months later, when Frits Philips passed away on December 5, once again the residents of Eindhoven all showed their admiration for him. In a special edition, the newspaper ‘Eindhovens Dagblad’ wrote: ‘without his influence Eindhoven would never have become the city it is today’. The newspaper went on to say that Frits Philips had cared dearly for his employees, providing them with affordable housing, study bursaries as well as sports and cultural facilities.

The importance of ensuring the wellbeing of employees was nothing new to Frits Philips. As president of N.V. Philips he had continued the social policy that was implemented by his uncle Gerard, his father Anton and his brother-in-law Frans Otten. Back in 1900 Philips had been one of the first companies in the Netherlands to set up a Sickness Fund, which paid employees 70 per cent of their salary when they were off sick. In 1909 the Philips Medical Service was set up to give employees and their families free access to doctors and to provide medication and dressings free of charge. Philips also set up a fully equipped outpatient clinic, a Philips child health clinic, a Philips pharmacy and a Philips midwifery service. Under the management of Dr. Burger, who was appointed in 1928, the Philips Medical Service laid the foundations for occupational healthcare in the Netherlands.

Eerste experimentele tv uitzendingen in de jaren '30

Health Service in 1923

The Philips Pension Fund was set up in 1913. This fund provided retirement pensions, disability benefit and also a widow’s and orphan’s pension. In addition to the pension fund, there was also the Philips Support Fund (Philips’ Ondersteuningsfonds) for employees who, through no fault of their own, had ended up in financial difficulty. Employees with more than three children could expect to receive support from the Philips Child Support Fund (Philips’ Kindertoeslagfonds), decades before Child Benefit became generally available in the Netherlands.

Mensen dringen bij televisiedemonstratie in winkel, 1950

Pension fund in 1918

As the company expanded, so it became increasingly difficult for employees to find suitable accommodation. Philips therefore decided
to build its own housing. The area of the city now known as ‘Philipsdorp’ was built between 1910 and 1923. This area was designed as a small village. The 800 or more houses were surrounded by extensive green spaces and the area had its own shops as well as sports and leisure facilities. The spacious houses were connected to the gas mains and water supply and they were also connected to the sewer system, which was not commonplace at that time. After Philipsdorp there followed another residential area called Drents Dorp and dozens of other projects too. By 1929 Philips had built nearly 4000 houses in Eindhoven. There were also branches of the ‘Philips Consumers’ Cooperative Society’ (Philips’ Verbruikerscoöperatie) – which later became ETOS – in these new residential areas so that employees were able to purchase groceries and household products at an affordable price.

Testbeeld kleurentelevisie van Philips, ontwerp van Finn Hendil 1966

Philipsdorp in 1918

Education was another important focus in Philips’ social policy. In 1916, to mark the company’s 25th anniversary, Gerard Philips and his wife put up the capital required to create the Van der Willigenfonds. This fund provided bursaries to enable the children of Philips employees to pursue further education. Following the foundation of the Van der Willigenfonds, in 1920 the Philips Association for Education and Development (Philips’ Vereniging voor Onderwijs en Volksontwikkeling) was set up and schools were built to provide nursery, primary and secondary education. In 1928 the Philips Boys’ Industrial Training Program (Philips-Jongensnijverheidsopleiding, JNO) was also set up. This program provided a four-year course of vocational education for young boys when they left primary school. For employees there was the Philips Technical College on the Kastanjelaan. This college provided all of the company’s in-house training courses. The household skills courses were quite separate. Thanks to an idea put forward by Anna Philips-de Jongh, from 1916 onwards ‘Philips girls’ were able to attend evening classes to learn domestic skills. A few years later this activity was transferred to the Philips Domestic Skills School (Philips Huishoudschool).

Philips Domestic Skills School in 1928

The company also provided recreational facilities for its employees. On August 13, 1913, the Philips Sports Association (Philips’ Sportvereeniging, PSV) was set up. The purpose of this association was to ‘promote participation in a range of different sports in the broadest sense of the word’. Within a few years the Philips Sports Association included sections for athletics, football, cricket, korfball, gymnastics, fencing, pigeon racing and hockey. From 1921 onwards these sports activities came under the recreation fund known as the Philips - De Jongh Ontspanningsfonds. At one point Philips had no less than forty hectares of sports fields under its management in Eindhoven. The PSV football team, who all worked at Philips, won the national championships for the first time in 1929.

PSV Sports park 1920-1929

In addition to sports activities, the Philips - De Jongh Ontspanningsfonds also financed dozens of other activities, ranging from chess clubs to flower arranging courses. In 1929 the ‘Philips Ontspanningsgebouw’ events venue (which was later called the ‘POC’) was finished and ready for use. It included a reading room, library, billiard room, cinema, theater, and club rooms. Theater companies from Amsterdam and The Hague were invited to come and perform here, and each year the Concertgebouw orchestra gave a number of performances in Eindhoven. The POC was also home to the Philips Harmonie brass band (1912), the Philips Orchestra Association (1921) and the – even older – Philips Philharmonic Choir.

Philips Ontspanningsgebouw in 1946

After the Second World War Frits Philips took responsibility for the company’s social policy. Under his management the Social Affairs department, which had been managed by G.F. Evelein since 1917, defined the essential elements of the company’s social obligations to its employees. The department would focus on three core tasks: ‘social security, work satisfaction and social responsibility’. Fully in keeping with Frits Philips’ personal convictions, the emphasis lay on
individual attention for employees: ‘Every employee must receive attention – in the broadest sense of the word – and not primarily as a production factor but above all as a human being. The human factor must be a top priority in our personnel management’.

During the post-war period of reconstruction the Social Affairs department expanded into a very large and in many respects independent company unit. In the Netherlands the personnel numbers rose from 22,000 in 1945 to 98,000 in 1970 and as a result work that had previously often been carried out by volunteers was now performed by professionals. Amongst other things, the department was responsible for the implementation of social legislation and for providing facilities in the field of education, development and leisure. Whilst continuing to build upon its existing activities – in 1960, for example, the number of houses in Eindhoven owned by the company rose to 8,600, almost a quarter of all housing in the city – the company also embarked upon new ventures. The Philips Medical Service gained a consulting surgery for medical organizational psychology, and programs were introduced for business management training and specific workplace- elated training. In Someren a camping center was created specifically for Philips employees. What’s more, these social activities were not confined to Eindhoven or indeed to the Netherlands. The company’s 260,000 employees (1970) working outside the Netherlands also had access to social facilities, which were tailored to suit local customs and circumstances.

Kindergarten in 1950

During the final quarter of the 20th century there was an increasing overlap between the social facilities provided by the company and those provided by the state. The Dutch welfare state, which had developed at a rapid rate, provided a wide range of benefits, public healthcare, social housing, open-access education, student finance, and subsidies for sports and cultural pursuits. This led to a debate about which responsibilities should be taken by the government and which by companies. There was criticism from many quarters, including labor unions and politicians, of what was perceived as Philips’ dominant position in society. It is also important to note here that as prosperity rose, so employees became more emancipated and more vocal. According to popular opinion, Philips’ social policy exhibited paternalistic traits, and that was not in keeping with a modern welfare state. The company responded by gradually amending the social provisions it offered in order to better suit the changing circumstances and needs.

A major change took place in 1980 when the primary healthcare provided by the Philips Medical Service started to be provided by an independent body. Most Philips employees felt it was no longer appropriate for the doctors or social workers treating them to also be employed by the company. Several dozen company doctors, nurses and pharmacists found new jobs at the Philips Healthcare Centers Eindhoven (Stichting Gezondheidscentra Eindhoven) that were set up to provide healthcare on an independent basis. Following this, it became clear that the Philips schools – which ranged from nursery schools to vocational training institutes – would also function more effectively if they were public bodies. The many Philips sports and leisure associations also started to operate independently, although a considerable number of them continued to be financed (to some extent) by Philips. This was also the case for the professional section of the PSV football association. Another major change was the transfer of almost all of the company’s housing stock – in excess of 17,000 rental properties – to the Hertog Hendrik van Lotharingen housing association. The company’s decision to allow its social facilities to operate independently or to terminate these facilities was in some cases driven by financial motives, but more often than not there were other more important considerations. For example, at the end of the 20th century hardly any claims were being made on the Philips Support Fund that had been set up to help employees who were in financial difficulty. When the decision was announced to close the Van der Willigenfonds many people felt very emotional. For more than 101 years this fund had enabled tens of thousands of students to access further education.

The rise in prosperity and changes in social and economic circumstances have led to changes in Philips’ social policy. However, the company’s ambition to strive for the highest possible social standards has remained unchanged and is still firmly embedded in the company culture. These days Philips’ social policy forms part of the ESG Commitments. These commitments not only define the company’s obligations to its own employees, they also define Philips’ responsibility towards workers in its supply chain. This is all part of Philips’ overall aim to improve the lives of billions of people all over the world.

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Philips: a socially minded company

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