A Visit to Mondragon: People Before Profits
This is the first of a series of posts I’ll be writing to describe my
trip to the Mondragon Cooperative Corporation, located in the Basque
region of Spain.
I’m compelled to start with purpose, mission and values. Whatever one might conclude about Mondragon, the single most important—and profound—part of my experience is the breathtaking beauty of 120 businesses, employing 85,000 people with sales of 15 billion Euros that are dedicated in everything they do to the dignity of the human spirit.
In an industrial, and now post-industrial age, that has turned people in to disposable assets, into tools at the service of capital, it is so hopeful to experience business at scale that chooses to honor the essence of humanity over the accumulation of wealth in service of capital.
‘Solidarity’ is at the heart of the Mondragon model. Without it they would not survive as businesses, or as a community. Solidarity is an expression of commitment to the common good. It is given the highest priority. Solidarity insists upon democratic methods in all aspects of business and management and in the process of dialogue that precedes every major decision. Solidarity is specifically expressed in compensation where the maximum salary differential from the lowest to the highest paid worker is now 7-to-1.
Never in the Mondragon’s history has any worker ever been laid off for financial reasons.
Mondragon’s values follow those of the cooperative movement.
1. Open Admission. Admission is open to all as long as there is an open job and an individual has the required skills. Full membership as a cooperative member is however a four-year process that includes an investment of 15,000 Euros as of 2011.
2. Democratic Organization. Every important decision is made through a democratic process. Sometimes this is slow and painful, but the principle is never violated.
3. Sovereignty of Labor and 4. Instrumental & Subordinate Nature of Capital. This is profoundly unique to the cooperative movement. It is as political as it is social, as much about organizational values as it is about personal integrity. Mondragon ensures that capital never drives decisions that are detrimental to workers.
5. Participatory Management. You are expected to participate. While no one is forced to, increased responsibility and promotion is based on participation.
6. Wage Solidarity (as described above).
7. Inter-cooperation. Inter-cooperation is understood as a broad application of the principle of solidarity:
- Between individual co-operatives, to leverage economies of scale and organizational synergies,
- In the social sphere to support the creation of a homogenous social-labor system has been promoted, including the gradual pooling of profits.
- To encourage the transfer of worker-members between cooperatives.
Inter-cooperation also supports the relationships between the MCC and other Basque and Spanish cooperative organizations actively participating in initiatives that build the social economy, as well as with other cooperative movements in Europe and the rest of the world, by reaching agreements and establishing joint bodies aimed at promoting common development.
8. Social Transformation. I’m still working to fully understand this. I assume this is a global aspiration to transform the relationship between business and society into one that makes capital subservient to humanity, the environment and the well-being of all.
9. Universality and 10. Education. Second to mission and values, education emerges as the second most amazing aspect of the Mondragon community. They understand the transformative power that lies within education. Having established 13 schools and universities to support their community, they have surpassed any American business I have encountered in investing in their own people.
The Mondragon Business Strategy
Mondragon has embodied these principles into its own twelve-point “business strategy.”
1. People are the mainstay of the enterprise. At Mondragon, they do love technology, engineering and manufacturing. In fact, what differentiates them from most worker cooperatives is the extent to which they actually make stuff. Tools, furniture, bikes, appliances to name a few. But people always come first.
2. We are all owners and protagonists. As an owner, everyone is responsible to advocate for his or her own point of view. No one’s voice is more important that another person’s.
3. One person, one vote. This is foundational to the cooperative movement and a principal that must never be violated. It stems from the original notion of democracy and safeguards the role of each and every person in a world where money and power often drown out our individual voices.
4. The Involvement of Everyone in Management, Ownership and Results.
5. Self-management. There is a basic assumption that the best type of management is always self-management. You are an owner you think about what is best for the whole and act accordingly. Does everyone always manage themselves as well as possible? Of course not and there are processes for training to build capability were needed. But everything flows from the assumption that we are all capable of managing ourselves.
6. Decentralized organization. Mondragon is the opposite of centralized, top-down, command and control management. Often, in fact very often, this is painfully, slow and can lead to decisions that may be less than optimal. But it doesn’t stray. Each cooperative business makes its own decision. Each has its own board and while they may be encouraged by Mondragon leadership to move in a particular direction, all decisions, including the decision to pack-up and leave the Mondragon group, is their own.
7. Real inter-cooperation in funds and people. (discussed above.)
8. Reinvestment of surplus. This is a requirement in the bylaws of every coop and it can be as much as 45% of profits.
9. Social responsibility.
10. Innovation: Technical/Technological, Organizational, Financial, Social. Mondragon understands the critical role of technology and innovation in a highly competitive global market. Its creation of thirteen universities is a testament to its commitment.
11. Balance between job creation and financial profitability.
12. Internationalization. MCC has global ambitions. With 77 non-cooperatively organized manufacturing facilities outside of Spain that it has started, purchased or owns jointly with a partner, Mondragon believes that to survive it must be a global player. Global from a sales perspective as well as global to mitigate the high cost of its own labor. Many see this as a deep conflict. How can they leverage low wages in developing countries to grow cooperative profits? Mondragon maintains that it is committed to evolving into a cooperative (type) structure in these 77 plants and they always compensate works at their plants more highly than their competitors, something that has not been independently verified. There is a Mondragon worker/owner from Spain at each foreign facility tasked with ensuring fair labor practices.
The rest of the series can be found at JeffreyHollender.com.
Jeffrey Hollender is a leading authority on corporate responsibility, sustainability and social equity.
This article originally appeared on JeffreyHollender.com.