I always wondered why democracy was not practiced in business. Here is a great example of how it can work when we change the way we think for a win/win. Mondragon is a Spanish organiation that demonstrates how a cooperative organisation that is run by a philosophy of harmony can benefit and empower workers and management for a win/win. This is how people can truly learn to work together and take responsibility, jointly, for their decisions. I have often wondered in the many jobs I’ve been in about the potential of the workers. I certainly had great potential but found myself stuck in a typist position. I wonder how I would have faired in a cooperative organisational structure. I sense we will re-discover the power of cooperatives which is not about taking power away from business management it is about sharing the intellectual and creative capacity of an organisation in a democratic setting for a win/win. It is more in alignment with societal values than organisational structures that are autocratic. In my view this is where the future will transform as we live the democracy we often speak about. Just imagine 100’s of people focused on creating a sustainable business that is profitable rather than 10 in a boardroom. Takes the pressure off the top, all share responsibility, that bodes well for wellbeing for both management and staff.

Wikipedia provides an overview of Mondragon. If you would like to explore this further go to the company website http://www.mondragon-corporation.com/ENG/Co-operativism/Co-operative-Experience/Co-operative-Culture.aspx

Mondragon Corporation

Type	Worker cooperative federation
Founded	1956
Founder(s)	José María Arizmendiarrieta
Headquarters	Mondragón, Basque Country, Spain
Area served	International
Key people	Txema Gisasola (Chairman)
Revenue	14,832 million € (2011)[1]
Employees	80,321 (2012)
Divisions	Finance, Industry, Retail, Knowledge
Website	mondragon-corporation.com

The MONDRAGON Corporation is a corporation and federation of worker cooperatives based in the Basque region of Spain. It was founded in the town of Mondragón in 1956 by graduates of a local technical college. Their first product was paraffin heaters. Currently it is the seventh-largest Spanish company in terms of asset turnover and the leading business group in the Basque Country. At the end of 2012, it employed 83,321 people in 256 companies in four areas of activity: Finance, Industry, Retail and Knowledge.

Mondragon cooperatives operate in accordance with Statement on the Co-operative Identity maintained by the International Co-operative Alliance. The standard Statement of Co-operative Identity has been credited by the supporters of co-operatives with eliminating the perverse incentives that may contribute to many problems of governance found in organizations with more traditional management structures.^[2][3]

History

The determining factor in the creation of the Mondragon system was the arrival in 1941 of a young Catholic priest José María Arizmendiarrieta in Mondragón, a town with a population of 7,000 that had not yet recovered from the Spanish Civil War: poverty, hunger, exile and tension.^[4] In 1943, Arizmendiarrieta established a technical college that became a training ground for generations of managers, engineers and skilled labour for local companies, and primarily for the co-operatives.^[5]

Before creating the first co-operative, Arizmendiarrieta spent a number of years educating young people about a form of humanism based on solidarity and participation, in harmony with Catholic Social Teaching, and the importance of acquiring the necessary technical knowledge. In 1955, he selected five of these young people to set up the first company of the co-operative and industrial beginning of the Mondragon Corporation.^[6] The people were Usatorre, Larrañaga, Gorroñogoitia, Ormaechea and Ortubay, and the company was called Talleres Ulgor, named as an acronym from their surnames, known today as Fagor Electrodomésticos.

The first 15 years were characterised by enormous dynamism. Many co-operatives were established, thanks to the autarky of the market and the awakening of the Spanish economy. During those years, also with the encouragement of Don José María, two bodies were set up that were to play a key role in the development of Mondragon –Caja Laboral (1959) and the Social Welfare Body Lagun Aro (1966). The first local group was created, Ularco, the embryo of the industrial co-operative associativism which has been so important in the Corporation’s history. In 1969, Eroski was set up by a merger of ten small local consumer co-operatives.^[7]

During the next 20 years, from 1970 to 1990, the dynamism continued, with a strong increase in turnover, the launch of new co-operatives promoted by Caja Laboral’s Business Division, the promotion of co-operative associativism with the forming of local groups, and the setting up of the Ikerlan Research Centre in 1974.^[8]

With big changes on the horizon like Spain joining the European Economic Community, scheduled for 1986, it was decided to take an important step in the organisational area, by setting up the Mondragon Co-operative Group in 1984, the forerunner to the current Corporation. In-service training for managers was also strengthened with the creation of Otalora, which was to dedicate itself to training and co-operative dissemination. The Group had 23,130 workers at the end of 1990.^[9]

On the international stage, the aim was to respond to the growing globalisation process, strongly promoting expansion abroad by setting up production plants in a number of countries. The first, the Copreci plant in Mexico in 1990 was followed by many others taking the total to 73 by the end of 2008 and 105 at the end of 2012. This was part of a strategy aimed at: increasing competitiveness and market share, bringing component supply closer to important customers’ plants, especially in the automotive and domestic appliance sectors; and strengthening employment in the Basque Country, by promoting the export of products manufactured by the Co-operatives by means of the new platforms.^[10]

In October 2009, the United Steelworkers announced an agreement with Mondragon to create worker cooperatives in the United States.^[11] On March 26, 2012, the USW, Mondragon, and the Ohio Employee Ownership Center (OEOC) announced its detailed union co-op model.^[12]

In 2012 its industry area which ended the year with international sales that set a new record of €4bn beating sales figures from before the crisis. MONDRAGON consolidated its presence abroad by opening 11 new production subsidiaries. Its international sales that year accounted for 69% (with a %26 increase from 2009 to 2012) and it employed 14,000 people abroad. The increase in MONDRAGON’s share in the BRIC markets (Brazil, Russia, India and China) was also particularly significant, around 20% up compared to the previous year.^[13]

Business culture

Mondragon co-operatives are united by a humanist^[buzzword] concept of business, a philosophy of participation and solidarity, and a shared business culture. The culture is rooted in a shared mission and a number of principles, corporate values and business policies.^[14]

Over the years, these links have been embodied in a series of operating rules approved on a majority basis by the Co-operative Congresses, which regulate the activity of the Governing Bodies of the Corporation (Standing Committee, General Council), the Grassroots Co-operatives and the Divisions they belong to, from the organisational, institutional and economic points of view as well as in terms of assets.^[15]

This framework of business culture has been structured based on a common culture derived from the 10 Basic Co-operative Principles, in which Mondragon is rooted: Open Admission, Democratic Organisation, the Sovereignty of Labour, Instrumental and Subordinate Nature of Capital, Participatory Management, Payment Solidarity, Inter-cooperation, Social Transformation, Universality and Education.^[16]

This philosophy is complemented by four Corporate Values: Co-operation, acting as owners and protagonists; Participation, which takes shape as a commitment to management; Social Responsibility, by means of the distribution of wealth based on solidarity; and Innovation, focusing on constant renewal in all areas.^[17]

This business culture translates into compliance with a number of Basic Objectives (Customer Focus, Development, Innovation, Profitability, People in Co-operation and Involvement in the Community) and General Policies approved by the Co-operative Congress, which are taken on board at all the Corporation’s organisational levels and incorporated into the four-year strategic plans and the annual business plans of the individual co-operatives, Divisions, and the Corporation as a whole.^[18]

Wage regulation

At Mondragon, there are agreed-upon wage ratios between executive work and field or factory work which earns a minimum wage. These ratios range from 3:1 to 9:1 in different cooperatives and average 5:1. That is, the general manager of an average Mondragon cooperative earns 5 times as much as the theoretical minimum wage paid in his/her cooperative. In reality, this ratio is smaller because there are few Mondragon worker-owners that earn minimum wages, because most jobs are somewhat specialized and so are classified at higher wage levels. The wage ratio of a cooperative is decided periodically by its worker-owners through a democratic vote.^[19]

Compared to similar jobs at local industries, Mondragon wages are 30% or less at management levels^{[clarification needed]} and equivalent for middle management, technical and professional levels. Lower wage levels are on average 13% higher than similar jobs at local businesses. Spain’s progressive tax rate further reduces any disparity in pay.^[19]