According to Mondragon, its business
philosophy is contained in its corporate values statement: Co-operation, Participation, Social Responsibility and Innovation. “The
Corporation’s Mission combines the core goals of a business organization
competing on international markets with the use of democratic methods in its
business organization, the creation of jobs, the human and professional
development of its workers and a pledge to development with its social
environment” (1,5).
Mondragon
seeks to maintain worker participation in decision-making through worker-shared
ownership and its “one worker one vote” system. After a probation period,
workers are given the option to become members, meaning they can vote in the
annual General Assembly (1,2). The membership fee is €13,400 (equal to approximately
one year’s pay/profit which is the company’s income after non-labor costs) and
can be borrowed from Mondragon’s co-operative bank where monthly and year-end
losses are credited or debited (5).
Each
worker’s vote in the general assembly carries the same weight regardless of
placement or title within the coop. This is the key to democracy within the
company. The general assembly controls production, income spread and elects
members of the board. The elected board of directors then appoints management
as well as a watchdog council to monitor management (8).
Another
way in which Mondragon promotes egalitarianism is through it’s fixed ratio
between upper management and workers wages which cannot exceed 70 percent of
the equivalent in other companies in the market and is generally 3:1 to 5:1
before taxes (2). “For instance, the CEO of the entire Mondragon Corporation
earns only 9 times as much as the lowest paid worker in the entire complex”
(5). As a consequence of Mondragon’s policies, the lowest pay is generally higher than the
local equivalent for similar work.
This
social structure has led to a healthy and robust company, even in the face of
economic downturns. Spain has gone through several troublesome periods over the
last 20 years. In the 1980-83 recession the Basque
country lost 20% of its jobs. Many companies in the area were forced to lay-off
heavily or close. Yet there were very few layoffs at Mondragon during this
time, helping to stabilize the region’s economy (8). In order to avoid lay-offs, workers voted
to take an 11% pay decrease, paid time off or be reassigned to other working
factories. In 2008 worker-owners
at the struggling Fagor appliance co-operative elected to give up their
Christmas bonuses and cut their overall pay by 8% in order to spare layoffs and
secure the competitiveness of their company (6).
What seems the
most profound about Mondragon’s policies is its focus on the sustainable
relationship of mutual benefit between worker and company. In contrast to most
capitalist companies, whereby the measure of a successful company is almost always
based on maximum profitability, the cooperative model offers an alternative approach
that supports democracy in the workplace through an egalitarian voting system, while
at the same time promoting job security for worker-members, social justice and
community responsibility (10% of Mondragon profits go back into the community)
(4,7).
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