As a business association, MONDRAGON’s activity is structured into four areas – Finance, Industry, Retail and Knowledge – which function separately within a group strategy, coordinated by the Corporate Centre.
The Finance area includes the activities of banking, social welfare and insurance. The Industry area consists of twelve Divisions specialising in the production of goods and services. The Retail area includes commercial distribution and agro-food businesses, and the Knowledge area comprises Research Centres, a University with 4,750 students and several Vocational Training and Education centres.
Each individual Cooperative is one of the building blocks in the organizational structure of MONDRAGON, with the Congress being the supreme body for joint expression and sovereignty, with its Steering Committee as the highest management and representative body, whose duties include the election of the CEO. Those Cooperatives that operate within the same business sector are formed into Divisions.
Each Division is headed by a corporate Vice-president. The President of the General Council and the 14 Vice-Presidents, together with the Departmental Managers at the Corporate Centre make up MONDRAGON’s management bodies. The General Council is the body charged with drawing up, coordinating and applying corporate goals and strategies.
In turn, the Standing Committee of the Cooperative Congress is the governing body, the mandate of which is to oversee and drive the implementation of the policies and agreements adopted by the Congress itself, permanently monitoring MONDRAGON’s business development and the management performance of the General Council’s Presidency. The Committee has 21 members chosen in representation of the Corporation’s various Divisions.
The Cooperative Congress is the supreme expression of the sovereignty and representation of MONDRAGON, being the equivalent of a General Meeting. It consists of 650 delegates who represent all the member cooperatives and its decisions are binding for each and every one of them.
- The vital role played by Arizmendiarrieta, the driving force behind the Experience, with his grand vision of the future and his influence over both students and disciples when putting his ideas into practice.
- The personal nature of the co-operatives, in which people are given priority over capital, an attitude which results in a high level of worker involvement in the company, through direct participation in both the capital and the management. All this contributes to creating a positive atmosphere of consensus and collaboration.
- A decidedly business-like approach to the co-operative phenomenon, in which company profitability and planned, rigorous and demanding management efficiency are seen as basic principles.
- Re-investment of practically all resources generated.
- Ongoing adaptation to the changes taking place in the environment.
- Creation of efficient inter-cooperation instruments: both in the financial field and as regards social welfare, innovation and R&D, co-ordinated job management and situations of crisis.
- Finally, another key element in the success of the Mondragón Experience, both initially and today, is the importance attached to training, both as regards formal education, such as that provided by our University Faculties and Professional Schools, and as regards Lifelong Training linked to professional refresher courses and advanced courses.
Our co-operative system has never, either at the moment of its foundation or during its subsequent evolution, been linked to the State or to any type of Public Administration. Our co-operatives were set up and have grown thanks to the efforts of groups of independent people committed to creating companies with a co-operative working philosophy, ensuring the participation of members in the capital and management of the organisations and guaranteeing an approach based on solidarity.
Nevertheless, particularly during their initial years, our co-operatives have benefited from the backing provided by our support entities, created not by the Administration, but by the Co-operative Group itself. These entities include, among others: Laboral Kutxa in the financial field; the Business Division, created by Laboral Kutxa to provide advice regarding management issues and to promote new co-operatives; our vocational training centres and university, for training qualified staff; and IK4-Ikerlan in the field of research.
The philosophy that has underpinned our Experience right from the very beginning has been that of creating our own support organisations (in the financial, training, research and international fields, etc.), as and when necessity dictates.
We have a total of 261 companies and bodies, of which 101 are Co-operatives.
At the end of 2015, the average number of employees at MONDRAGON was 74,335. 44.2% of these employees work in the Basque Country, 39.9% in other parts of Spain and 15.9% work abroad.
The number of employees went from 25,322 in 1992 to 74,335 in 2015. Some 40% of the Corporation’s workers are cooperative members at present.
For the Industrial cooperatives the percentage of members exceeds 80%
The non- cooperative members mainly work in the distribution sector outside the Basque Country and in the industrial plants that are also based outside the Basque Country, either in other parts of Spain or abroad.
Any company interested in joining MONDRAGON must already be or must become a co-operative. It must also accept the regulations of our Congress and have a feasible development project.
The request to join is analysed by the group of co-operatives that belong to the same sector, i.e. by what in our internal structure we term the Sectorial Subgroup, which is the body which decides whether to accept or reject the petition. If the response is favourable, then the final decision lies with the corporate governing bodies (the General Council and the Standing Committee).
Yes, providing they belong to one of our co-operatives, such as is the case with our commercial delegates or those that provide professional services in our foreign plants. However, it is not possible to be a member in an isolated manner or in an honorary capacity, without maintaining a strong business and professional link with one of our co-operatives.
Our University, the “Mondragón Unibertsitatea”, is open to anyone, and anyone at all who has the academic qualifications to enter can study there. When they finish their studies, they are under no obligation to work for the Corporation’s companies, although about 40 or 50% of the graduates, the Engineering graduates particularly, choose to work for one of our cooperatives.
We have signed a collaboration agreement with ONCE (the Spanish National Organisation for the Blind) which outlines our commitment to creating jobs for people with different levels of disability. We should point out that the Eroski Group currently employs hundreds of disabled people in its commercial establishments. Also, in partnership with the GUREAK company, it has already opened two supermarkets managed entirely by disabled people. Moreover, it aims to extend this initiative to other regions.
We have no pretensions in this area. We simply believe that we have developed a way of making companies more human and participatory. It is an approach that, furthermore, fits in well with the latest and most advanced management models, which tend to place more value on workers themselves as the principal asset and source of competitive advantage of modern companies.
If we focus solely on the town of Mondragón and its region, an area with a high concentration of co-operative activity, we see that recent European reports place this area at the top of the Spanish per capita income scale, alongside San Sebastián and its surrounding area.
It is also here that, as the Basque media has pointed out over recent years, ‘economic development is greater and the distribution of wealth fairer’. This observation is based on the report compiled by the Inland Revenue in light of the annual tax returns filed by the inhabitants of Gipuzkoa. These reports underline the ‘uniqueness’ of the municipalities which make up the Alto Deba region, which itself ‘boasts an outstanding model of fairer economic development’.
We should remember that it is in Gipuzkoa that the most intensive co-operative activity is based where our co-operatives contribute 5.4% of the total GDP of this Basque province, and 14.8% of the industrial GDP. They also provide 6% of all jobs and 16.2% of jobs within the industrial sector, as well as accounting for 24% of all industrial exports.
The fundamental pillars that have characterised the Experience continue to be fully valid in our Cooperatives – education, work and solidarity, together with the continued existence of the People’s Society and its mechanisms of participation and solidarity.
In recent years there has been a great deal of reflection aimed at deepening the sense of the experience, which have given rise to cooperative educational activities to promote the main hallmarks of our identity to the people.
Recently, at the 2016 Conference, the paper on “MONDRAGON of the future” was approved, in which one of the central pillars focused on “living the values”. Once again, the main idea was to present the values and practices to be strengthened, proposing some areas to be worked on to encourage a better experience at all levels.
The values chosen were those of self-demanding behaviour and joint responsibility; responsible solidarity; intercooperation; and the social transformation of the environment.
Can co-operative or social projects in other countries, such as, for example, Latin America, have access to MONDRAGON’s funding programmes?
Access to our funding mechanisms is, logically, restricted to our members. However, we also support the work of Mundukide, an organisation set up by a number of retired MONDRAGON managers which aims to foster and subsidise social projects in developing countries.
Since its very beginnings, the MONDRAGON Cooperative Experience has been characterised by its commitment to solidarity and social responsibility towards its environment, with this being one of its defining traits. This solidarity is revealed, in the first place, in a significant contribution to the wellbeing and enhancement of the quality of life of the communities that host our companies: creating direct jobs, generating induced employment in other firms and fostering a diversified business fabric.
Additionally, the MONDRAGON Cooperatives invest around 10% of their profit in socially-oriented activities each year, and this is channelled through the Cooperative Education and Promotion Fund. In 2015 the figure corresponding to applications of this fund amounted to 22.7 million euros.
In addition to a variety of educational activities, this fund also contributed to promoting the Basque language, furthering cooperation with developing country, as well as sponsoring numerous cultural, sporting and welfare activities.
Any member can form part of the governing bodies, providing they receive sufficient support from the other members of the Assembly. Members of the governing bodies receive no financial remuneration for their services. Similarly, any member can be the managing director, providing they fulfil the professional requisites and have the leadership qualities required by such a post. It is up to the Governing Council to propose and elect the most suitable candidate.
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Candidates need only to fulfil the professional requirements of the job they are applying for, and their joining needs to be approved by the Governing Council. They also need to pay a joining fee, equivalent to remunerative index number 1, of around €15,000.
This contribution is added to the co-operative’s share capital as well as to the member’s own account, and the amount will normally grow over the years through the payment of annual profits (dividends) by the co-operative. The member’s capital may also drop (negative dividends) in the event of the co-operative registering an annual loss.
We believe so, bearing in mind the drastic differences in salaries that can be found on the job market and considering the dimension and complexity of our current organisation. During the early years, the net/gross (terms which were at that time synonyms, since no income tax was levied on individuals) salary scale was 1 to 3. Later, this scale was expanded to 1 to 4.5, in order to compensate the loss of purchasing power by our managers as a result of the introduction of income tax by the government.
In the 1990s, after the creation of the MONDRAGON Corporation and in view of the growing complexity of both the organisation and the day-to-day activities of its Cooperatives, we decided to implement a salary range going from 1 to 6, reaching level 8 in certain exceptional cases of top-level managers.
In our co-operatives, the payment of interest into the share capital is governed by the Basque Co-operative Act, since our autonomous government has full authority in this area. It is also governed by the internal regulations of the Corporation.
The Basque Co-operative Act explicitly states that there may be no payment of interest into the share capital if the co-operative has not recorded a profit during the year. It also establishes a maximum limit for such payments, which corresponds to the legal interest rate established by the Spanish government (3.0%) + 6%.
Taking this Act as our reference, in the MONDRAGON co-operatives the nature of such payments must be approved by majority vote during our Co-operative Congresses. This regulation limits share capital payments to a maximum interest level of 7.5%, subject to monetisation. No share capital payments are made unless the co-operative has recorded a profit for the year.
We believe that the working conditions and treatment received by our workers is better than the average for the local environment. This is due to the high level of participation, the free flow of information regarding the company’s performance and the basic fact that the worker-members are the owners of the company, with a certain amount of decision-making power in the General Assembly, which is governed by the principle of ‘one person one vote’. Another key aspect is the greater degree of job security enjoyed by our employees, as well as better retirement conditions, since in addition to the state pension paid to self-employed workers, our members also receive a pension from our own co-operative fund, LagunAro EPSV.
From a financial perspective, direct labourers and mid-level technicians (who are also members) are generally better off than their counterparts in the non co-operative environment, since in addition to their monthly salaries, which we call ‘advance payments’ and which are generally similar to those paid in the local environment, our members also benefit from the annual distribution of profits, in accordance with their professional level within the co-operative. As regards our top executives and managers, their global salaries tend to be lower than those of their counterparts in the non co-operative world, as a result of their commitment to remunerative solidarity.
In our co-operatives, employees may be members of a specific trade union on an individual basis, but there is no company-wide union representation, since as the workers are also the owners, the historical role played by trade unions in conventional companies is rendered redundant.
Some of the typical functions of trade unions, such as those linked to the company’s social policy, the supervision of working conditions and ensuring that the workforce is properly informed, etc. are carried out in our co-operatives by the Social Council, an internal body which is elected democratically by the General Assembly.
One of the main assets of the MONDRAGON Cooperative Movement is its ability to adjust to change at any given moment in time. Faced with the phenomenon of globalisation, early in the 1990s Mondragón decided to step up its international presence, favouring not only the export business but also the deployment of production facilities abroad.
The results speak for themselves: we have gone from 25% of international sales achieved in the industrial area at the start of the 1990s to 71% in 2015, and we have 128 production plants in 33 different countries. If we add to this the staff of our corporate and sales offices, our international staff reached a total of 11,790 employees at the end of 2015, representing 15.9% of the total employment.
A new challenge proposed by MONDRAGON as part of its Sociocorporative Policy for the four years, 2017-2020, is for businesses to develop from sustainable competitive positions in order to generate more valuable employment. It has five strategic lines of actio: cooperative identity and commitment, financing, innovation and business promotion, inter-cooperation and global presence.
All our companies abroad are organised as Limited Companies. There are several reasons for this: most of the countries do not have the appropriate legislation of a cooperative nature that we have here; in many cases we incorporate these companies as a joint-venture with other partners and, thirdly, and this is perhaps the main reason, the setting-up of cooperatives requires cooperative members who are used to working within a cooperative culture, and this is a process that takes time.
Nevertheless, although the legal set-up of our foreign affiliates is not that of a cooperative, we still share our management model with all of them, based on transparency and participation of the workers in the company’s management.