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.
It is not easy to explain the reason for the success of our co-operative and business movement in just a few words. However, we can highlight the following key points:
- 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.
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.
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.
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).
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.