The Mondragón Co-operative Experience
The Mondragón
Co-operative Experience is open to all men and women who accept the Basic
Principles and can prove themselves professionally capable of doing the jobs we
are able to create. Therefore there is no discrimination of any type for
religious, political, ethnic or sexual reasons.
Limitations are only established according to the practical needs and business
requirements of the Co-operative and taking into account the reports drawn up
after a trial period.
Based on the basic equality of the worker-members, which implies acceptance of a democratically organised company based on:
... The sovereignty of the General Assembly, consisting
of all the members and which operates on the basis of "one member, one
vote".
... The democratic election of governing bodies, especially the Governing
Council, which is responsible to the General Assembly for its management.
... Collaboration with management bodies designated to manage the company
through the delegation of the members as a whole.
There is a broad delegation of powers on a day-to-day basis. Hence the importance of the election of the Governing Council, renewable every four years - half of the members every two- and the appointment, through this Governing Council, of the executive management, to whom the economic performance and strategy of the company are delegated to a great extent. However, it must always be remembered that final decision making and control rests with the General Assembly.
In the MCC
Co-operatives it is understood that Labour is the main factor for transforming
nature, society and human beings themselves. As a result, Labour is granted full
sovereignty in the organisation of the co-operative enterprise, the wealth
created is distributed in terms of the labour provided and there is a firm
commitment to the creation of new jobs.
One of the main reasons behind the development of the Mondragón Experience in
the fifties was precisely the desire to give workers a leading role in the
decisions which affected their activity and way of life. Something difficult to
achieve in traditional companies and even more so in those days.
As far as the wealth generated by the Co-operative is concerned, this is
distributed among the members in proportion to their labour and not on the
basis of their holding in Share Capital. The pay policy of MCC's co-operatives
takes its inspiration from principles of Solidarity, which are materialised in
sufficient remuneration for labour on the basis of solidarity.
Payment in our Co-operatives consists of two basic elements, which are the
so-called advance payments and co-operative dividends.
.. Advance payments, which are received
monthly and include a fixed part directly related to the structure of each post
and a variable part, linked to the professional performance of each member.
.. Co-operative dividends, are each member's share in the
results (dividends) or losses (negative dividends), obtained by the
Co-operative during the year. Between a maximum of 70% and a minimum of 30% of
the net profits available are distributed as dividends, depending on the
financial situation of the Co-operative. The annual amount of dividends is
added to each member's individual contribution.
IV. INSTRUMENTAL AND SUBORDINATE NATURE OF CAPITAL
The Mondragón Co-operative Experience considers Capital to be an instrument, subordinate to Labour, which is necessary for business development. Therefore, it is understood to be worthy of just remuneration, in accordance with the efforts involved in saving it, although not directly linked to the amount of profit made.
In general terms, the contributions of the members to the Share Capital of the Co-operative,
accrue an annual rate of interest which consists of two parts: a basic gross
annual interest rate of 7.5% as a maximum and an "inflation-correcting
interest rate" which, as a maximum, can account for an annual gross rate
of 70% of the increase in the Consumer Price Index for the previous year. In no
case can the sum of both parts exceed the legally established limits, which are
currently set at 11%.
In any case, the return on members' contributions to Share Capital is
conditional on the Co-operative having made sufficient profit or having
sufficient reserves available.
This Principle implies the progressive development of self-management and, consequently, of the participation of the members in business management. This requires:
..The development of adequate mechanisms and channels
for participation.
..Transparent information with respect to the performance of the basic
management variables of the Co-operative.
..The use of methods of consultation and negotiation with the worker-members
and their social representatives in those economic, organisational and labour
decisions which affect them.
..The systematic application of social and professional training plans.
..The establishment of internal promotion as a basic means of covering
positions with greater professional responsibility.
The first and foremost body of participation is the General Assembly, in which rests the full sovereignty of the Co-operative. Its most important powers include: appointing and revoking members of the Governing Council and Account Auditors by means of a secret vote; examining company management, approving the annual accounts and the distribution of surplus and apportioning of losses; approving the general policies and strategies of the Co-operative; approving increases in share capital, the rate of interest to be accrued by capital contributions and the joining fees for new members; modifying the Company Statutes and approving everything implied by a substantial modification in the economic, organisational or functional structure of the Co-operative.
The Governing Council, elected by all the members at the
General Assembly, is the representative, management and governing body of the
Co-operative. It consists of a maximum of 12 members, with half being renewed
every two years. The term of office lasts four years, with re-election
possible.
Its actions are subordinate to the policies and strategies set by the General
Assembly and among its responsibilities the following stand out: the appointment
and dismissal -at the request of the Director General of the respective
Subgroup- of the Managing Director of the Co-operative; the calling of ordinary
or extraordinary General assemblies; the admission and withdrawal of members;
decisions concerning the work and disciplinary system and the application of
sanctions; changes important to the organisation and operation of the
Co-operative; to propose to the General Assembly the approval of the annual
accounts, the distribution of profits or apportioning of losses and resolving
any doubts which may occur concerning the interpretation of the Statutes.
Finally, the Social Council acts as an advisory and
consultative body in representation of the members as a whole before the
internal authorities of the Co-operative. Its members are elected by areas of
activity and their number depends on how many members the Co-operative has. Its
basic functions are advice, information, negotiation and social control.
The responsibilities of the Social Council concentrate on the drawing up of
proposals and reports on decisions to be adopted by the governing bodies,
transmitting the information received to those it represents and channelling
initiatives on the part of members to the governing and management bodies.
The Mondragón Co-operative Experience declares sufficient payment based on solidarity to be a basic principle of its management. Solidarity is manifest both internally and externally, as well as at the Corporate level.
a.- Internally through the creation of payment framework based on
solidarity. For many years, the difference in the payment received by the least
qualified worker-member and the top executive of the Co-operative was 1 to 3.
In recent years, the increasing difficulty of management work in our
co-operatives, together with the size and organisational complexity attained by
Mondragón Corporación Cooperativa (MCC) have led to an increase in the maximum
level, taking it to realistic market levels, with a deduction of 30% as a
commitment to the principle of solidarity.
b.- Externally, in an attempt to ensure that the payment received by
co-operative members is equivalent to that received by salaried workers in the
same sector and geographical area, unless it is manifestly insufficient.
c.- At the MCC corporate level, through the means of a labour framework
based on solidarity, both as far as payments and work hours are concerned. In
order to avoid differences between co-operatives, pay levels should be between
90% and 110% of the corporate reference. Likewise, annual working hours must be
between 97% and 103% of the corporate working calendar.
VII. CO-OPERATION BETWEEN CO-OPERATIVES
Understood as the specific application of the principle of solidarity and as a requirement for business efficiency, Interco-operation is evident in various spheres:
a.- Between individual Co-operatives, through the creation of Sectorial Subgroups within the structure of MCC. Thanks to these bodies economies of scale and organisational synergies have been fostered in the business area, while in the social sphere the creation of a homogenous socio-labour system has been promoted, including the gradual pooling of profits. The transfer and promotion of worker-members has also been made possible.
Intercooperation has historically been a constant feature of the Mondragón
Co-operative Experience. It has been evident in the promotion of new
co-operatives, in the creation of support bodies in the financial, educational
and research areas and in the carrying out of joint projects in the social and
business areas.
b.- Between the Mondragón Co-operative Experience and other Basque and
Spanish co-operative organisations, by carrying out joint actions and
actively participating in organisms and initiatives of the Social Economy.
c.- With other co-operative movements in Europe and the rest of the world,
by reaching agreements and establishing joint bodies aimed at promoting
development. Mention should be made here of the enormous efforts made by our
Corporation in co-operative dissemination, participating in international
forums and debates which we are asked to attend, advising co-operative
initiatives as far as our means allow, etc.
The Mondragón Co-operative Experience channels its commitment to economic and social development, in the environment in which it operates, through instruments like:
a.- The majority reinvestment of the net profits obtained, with a significant
proportion earmarked for Funds of a community nature, like the Central
Interco-operative Fund, which facilitates the creation of new jobs.
b.- Support for community development initiatives, especially in the
educational area, through the application of the Social Projects Fund, to which
up to 10% of the net surplus of the Co-operatives is assigned.
c.- The operation of a Social Security policy coherent with the co-operative
system, based on solidarity and responsibility. This is channelled through the
activities of our Social Welfare Institution Lagun-Aro, which is managed with
the aim of encouraging savings in the benefits provided and looking for the
right balance between the contributions to be paid and the quality of the
services offered.
d.- Co-operation with other institutions of an economic and social nature.
The Mondragón Co-operative Experience, as an expression of its universal vocation, proclaims its solidarity with all those who work for economic democracy in the sphere of the Social Economy and supports the objectives of Peace, Justice and Development, characteristic of the International Co-operative Movement.
This universality is evident in the institutional sphere through MCC's active
presence in the most representative forums of the Social Economy like CICOPA
(International Committee for Worker and Craft-Worker Co-operatives), EUROCOOP
(European Consumers Organisation), CEPES (Spanish Business Federation for the
Social Economy) or the Basque Confederation of Co-operatives.
Likewise, through OTALORA, which is our Business and Co-operative Training
Centre, we try and disseminate co-operative culture on the basis of our own
social-economic experience, developed over the last 40 years.
Education and Training have played a decisive role in the creation and development of the Mondragón Co-operative Movement. Its founder and main driving force, the priest José María Arizmendiarrieta, was always quite clear that "education, understanding as such the complex of ideas and concepts adopted by a man, is the key to the development and progress of a people".
Insisting on this idea, Father Arizmendiarrieta liked to repeat "that
education is the natural and indispensable cornerstone for the promotion of a
new humane and just social order" and that "knowledge has to be
socialised to democratise power".
Therefore, on the basis of this approach, the first thing he did when he came
to Mondragón was to create the Polytechnic School in 1943 (today Mondragón
Eskola Politeknikoa), which during all these years has been the main source of
managers and skilled workers for our co-operatives.
Education and In-Service Training, both in the co-operative and professional
spheres, continue to be key elements for the development and consolidation of
our Co-operative Experience.
http://www.mondragon.mcc.es/ingles/experiencia.html
Revised: November 1996