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Mondragón and the Other Fr. José María

Mondragon Corp
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A new way of doing business.

Here’s a closer look at what Fr. Arizmendi (who now has a cause for his canonization underway) and his team accomplished:

Let’s pretend you are a twenty-something college grad looking for a job today. You get an interview with a certain international company (a cooperative, the brochure says) which looks interesting and has a great — indeed, fabulous — track record. For example, they simply don’t lay people off. Worst case, they transfer them to other groups in the organization which is set up as a network of cooperatives. Even the global recession in 2008 affected them comparatively little.

Waiting for your interview, the HR person hands you a description of the company’s organizational philosophy, their Basic Principles. They are as follows (just for fun, I add responses a typical applicant in today’s job market might make in ital):

1. Open admission. Our company is open to all persons who are capable of carrying out the available jobs. There is no discrimination based on religious or political grounds, nor due to race, gender, age, or socio-economic levels. The only requirement is the acceptance of these Basic Principles.

OK, fine — not so unusual but good to see spelled out in print. I think this means they hire poor people, too.

2. Democratic organization. Workers are owners, and owners are workers. Each cooperative is managed by a system of “one person, one vote.”

Wait, what? I’ll be an owner? What does that even mean? I get a “vote”?

3. Sovereignty of employee’s work over capital. Workers join our company and become owners after making a capital contribution at the end of a trial period. All workers are entitled to an equitable distribution of profits. The return on saved or invested capital is just but limited, and it is not tied to the surpluses or losses of the cooperatives.

So this is not just some little employee stock ownership plan — we’re getting a share of profits? “Not tied to profits or losses”?! How can they do this?

4. Subordinate character of capital. Capital is a means to an end, not an end in itself. Available capital is used primarily to create more jobs.

Never heard of such a thing. They act like jobs are sacred or something. How can the creation of jobs be a company goal? Labor over capital?

5. Participatory management. Worker-owners participate in decision-making and the management of the cooperatives. This implies development of self-management skills. Formal education and adequate information is provided to improve worker-owners’ ability to participate competently in decision-making.

Me? A decision-maker? Already? Is this part of that crazy “open book” management thing?

6. Payment solidarity. Remuneration is regulated internally and externally. Internally, an agreed differential between the highest and lowest paid job is applied. Externally, a remuneration level is maintained in relationship with similar local industries.

Huh. I hear the wage ratio is about 5:1 in this company. So the CEO will not be making 300 times what I’m making? Won’t he be steamed about that when he finds out it was the worker-owners’ decision?

7. Intercooperation. Cooperatives form groups to pool profits to absorb worker-owner transfers when necessary and to attain synergies. These Groups associate with each other to support corporate institutions. Our company associates with other cooperative organizations to promote the cooperative model.

Aha! Now I get it: this is a cooperative! But it makes $24 billion in annual profits? I thought coops were just a hippie thing!

8. Social Transformation. Our cooperatives invest a majority of their profits in the creation of new jobs. Funds are also used in community projects and in institutions that promote the regional culture.

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