Adam Pieniazek

Umass - Amherst - SCH-MGMT - 365 Business and Its Environment
Summer 2007 Discussion #10

1) What are the characteristics of the Mondragon cooperatives that you find most different from businesses with more familiar organizational forms? 2) What assumptions seem to underlie the Mondragon? 3) What do you think about these characteristics and assumptions?

Democracy + Personal = Good; Democracy + Professional = Bad?

Our society’s belief in the virtue of democracy, when applied to our personal lives, yet our insistence that democratic principles in the workplace will lead to inefficiency is a bit ironic and odd. We value the role and rights of the individual in our society in almost every arena except in business. What makes the economy so significantly different from the rest of society that we must remove our democratic ideals when we clock into work? Do we truly believe that letting the prisoners run the prison is to be feared and avoided? Or, did a small, elite group of powerful individuals realize that true power lies in the economy and thus collude to prevent the mixing of democracy and commerce? Is a market truly free if its power lies in the hands of the few rather than the many?

Apparently, the notion that democracy is a great system to live under but an inefficient system to work under is a common American belief, which allows for corporations and other organizations to institute whatever structure they deem necessary. The duality of our American society, democracy in personal lives, capitalism in professional lives has created a split American society, where ideals and values from our personal lives do not carry over to our work lives and vice-versa. The Mondragon cooperatives are an attempt to eliminate this conflict and bring personal values into the workplace. The roots of the Mondragon cooperative date back to a Spanish bishop who started a school funded via donations from the citizens of the town of Mondragon. The graduates of that school went on to create the ULGOR company, which held principles of being owned by the workers, who would each receive one vote in the system’s truly democratic management system. The workers were also required to invest in the company, so that ownership of the company remained within the company, rather than being bought by outsiders.

Here, we see the first difference from traditional organizations. Every worker is treated equally, whereas a majority of corporations have a strict hierarchal structure. Further, each worker is required to buy their way into the company, whereas most companies depend on outside capital to fund themselves. These two features create a sincere and deep commitment among the workers to the success of ULGOR. The average worker shows up to a job, performs his/her duty and in turn gets a paycheck; the workers of ULGOR had to devote themselves to the company because they were the owners, and if the company failed they’d lose their wage and their capital. One assumption here, is that there are individuals who are willing to, in essence, pay for a job. Although the membership fee for a Mondragon company is actually capital which provides each member with an equal share in the company’s organization, it is also a significant sum of money to be giving to a company, for which you may not even enjoy working for.

It’s a unique tactic, but as the sheer size of the sales figures for Mondragon show, it’s apparently successful and well-liked. It must also act as a filter for Mondragon, where the membership fee eliminates employees who are simply looking for a paycheck and have no desire to work on developing an organization. It also acts as a filter in that an employee must have enough capital, and thus must be either successful outside of Mondragon, or have a lot of confidence in their fit with Mondragon’s culture to obtain a loan for the membership fee. Personally, depending on the company and the size of the membership fee, I feel I would quite enjoy owning an equal portion of a company and working democratically with my fellow employees to better the company and achieve its goals. The principle of each member having an equal say in the organization also appeals to me. We’ve seen many examples of top executives who run a company according to their vision, rather than what’s best for the company. Mondragon’s method realizes that good ideas can come from anywhere, and that unpopular ideas will likely fail due to a lack of commitment among workers.

Still, by giving the power of decision-making to all employees, Mondragon also eliminates a large number of complaints and poor attitudes towards management, as all the employees are in essence managing themselves. In many companies, bitter fights break out over compensation and whose idea is correct, with the individual or group with the highest position power often settling the dispute. At Mondragon, however, anyone can raise a vote and have the community determine the appropriate decision. Another assumption here is that each employee is educated enough and has enough of an incentive to vote for decisions that are beneficial for Mondragon. For instance, although infinite vacation time and very early retirement might be popular concepts for a majority of workers, they obviously would damage Mondragon if every employee was constantly on vacation or retiring after a few years of service. The membership fee and financial tie-ins to the performance of Mondragon act to encourage employees to consider the future growth of Mondragon as a prime objective, however they might not be enough for every employee.

For those employees, education at a Mondragon institution could help those employees understand the Mondragon way and work to improve the Mondragon method. Education is an important aspect of the Mondragon system, and any new Mondragon enterprises must have their leadership study at the Empressarial Division for at least two years before they’re allowed to start their venture. It’s an excellent method that ensures the leaders are dedicated to their entrepreneurial project, and surely contributes to the high success of Mondragon start ups. Here, an assumption is that competitors won’t beat Mondragon to the market, and that if they do, Mondragon will be able to penetrate the market. There are certain industries where the first few companies to the marketplace will quickly capture a significant share of the consumer base and thus act as barriers to entry for any new companies hoping to join the industry. Mondragon’s line of thought appears to be that they’d rather miss market opportunities, but be sure they have a good product and company when finally entering the market. Though I agree with Mondragon’s principle of forcing leaders to learn before starting a Mondragon company, it does seem that it puts them at a disadvantage in certain industries.

Although the majority of corporations are simply places to work and get a paycheck, we are seeing a “total system where one can learn, work, shop, and live”* in use by several large corporations. For one, the Google main campus location features benefits such as ““…a standard package of fringe benefits, but on top of that are first-class dining facilities, gyms, laundry rooms, massage rooms, haircuts, carwashes, dry cleaning, commuting buses…”, which helps [prevents] Google employees from needing to leave their offices, and instead allows them to focus on their jobs. In this sense, parts of the Mondragon way are used by other companies. The assumption here is that it’s OK for a person to stay in one place, surrounded by the same people for long periods of time. Both at Google, and in the Mondragon total systems, it might be wise to force employees to leave the environment every now and then so as to not become stagnant and to get a fresh perspective on life within the environment.

A few years ago, the mother of one of my best friends, let’s call her Mary, talked to me about another one of her sons, let’s call him Joe, who had always been somewhat of a rebel and struggled fitting into “regular” society. During his early adulthood he simply vanished and cut off ties with everyone he used to know. His family was concerned but also realized Joe was exerting his independence and exploring himself and the world on his own terms. After a few years, Joe suddenly reemerged; happier, stabler, and seemingly better integrated into society as whole.

His family was very curious what happened to cause such a huge shift in their son and brother. He then began describing to his family his current way of life: his home life, where he lived with a group of people; his social life filled with a diverse group of people and personalities; and his professional life, where he worked for no boss and contributed and received in equal proportion to his colleagues. His mom, Mary, thought he joined some sort of communist cult! In reality, Joe had joined a cooperative, Twelve Tribes, which is in many ways quite similar to Mondragon. The parent organization of this cooperative is “a federation of self-governing religious communities” [wikipedia.org on Twelve Tribes], with restaurants and markets, such as the Common Ground Cafe and the Common Sense Wholesome Food Market. Although there are criticisms from ex-members, I found the Common Ground Cafe to serve excellent food, and meeting with Joe, he seemed happy and well-adjusted. For some people a co-operative way of life is beneficial, for others it is not. Although, the Twelve Tribes are an extreme example (as they live and work together), it shows that there is a demand for cooperative way of life.

The below picture from the Twelve Tribes home-page [somewhat ironic, considering they encourage giving up technology] shows assumptions people make about the Twelve Tribes members. All too often, we assume that groups such as Twelve Tribes and the democratic work system at Mondragon don’t work and require people to be forced into the system. Yet, we don’t consider whether the people within those systems are satisfied. It’d seem that if those directly impacted by such systems are OK with it and enjoy living under such circumstances, we should accept these groups and even learn from them.

*this quote and the background information for this post are credited to From the Ground Up: Essays on Grassroots and Workplace Democracy by C. George Benello