“This is a people society, money is only a resource”

-Mikel Lezamiz, Director of Cooperative Dissemination at Mondragon-

As part of a group of 17 people from the Co-Lab at MIT, we all had lots of questions during the initial orientation. Our guide and primary teacher was Mikel Lezamiz, Director of Co-operative Dissemination at Mondragon.

He’s spent seventeen years taking hundreds of groups from all over the world through the Mondragon experience that usually lasts a week. While the goal is to limit groups visits to one a month, the demand is so great that there is often a group visiting every week of the year. Below is a Q&A with Lezamiz about this shining international model for worker cooperatives.

When someone’s job is eliminated from one of the co-ops, how do you find a job for them in another co-op?

“At the headquarters office of the Mondragon Cooperative Corporation (MCC) there is an Human Resource person in charge of talking to other co-ops to find out if they have job availability. Two percent of my salary is put into an employment fund that pays for this HR service. Furthermore, if I was making an equivalent of 100 and because of relocation my new salary is 80, the employment fund pays the difference for up to 2 years.”

How does the Spanish safety net system work?

“You usually get unemployment payments for 1/3 of the time of your job tenure. For instance, if after three years you lost your job, then you will get payments for one year.”

How do you compete against the business practices of China?

“With quality and good service. We have a co-op that produces bicycles called ORBEA. These bicycles are very expensive ($5,000 to $20,000) but much better quality than the Chinese products. I recommend that you read an interesting paper “MONDRAGON Innovating a Human Centered Globalisation” by Nick Luzarraga, PhD (Author’s Note: Dr. Luzarraga was part of our own MIT group). The major conclusion of this paper is that when we [Mondragon] create two jobs abroad, we create one locally.”

Are workers in your international locations also cooperative members?

“No, not yet.” (This was a topic of almost every conversation. Many worker/owners identified it as the #1 challenge for Mondragon. At numerous international factories were efforts were made to convert employment into cooperative ownership, local employees were unwilling to invest their own salaries in an ownership share. While these efforts were unsuccessful the consensus of our group is that greater structural innovation and flexibility is required on Mondragon’s part.)

How do wages compare between how much you pay here in Mondragon and in factories you own and operate internationally?

“We offer not only wages but also other benefits that make labor stable. We definitely pay more than our competitors so that labor does not leave our co-ops.” (However, there is currently no independent verification of formal benchmarking in place.)

Do you have a problem with managers leaving your co-ops for General Electric, General Motors or other international industrial conglomerates?

“No, because we offer our workers much more. Our workers are at the top of Maslow’s pyramid. In other work places, workers are dealing with lower levels of the Maslow’s pyramid.” (Hiring managers however, when salaries at Mondragon are often a fraction of the marketplace is a different challenge.)

What would you say are your biggest challenges?

“How can we maintain the cooperative values and principles when we expand to other countries. Neither in Mexico, nor in Brazil, have we been able to make our employees co-op members. Mondragon is based on a commitment through solidarity and using democratic methods. It has been challenging to stick this commitment in other places outside of Spain.”

How does one join or become a member of a coop?

“First, you must have the necessary technical knowledge, then there must be an open job. Everyone joins as a temporary worker for one year, after one year you pay 10% of the access fee (15,000 Euros that is mostly deducted from your salary). You must also have social competencies. After a year, the selection process begins to determine if someone should be considered for permanent membership. After you pass the one-year mark, the board determines if you should become a temporary member for the next 3 years. If so you pay the other 90% of the access fee, sign a development plan. 80% of the coop employees must be members, a maximum of 20% of non-members is allowed. Once a member, you remain a member even if you move to a new coop.

Read my other blog posts on the my Mondragon experience to learn more about this unique business model’s history, commitment to cooperative principles, governance model, and business strategy to put people before profits.