From a SHAREABLE article that was published by Too Much, June 30 2015, titled; Mondragon Corporation: A Manufacturer of Equality, Josu Ugante, a 27 year employee and 7 year president of Mondragon International was interviewed with the following excerpts:
- How are manager-worker pay differentials determined within the various Mondragon enterprises?
– We have limits on all our co-ops. No manager within any co-op can make more than six times the salary of any worker in the co-op.
- The lowest-paid Mondragon associate in Spain is making about what?
– About 28,000 euros ($32,000)
- Why do you all in Mondragon pay attention to the gap between top and bottom compensation?
– Because at Mondragon we are the owners. Every associate is an owner of the company, and we consider a maximum acceptable pay difference one of our solidarity tools.
- Why is solidarity important? In the US, no executives at General Motors or Microsoft would say that their enterprises value solidarity. Why does solidarity matter to you?
– We are a cooperative. We are different. For us, people are our most important asset.
- So where do your executives come from? Are they people who come to their executive position from outside the Mondragon network or are they mostly people who come up through the Mondragon ranks?
– Inside Mondragon, we give a lot of training for our people, and, unlike other companies, our hierarchical structure is very flat. We also keep information within Mondragon very transparent. All associates can access basic financial information about the company – because we are all the owners. In this environment, we get all our executives from inside. We promote from within and have more than 100 Mondragon companies and associated entities, so we have a lot of opportunities in different companies to promote.
- Defenders of the current corporate order in the US like to claim that you can’t effectively run a major modern business enterprise without paying top executives great gobs of compensation. At Mondragon, you clearly disagree.
– We are not losing out for managerial talent because of our pay limits. For us it is difficult to understand huge pay differences. We feel that the values and the solidarity of our organization kind of give wealth that doesn’t express itself in money.
- What sort of wealth?
– We want to transform our society. We want to have a more equal society. For us to be near the best society in terms of equality, is really important to us.
In the factories that you run abroad, how do you handle compensation?
– For the worker salaries, we pay higher than local society norm. We always pay higher than the prevailing wage. And we offer for our companies abroad the possibility of organizing as a cooperative, but they haven’t wanted to choose that option yet.
- Why don’t they want cooperative status?
–I think because to become a cooperativist, you need to make some tough decisions in tough times that may involve cutting the salaries or increasing the hours of fellow workers, including your own, when times demand it. In the co-ops of Mondragon, if we are losing money, we decrease our salaries, our anticipation of results.
- And the salaries are reduced by your one-to-six ratio?
– Yes, we always maintain this ratio.
- So if there is sacrifice, people at the top make sacrifices, as well?
– Yes, we want to be in for the long-term. We are all owners. As cooperativists, we all have capital, equity, in our company. This equity starts now with 15,000 euros ($16,491) we each put into the company to become an associate. The company allows you to pay this 15,000 over 24 months, taking out a little bit from each salary paycheck. This equity grows over time, as our enterprises within Mondragon have profits. So we have, in effect, three kinds of income at Mondragon: Our salaries, the growth in our equity in the company and the interest Mondragon pays on that equity.
In his book published in 2012, The Cooperative Solution, E.G. Nadeau highlights the sector-by-sector review of cooperatives in the United States according to the UWCC (University of Wisconsin Center for Cooperatives) as follows:
- 29,300 Cooperatives in the United States
- 515 Billion in Revenue
- 860,000 Employees
- 351,000,000 Members
- Biggest Sectors are Mutual Insurance – 233,000,000 Members, Agriculture – 2,900,000 Members, Credit Unions – 93,000,000 Members, Rural Electric – 18,000,000 Members and Social Service – 1,600,000 Members
- Worker Cooperatives – 220 with 55,000 Members
In her article written in the Fall 2014 Issue of Yes Magazine, titled “How America’s Largest Worker Co-op Lifts People Out of Poverty,” Laura Flanders writes about Cooperative Home Care Associates (CHCA), Bronx, NY., the largest Worker Cooperative in the United States.
After 17 years as a home health aide at CHCA, Zaida Ramos recently celebrated her daughter’s college graduation. She is paying for half her son’s tuition at a Catholic school and she’s a worker-owner in a business where she enjoys flexible hours, steady earnings, health and dental insurance plus an annual share in the profits. Bronx is also home to an array of 23 co-ops, from the large CHCA to the small Green Worker Cooperatives, which incubates local green businesses. CHCA is the only Worker Cooperative of those that employees more than 70 people.
At CHCA, workers become “owners” with a buy-in of $1,000, paid over time. The company had $64 million in revenues in 2013. They have raised wages, $16 per hour with benefits, plus guaranteed hours 36 average, and family health insurance. Turnover stands at 15% and the ratio between CEO-to-minimum-wage-worker hit its high in 2006 at 11:1.
After 92 years, the Federation of Protestant Welfare Agencies (FPWA) fight against poverty, its leaders are clear: “Making sure that a safety net exists is not enough to help New Yorkers have satisfying lives. We needed a new approach to workforce development that would not only reduce poverty but also promote upward mobility, and that’s where co-ops can be an anchor,” says Wayne Ho, FPWA’s chief program and policy officer.