“Trained people will build better companies.”
-Director of New Member Training at Mondragon Cooperative Corporation-
What if the board members of every US corporation were trained in the basics of corporate governance – before they took office? Imagine that kind of business world.
Such ideas are not “what ifs” at the Mondragon Cooperative Corporation. They are realities. “Training must precede the establishment of a cooperative! Trained people will build better companies. To enter a cooperative you must value the community ahead of yourself,” our tour guide enlightened us.
He was speaking at Otalora, one of the cooperative’s thirteen universities and the equivalent of a business school – it’s where we spent several hours understanding the training program offered to every new coop member elected to a coop board or a as Governing Council Member.
Mondragon’s founders believed that the only way to understand and experience democracy was through the creation of cooperatively organized business. Yet, when it was founded more than 50 years ago, there was no domestic model of democracy or democratic management to grasp onto in a Spanish and Basque society controlled by a Franco-fascist dictatorship.
But there were ideals – primarily that of ordezkari, which means representative in Basque. And those ideals needed to be taught to the next generation. The founders’ belief was that to be an effective democratic representative necessitated training.
With 120 cooperative business and eight members elected to the board of each, there are almost 1,000 members that need to be trained. Because board terms are four years and 50% of the board is elected every two years that means there is a new group of 500 board members every two years (though members may be reelected).
Training is voluntary – though 56% of board members choose to get the training. Naturally, we all wondered why it’s not mandatory.
But as our guide reminds us, “We don’t want a student who is forced to be here. To learn you must be motivated. In a coop, everything is voluntary; everything that is mandatory is seen as negative. We honor everyone’s own will. If you don’t choose the training, perhaps you have something more important to do; however, when the Board faces a crisis, all of a sudden everyone wants training – fast. We get more people to want training by seducing them, not forcing them. The training is not just beneficial for you as a board member; it’s valuable for the rest of your life, for your family life, business development, and career advancement.”
He went on to detail how the trainings are conducted.
“For the first year, all those that choose will receive training. First, we determine the level of the individual’s competence relative to what’s required for them to fulfill their responsibility; then, we design a program to meet their needs.
Everyone who serves on the Board of Directors works in and is a part of the cooperative. That daily responsibility is the most important responsibility. To be elected you are likely to be perceived as a leader, or a potential leader.
As a Board member of an individual coop you must understand the ‘whole’ of Mondragon. This requires often a reprioritization of your own values to place the ‘whole’ above the needs of your own coop.”
Everyone learns the basics: Rules of the board, history, business concepts, how to read a P&L statement and a balance sheet. They also learn how to with one another through teamwork, delegation, sharing, communicating efficiently, being able to explain why a decision was made to other members of the coop, developing priorities, and analyzing data.
Leadership skills are also taught so members may be better able to manage internal democracy, handle conflict management, and know how to reconcile for the short- and long-term, the local and the global, the balancing of the heart and the head. Finally, they learn the power of generosity. “If you don’t have generosity you have nothing,” our guide explains.
If things are not working, a board member may be removed, but only by calling a meeting of the entire General Assembly. If they “fire” or expel a board member, the General Assembly must decide. Fewer than five people have ever been expelled. Lack of performance translates into lack of promotion, not firing. Mondragon does try to relocate members whose performance is unacceptable. (Anyone can choose to leave the coop at any time, or they can ask to move to another coop but – they must be admitted to the new coop.)
In selecting board members there is a preference for diversity, people who are elected tend to be young, under 40, particularly in the past five years.
The most powerful part of the training is the learning and passing on of Mondragon’s values. Family. Education. Solidarity. History. Members learn about the significance of the company they are becoming a part of. And it is not without reflecting on the good and the bad, that members learn from the past. As our guide recounted:
“Mondragon went through a period of huge growth for 15 years until 2008. Now, we face a time of crisis. When we had growth we paid less attention to our values.”
That highlights the importance of corporate values to a company – it’s the one thing that will help a company survive through thick and thin – training employees to pass on those values ensures that the next generation of the business will maintain its commitment to purpose.