The Role of Globalization in Business

The advent of globalization ushered in a period of revolution in the business world. The expansion of the market and product chains demands the involvement of better and productive business models. Primarily, organizations have had to change to reflect the changes in consumer preferences and industrial evolution. Embracing factors such as new technology meant to address a wider market necessitates the need for companies to review their human resource approaches. The Mondragon’s co-operative and democratic model presents an example of a human resource theoretical framework which underlines institutional operations (Etxagibel, Cheney and Udaondo 2012, p. 78). This paper seeks to examine whether Mondragon’s cooperative and democratic model helps or hinders the performance of its human resources when competing in a globally competitive market.

Globalization can be defined as the worldwide inclination among individuals and organizations towards an integrative community (Croucher 2018, p. 31). As a common feature of the contemporary society, globalization seeks to unite people in the attempts to achieve collective development across the world. The term reflects the people’s willingness to overcome their historical, racial and economic differences. Notably, globalization is a culmination of technological advances and revised political policies which encourage improved relations (Hay and Marsh 2016, p. 71). The phenomenon affects the political, social and economic elements of the community. Alternatively, human resource is a term that is often invoked to explain individuals and skills that are available in a given institution to streamline productivity. When competing on a global scale, the success of cooperatives will majorly depend on its ability to channel and direct the available human resources towards the achievement of ultimate success (Errasti et al. 2003, p. 560). The Mondragon experience offers insight on the relevance of internal policies in streamlining efficiency. In assessing the effectiveness of Mondragon’s co-operative and democratic model, the current study will be predicated on Maslow’s Hierarchy of Needs theory. Primarily, the correlation between the latter theory to the organization’s model facilitates the reflection of the importance of involving employees in the generation of decisions affecting the organizational community.

According to the Mondragon website, the organization is a business-propelled socio-economic project which houses several independent cooperatives in the Basque Country (Mondragon 2018). Some of the elements that inspire functions in the organization include commitment to the environment, the competitive environment and the satisfaction of client needs. The vision of the company highlights the desire to become a committed people with an integrative identity, which facilitates the development a profitable and globally pervasive business venture (Mondragon 2018). In achieving the pre-established organizational goals, the institution is guided by the values of cooperation, participation, social responsibility and innovation. The co-operative and democratic model that is assumed by the organization stems from the defined values.

Outline of the Company’s Human Resource Approach

Mondragon is an institution that is committed to the realization of success on a global scale. The organization is home to 266 companies and co-operatives, 80,818 people and 15 technology centers (Mondragon 2018). Mondragon’s co-operative and democratic model addresses our business areas which include finance, industry, retail and knowledge. Alternatively, the Mondragon bodies include Co-operative Congress, divisions, the standing committee, general council and industrial council (Mondragon 2018). As frameworks of management, the bodies regulate the daily running of the institution and the various factors within the institution which require alignment.

The Mondragon co-operative and democracy model is committed to the improvement of the lives of employees who form a part of the institution. According to Lafuente (2017), Mondragon is inclined towards the provision of power to the employees in the institution. Granting employees increased influence over operations in the setting serves the purpose of encouraging initiative and streamlining improved relations internally and externally. Using Maslow’s hierarchy of needs, the organization’s management model is observed to be an efficient tool in encouraging and cementing employee motivation. According to Maslow’s theoretical framework, increased productivity calls for the engagement of various policies which improve employee drive, motivation and loyalty (Sadri and Bowen 2011, p. 45). People have a hierarchy of needs which need to be met in the workplaces. The model assumed by the Mondragon corporation seeks to address the various elements of Maslow’s hierarchy of needs. The various employee needs that are addressed by the democratic management model include physiological needs, security needs, belongingness, esteem needs and self-actualization needs. Institutionalization of governance at Mondragon is aimed at providing human resource with the power needed to streamline the decision-making process (Ridley-Duff 2010, p. 127). Such an approach addresses their security and psychological needs. Knowing that they are a part of the company’s indispensable fabric, employees are assured of the security of their jobs. The sense of satisfaction among employees is also enhanced when they are provided with the platform upon which they can participate in the opining phases.

As a change and leadership framework, Mondragon’s co-operative and democracy model addresses the need for the engagement of openness and democratic principles in employee interactions (Leyton 2013). Overall, the policy addresses several areas of the relationship between the administrative body and employees at Mondragon corporation. While it is guided by specific principles, the extent of application of the model is subjective. The organizational structure tends to influence the model integration process. The need for training, as highlighted by the organization, is also an extension of Maslow’s hierarchy of needs (Benson and Dundis 2003, p. 316). Self-actualization demands constant improvement in both skills and knowledge. In line with the principle, Mondragon’s policy ensures that employees are provided with the resources and opportunity to advance their careers through training. Thus, Basterretxea and Albizu (2010) argue that the training measure assumed by Mondragon accounts for the organization’s ability to retain employees over a longer period of time. Alternatively, the model’s commitment to the improvement of employee welfare serves the purpose of promoting talent. Through the developed abilities, individuals working in the subject corporation will be able to realize sustained career growth (Basterretxea and Albizu 2011, p. 202). Primarily, employees are able to achieve self-efficacy which in turn augments their loyalty and effectiveness. Successful human resource structures provide pillars which provide employees with the power to extend their learning experiences.

Globalization demands the integration of measures of diversity, which are intended to embrace employees from all segments of life (Moreno 2006, p. 57). Diversity management is an intrinsic part of Mondragon’s co-operative and democratic model. The open admission policy that is engaged in the organization ensures that the organization does not discriminate the available employees based on their religious affiliations, ethnicity and politics. According to Extagibel, Cheney and Udaondo (2012), Mondragon hosts a large, diverse community (p. 76). Given the large number of corporations that are hosted by the institution, successful operations demand the engagement of a guiding framework which streamlines discussions between the involved parties. The model that is assumed by Mondragon in overseeing its mandate mitigates conflict through the promotion of the individual interests of the different partners in the institution. Without the framework, priorities would be unevenly distributed to promote the interests of some partners above others.

The human resource approach at Mondragon is majorly predicated on the democratic principle. According to McCrea (2012), all of the decisions that are made in the institution have to be deliberated upon collectively. The decision-making process is overseen in the General Assembly, where every stakeholder in the organization is involved. Each individual partaking in the decision making is subject to the one-person, one-vote policy. The framework ensures that views are proportionally reflected to mitigate conflict. Mondragon’s success in the co-operative industry is a culmination of the institution’s commitment to the democratic policy. Such an approach ensures flexibility in the execution of organizational goals. From the intervention, decisions can be inferred in a timely and efficient manner. In examining the policy, Tremlett (2013) contends that the democratic approach is critical because it provides the company with the flexibility to address issues such as wage cost cuts. Overall, the Mondragon co-operative and democratic model helps the performance of its human resources when competing in a globally competitive market.

An Evaluation of How Well the HR Policies and Practices Work

Human Resource Unity of Purpose

Competing on the global scale requires the engagement of a specific purpose which defines all operations that are overseen in the organizational setting. Mondragon’s co-operative and democratic model facilitates the establishment and realization of a comprehensive purpose. Given the model’s commitment to the democratic principle, all of the major stakeholders and employees are involved in the development of the organization’s goals and purpose. From the initiative, some of the areas of concern can be highlighted and collectively deliberated upon. Human resource unity of purpose is critical to promotion of quality of services that are rendered by Mondragon. According to Leyton (2013), the corporation’s co-operative and democratic model encourages the involvement of employees in the management of the business by providing a collective decision-making platform. The significance of such an approach in promoting human resource initiative and drive cannot be overstated. From the increased motivation, the available human resource personnel will be willing to expend more efforts in the realization of Mondragon’s competitive edge.

Involving employees in the generation of the organization’s goals serves to mitigate resistance. In reflecting on the significance of employee input in the achievement of organizational goals, Chen and Huang (2009), argue that innovation is enhanced when employees are encouraged to partake in the discussions that lead to creation of products and provision of services (p. 106). Expectedly, a divided institution will be less likely to streamline human resource efforts towards the achievement of a specific goal. Developing an operational system that embraces a pre-established purpose accounts for the success of Mondragon Corporation. From the determined premises, the human resource is able to delegate duties depending on the strengths of the individuals who are available in the Mondragon institution. Being the first step in the realization of efficiency, unity of purpose promotes the organization’s value creation and thus augmenting consumer satisfaction. Such initiative is even more crucial in the era of globalized competition. Productive and experienced employees are no longer impressed solely by the remuneration packages that are offered by organizations. People need to feel appreciated and recognized for their efforts. Mondragon’s Co-operative and democracy model ensures that such a goal is achieved.

Efficient Capital Collection & Wage Solidarity

Unlike other organizations, Mondragon is committed to a subordinate form of capital. The approach ensures that the available human resource forms a critical part of the capital generation process. As a negation of the prevailing corporate practices, Mondragon’s capital collection approach provides its employees with influential power regarding the direction of the organization. Global competitiveness calls for dynamism in corporate practices. Without the power to influence the organization’s choices, Mondragon could experience challenges in evolving to embrace changing consumer needs. For instance, one of the biggest issues in the business world today relates to the need for the conservation of the environment by major business players. The quickness and rapidity by which capital is secured by organizations shapes their competitiveness in the global market (Turner and Robson 2007, p. 67). In the era of rapid shifts in consumer preferences, companies will be compelled to embrace capital collection interventions that are effective. The initiative serves to provide the employees with direct influences over the decisions that are made in the corporations (Williams 2016, p. 34). Mondragon’s democratic model invokes the help of all stakeholders in the generation of capital. From the measure, the human resources in the institution will be able to compete on a global scale.

The wage solidarity framework also ensures that employee remuneration rates are in line with the prevailing sector payments (Altuma-Gabilondo 2013, p. 2). Financial motivation reflects Maslow’s hierarchy of needs framework. As a rewarding tool, the organization’s remuneration model serves to inspire human resource to expend more efforts in the execution of duties (Sadri and Bowen 2011, p. 48). Mondragon will be able to compete on a global scale if it is able to engage rewarding measures that are instituted to streamline efficiency among the employees. Currently, as the leading co-operative player in the Basque region, the organization is provided with a vast array of employs who perform different roles (Tremlett 2013). To retain the skilled manpower, Mondragon’s co-operative and model approach lays the ground upon which successful deliberation on an efficient pay structure can be inferred. The relevance of such an initiative is found in the loyalty which is inspired among the employees as a result of the policy.

Expansion and Innovation

One of the major challenges that is experienced by organizations in trying to compete on a global scale relates to the concepts of expansion and innovation (Mavondo, Chimhanzi and Stewart 2005, p. 1260). Given Mondragon’s commitment to the realization of ultimate success across the Basque borders, the relevance of the institution will be influenced by the levels and degrees of innovation which are instituted to promote efficiency. While expansion is beneficial in the long run, it may inspire a shift in the methods by which the internal system is run. According to Flecha and Ngai (2014) constant expansion may lead to the jeopardy of internal operations (p. 673). Subsequently, Mondragon’s commitment to the participatory approach will ensure that it stays relevant in the market by instituting ides that are relevant to the prevailing circumstance. As an extension of the corporate management model, Mondragon’s approach ensures that individuals are able to highlight some of the challenges that affect the expansion initiatives (Freundlich, Grellier and Altuna 2009, p. 2). Such an approach provides an opportunity through which the members of the subject institution will be able to deliberate and formulate policies which are bot internally and externally efficient.

As a human resource approach, the model employed by Mondragon ensures that the available resources are optimally applied to generate maximum benefit for the institution. As the organization has expanded, the commitment to the model facilitates satisfaction for both the lower level employees and administration body in the subject cooperative (Lizarralde 2009, p. 27). Expansions may also result in conflicts between parties in the institution. However, the open communication framework that underlines operations in the subject organization ensures that the parties involved are able to generate findings that are relevant to the given course. The criticality of open communication in the realization of organizational objectives is witnessed during the deliberation process (Camison and Villar 2009, p. 131). Individual creativity tends to be manifested when parties are allowed the opportunity to voice their opinions. Interactions between the administrative body should be pegged on an open policy approach to ensure that all areas of development, and diverse consumer needs, are considered before a decision is inferred on the way forward.

Conclusion

Mondragon’s model co-operative and democratic model can help the performance of its human resources when competing in a globally competitive market. The internationalization of the organization warrants the involvement of an expansive strategy which will reflect the need for innovation and diversity. As an institution that is committed to addressing global needs, Mondragon’s democratic approach to human resource provides it with the platform needed to streamline creativity. The approach reinforces diversity which is an indispensable part of the global business setting. Diversity in the internationalization of cooperatives encourages the embrace of individuals from different political, social and economic standings.

The Mondragon approach overcomes the frequent contradiction between worker welfare, autonomy and participation on the one hand, and competitiveness and high performance on the other. As a participatory framework, the Mondragon model ensures that people deliberate over the available opportunities that can be used to streamline performances. All of the challenges are examined and thus providing a clear way through which efficiency in the corporation can be achieved. From the measures instituted, the organization will be able to achieve ultimate success on the global platform. As the organization has expanded overtime, Mondragon has been able to overcome some of the challenges relating to the progress. For instance, the issue of capital and control has been resolved by limiting the collection initiatives to internal stakeholders. Given that they are the ones who benefit from the initiative, providing employees with the power to influence decision making encourages initiative in the institution. Their model could indeed provide a model of a new form of ‘co-operative capitalism’. While Mondragon is committed to the generation of revenue, as a modern form of capitalism, the human resource model ensures that the control of the organizations is spread across the entire institution.

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