Institutionalization is briefly the process of developing or transforming rules and procedures that affect human relationships. To elaborate further, institutionalization is the ability of an institution to carry on and develop its activities without being dependent on certain individuals. Institutionalization encompasses data analysis, successfully transferring to new areas, and management with outcomes. It ensures the improvement of existing goals and the establishment of new ones.

How Does Institutionalization Happen?

Institutionalization requires every employee and manager within the company, even if they are new hires, to understand the purpose, mission, and vision of the job. The company’s instructions, policies, and strategies visually must be made apparent via technology, holding meetings, and documenting these processes for institutionalization to begin. Utilizing technology in institutionalization is essential. Furthermore, while doing this, the company should continuously renew and improve itself.
Institutionalization occurs by keeping up with the times. It is important for companies or institutions to first define their vision and mission while fulfilling them during institutionalization. The company’s operations depend on this. By determining and internalizing shared goals and ideas, fundamental principles of vision and mission are also established. Another step that facilitates institutionalization is the definition of the upper management structure within the company or institution.
The most crucial requirement for a company during growth is to define the roles and who will fulfill them among top management. A company or institution wishing to institutionalize must determine the number of board members and how and when meetings will take place. As institutionalization will bring growth, different departments may be needed over time. Therefore, structuring human resources is essential for institutionalization. All these requirements represent the path to institutionalization and pave the way for your company’s institutionalization.

What Are the Benefits of Institutionalization?

The company institutionalization offers many benefits. First and foremost, it provides a solid business structure definition as institutionalization allows the business or company to be based on foundations supported by successful practices. While doing this, it also supports and safeguards the continuity of characteristics such as growth and permanence needed by the company or business. Additionally, institutionalization formalizes positions such as board membership and director, strengthening governance bodies while allowing operations to continue without being dependent on them. It creates an environment conducive to making strategic decisions effectively without causing delays in operations. Of course, to achieve this, the company must conduct itscorporate governanceactivities in a controlled manner. This,monitors the company's performanceand enables it to overcome risks that may arise during operations.
Institutionalization means that there is no uncertainty within the company. Each person’s position is clear, and productivity and professionalism in the company increase as everyone fulfills the requirements of their position. A company or business gains identity, mission, and vision through institutionalization.
Institutionalization facilitates the growth and longevity of a company or business. Because it brings professionalism, it is likely that the company will achieve successes and grow. However, to accomplish this, one must be systematic. A plan brings success.
Institutionalization fosters trust among people toward the company. When you are institutionalized, the people you hire and managers are expected to have a vision and mission and to work within a framework of professionalism. For this reason, people trust institutional companies and prefer them.

Why Is Institutionalization Important?

The greatest importance of institutionalization is that it is not dependent on specific individuals. In other words, work does not get interrupted when the manager or other executives are absent; it continues. What matters is not the individuals at the head of the company but the company itself. Every employee of the company is important. In times of crisis, it can continue operations with its employees without interruptions. This ensures that growth trends also persist.
Another significant importance of institutionalization is its ability to catch up with the times. You are living in a world where technology is developing rapidly, and you can access everything easily. With the spread of globalization, institutionalization enables you to grow your company and compete even with firms on the other side of the world.
Institutionalization is important for creating a strong human resource power within the company. Due to the company's growth, the number of skilled individuals that you can hire also increases. This significantly adds strength and energy to the growth processes of businesses. On the other hand, institutionalization helps businesses evaluate areas such as technology and information systems.
Moreover, institutionalization is crucial for businesses to make assessments in areas such as technology, information systems, and management systems. An institutionalized organization can effectively identify existing and future risks.

Principles of Institutionalization in 5 Steps

There are many principles of institutionalization. However, there are certain key principles that are necessary and important to succeed in institutionalization. It is vital for both employees and managers to acquire these principles. The principles of institutionalization in 5 steps are as follows:
● Responsibility: The first principle of institutionalization is responsibility. Every company has its goals and desires. To fulfill these, every employee of the company must take responsibility. Employees must be responsible for the requirements of their departments, their jobs, and their work ethics. At the same time, managers must also take responsibility for risky or high-level decisions.
● Effectiveness: Success is a purpose for institutionalization, and in pursuit of this purpose, the company must effectively use its resources to achieve its targets.
● Accountability: While companies or institutions fulfill their operations, they utilize resources. These resources must be used fairly in the company’s resource usage. This principle requires fairness and accountability when necessary. Adopting this principle allows for obtaining more significant resources and consequently accelerates development.
● Transparency: The most critical aspect in corporate companies is the feeling of trust. This can exist between employees and management or between the company and customers. Gaining people's trust is extremely important to ensure your company’s growth. Therefore, the institution or company must be transparent. It must provide accurate information to consumers or customers at the desired time. Being transparent prevents fraud-like incidents and increases the feeling of trust.
● Consistency: When companies are institutionalizing, they must act consistently with the goals and desires they set. They must not abandon their vision and mission. Acting consistently allows people to enter the right expectations in the company and helps strengthen it.

Is Institutionalization Necessary?

The necessity of institutionalization depends on your goals and desires. If you want to remain a small company and are satisfied with it, there is no need to pursue institutionalization. However, if you wish to grow, expand, and open up, institutionalization is a necessity. Without institutionalization, achieving professionalism and growing or developing is unlikely. This is because our current world, influenced by globalization, has made institutionalization a prerequisite for growth and expansion. You must keep pace with the times and adapt to it.

What Is the Purpose of Institutionalization?

The purpose of institutionalization is for companies to be able to continue their activities without being dependent on individuals. It ensures that managers are temporary, while companies are permanent. However, the incoming managers and employees must know the company's goals and principles, internalize them, and fulfill their duties. It also aims to prevent mistakes, wrongdoings, and disputes within the company.
Additionally, it is successful to create management planning, guidance, coordination, and audits, which are stages of institutionalization. Goals, tasks, and strategies are essential for the continuity of the company.

Where Should Institutionalization Start?

If the upper management of companies or institutions wishes to institutionalize, it should be commenced when it shows signs of growth movement. Instead of entirely starting from scratch, it can begin by establishing an accounting system. This is because a system that collects and stores financial information is vital. Such a system contributes to success in the path toward institutionalization by creating links between management and other business characteristics. Additionally, the foundations you acquire while starting institutionalization should be the starting point of your goals. Approaching the problems encountered along this path with the principles you have set can ensure continuity for your company.

What Is the Difference Between Corporate Governance and Institutionalization?

Corporate governance is the system by which companies are guided and controlled. Boards of directors are responsible for managing their companies. The role of shareholders in governance involves appointing directors and auditors and ensuring that a proper management structure is in place. Among its responsibilities, the board is to define strategic goals for the company, provide leadership to achieve these, oversee the management of the business, and report the governance to the shareholders. Therefore, corporate governance deals with what a company’s board of directors does and how it determines the company’s values and should be distinguished from the company's dailyoperational managementcarried out by full-time executives. The most notable distinction between corporate governance and institutionalization is the concept of