The Problem of Institutionalization of the Real Sector

After the 2001 crisis, Turkey achieved significant success in establishing the functioning of the financial system and especially the banking sector on certain principles. However, it did not take any steps to ensure that the functioning of the real sector was healthy. Turkey was left with an industrial sector that was extremely weak, inefficient, and based mainly on the assembly industry and that had not established its institutional infrastructure.

In the past, the most important step that could ensure the institutionalization of the real sector was the implementation of the new Turkish Commercial Code (TTK). However, both the insistence of companies in Turkey with the statement that "we cannot keep up with what this law brings" and the confusion that arose in the market as a result of the lack of clarity in the implementation circulars regarding the law led to the cancellation of the articles of the new TTK that were of great importance for the institutionalization of the real sector.

In a structure where institutions do not function well and where a boss-centered business management approach prevails, changes may be possible, but reforms that will bring about "economic development" cannot be discussed.

The boss-centered management approach does not encourage teamwork in any way. The decisions made by one person are imposed on the professional staff as absolute truth. Thus, the emergence of new products that can be triggered by different ideas, the implementation of more efficient working methods, better financial management, etc. processes and elements are disabled. This situation can lead to the point where the motivation to produce new ideas within the professional staff is broken and no new ideas are brought to the agenda anymore.

There may be different degrees of boss-centered decision making. In other words, in some organizations, ideas may be brought to the table in various meetings, but the boss always has his say. In this case, an organization loses its ability to be innovative.

The reason why most companies in Turkey are boss-centered is that the traditional business model has been accepted as the only and most correct model. Shareholders of companies are generally family members, and in many family companies that enter the professionalization process, the psychology of "losing control of the company" can come into play after a certain point. Thus, professionalization efforts are in vain and companies in Turkey cannot become institutionalized. In addition, most companies are not even aware of why they are entering into professionalization and institutionalization projects. They usually enter into institutionalization and professionalization processes because they believe that managing increasing turnover is not possible in any other way and because they have difficulty in business management.

In the institutionalization and professionalization processes, the fact that the shareholders of the company prefer traditional thinking and work with the wrong professionals and consultants can also play an active role in the feeling that the company is slipping away from them. I have seen so many people under the name of consultant in my working life that they can pretend to have problems that do not exist and then pretend to solve them and become the rising stars of family companies. However, when the failure of this consulting model is revealed, the trust of the shareholders in institutionalization and professionalization is shaken and the project can be shelved, never to be brought up again.

Transparency, honesty and having wide open communication channels are extremely important in every organization. However, in a structure that is becoming institutionalized and professionalized, it is necessary to name how the communication channels will work. Shareholders, who are already in a state of mind that we can describe as "is my company going to waste", need to understand well throughout the process that the value of their shares will increase with successful institutionalization and professionalization. Here, the task falls to consultants or professional people.

Which committees and/or boards will meet, how often, and what topics will they discuss? What will be the mission of these committees or boards, and which functions, not individuals, will be their participants? Which reports and what content will be prepared at the meetings to discuss the previously determined topics? If answers to these questions are not found and the meetings are not tied to a certain principle, complete chaos will occur between shareholders and professionals.

The fact that every shareholder is talking to the professional staff about every issue that comes to their mind at any moment and putting forward ideas regarding daily operational processes creates a completely confusing working environment for the professional staff. When different shareholders talk to the professional staff with completely different ideas on different issues, coordination becomes impossible. As a result, it is not possible to develop strategies that are in line with the written vision and mission of the company, if any. And everyone ends up blaming each other for the unsuccessful process that emerges.

Transparency and the use of communication channels based on transparency are of great importance in the development of new products, finding the right human resources according to the appropriate job profile, increasing financial efficiency, developing consistent communication in the company's external relations, developing the right production models with the right technologies, in short, in all functions of a business.

Thanks to transparent communication channels that can be established with committees and boards, elements that will contribute to the development of both businesses and the country, such as teamwork, in-depth discussion of new ideas, progress in every field, and being more competitive nationwide or internationally, can come together in coordination.

An organization that does not allow for innovation in its institutional infrastructure may contribute to the "growth" of a country, but it contributes almost nothing to its development. The difference in institutional structure development between the financial sector and the real sector in Turkey causes the connection between these two sectors not to be established sufficiently strong. Because, in this relationship based on mutual trust, sufficient trust cannot be established. It should be well known that the relations between these two sectors are not based solely on financing costs.