Three components of business ethics

ethics-947576_640By Lucy Adams

Think your small business will survive without strong ethics? In a few years, you’ll see how wrong you are! The connection of business and ethics becomes stronger with every passing day, and it’s no surprise given the fact that modern companies are much more competitive if they stick to certain human values.

If you wonder how corporate ethics can benefit to your company, this article is just for you! Knowing the cornerstones of business ethics, you’ll be able to create a powerful team of professionals who will never cross the line in pursuit for short-term profits.

Components of corporate ethics

Business ethics is a set of moral rules in a particular sphere of human/company behavior. However, it can’t arise just like that – the formation of the entrepreneurship ethics is a rather complicated and slow process.

There are three key components of corporate ethics:

– Human values, which includes material benefits, the care of employees, and the creation of workplaces. When it comes to customers, good work ethics means fair advertising and value for money, as well as fair treatment of investors, shareholders, and partners.

– Macro level (the field of company’s activity) – the compliance with market competition and absence of discriminating against any of the participants of the labor market.

– World level – adherence to the ethics in relations with customers, suppliers, personnel and so on.

As an entrepreneur, you should treat all business opportunities not only from the perspective of your personal benefit but also from the position of complying with moral standards and key components of corporate ethics.

Triple bottom line (TBL) concept

In 1994, John Elkington, an American economist and entrepreneur, proposed his concept of a triple bottom line in business. According to the concept, any business should be based on three fundamentals of sustainable development: social, environmental and financial. Surprisingly, businessmen and companies sometimes ignore the first two cornerstones.

#1 Social – A company should be honest with people working for it, as well as with the community and region in which the company operates, organizing the business in such a way as to interrelate the profits, good working conditions and the interests of investors.

#2 Environmental – The company shouldn’t harm to the environment (or at least, minimize it) and should donate some funds for environmental protection. Environmental ethics also implies the effective and wise use of non-renewable sources of energy, reduction the production waste and making it less toxic.

This line of the concept has similar features with the so-called eco-capitalism aiming at keeping our planet clean and tidy.

#3 Financial – The vast majority of private companies are aimed at generating profit, and it’s nothing wrong with that. Although profit is the indicator of the company’s health, the financial aspect shouldn’t be placed above the other two fundamentals.

Lust for profit can lead to environmental disasters and deceit of workers, customers, and partners, so the company should come up with a clear strategy of increasing its income without violating moral and human values.

Drawbacks of triple bottom line concept

The TBL concept is not without issues, however:

– The concept includes three criteria, namely social, environmental and financial, but it doesn’t take into account the factor of time. It’s very hard to come up with a win-win strategy, considering that every business action has short-, medium- and long-term consequences.

– The concept of the TBL leads to a rise in the price of goods and services, and this burden falls on the shoulders of ordinary people. According to some experts, following the concept can lead to the bankruptcy of enterprises and global crisis.

– Many believe that achieving equilibrium between the three lines is almost impossible, especially when it comes to small or medium corporations. There are too many requirements in front of the company, and whether the business wants it or not, it has to sacrifice something. For example, investing in environmental protection reduces the salary of the employees and vice versa.

Despite all the cons, the concept does make sense. It’s up to you whether to integrate ethics into your business or leave all things as they are. I wish you good luck in your entrepreneurial endeavors.

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Lucy Adams is a professional writer who addresses a wide variety of business topics.

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