The 4-Way Test
One of the most widely printed and quoted statements of business ethics in the world is the Rotary "4-Way Test." It was created by Rotarian Herbert J. Taylor in 1932 when he was asked to take charge of the Chicago based Club Aluminum Company, which was facing bankruptcy. Taylor looked for a way to save the struggling company mired in depression-caused financial difficulties. He drew up a 24 word code of ethics for all employees to follow in their business and professional lives. The 4-Way Test became the guide for sales, production, advertising and all relations with dealers and customers, and the survival of the company was credited to this simple philosophy.
Herb Taylor became president of Rotary International during 1954-55. The 4-Way Test was adopted by Rotary in 1943 and has been translated into more than 100 languages and published in thousands of ways. The message should be known and followed by all Rotarians.
Of the things we think, say or do:
• Is it the TRUTH?
• Is it FAIR to all concerned?
• Will it build GOODWILL and BETTER FRIENDSHIPS?
• Will it be BENEFICIAL to all concerned?
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Herb Taylor explains the origin and development of the "4-Way Test":
"Back in 1932 I was assigned by the Creditors of the Club Aluminum Company, the task of saving the company from being closed out as a bankrupt organization. The company was a distributor of cookware and other house-hold items. We found that the company owed its creditors over $400,000 more than its total assets. It was bankrupt but still alive.
At that time we borrowed $6,100 from a Chicago bank to give us a little cash on which to operate.
While we had a good product our competitors also had fine cookware with well-advertised brand names. Our company also had some fine people working for it, but our competitors also had the same. Our competitors were naturally in much stronger financial condition than we were.
With tremendous obstacles and handicaps facing us we felt that we must develop in our organisation something which our competitors would not have in equal amount. We decided that it should be the character, dependability and service mindedness of our personnel. We determined, first, to be very careful in the selection of our personnel and, second, to help them become better men and women as they progressed with our company.
We believed that "In right there is might" and we determined to do our best to always be right. Our industry, as was true of scores of other industries, had a code of ethics - but the code was long, almost impossible to memorize and therefore impractical. We felt that we needed a simple measuring stick of ethics which everyone in the company could quickly memorize. We also believed that the proposed test should not tell our people what they should do, but ask them questions which would make it possible for them to find out whether their proposed plans, policies, statements or actions were right or wrong.
We had looked in available literature for such a short measuring stick of ethics but could not find a satisfactory one. One day in July, 1932, I decided to pray about the matter. That morning I leaned over my desk and asked God to give us a simple guide to help us think, speak and do that which was right. I immediately picked up a white card and wrote out The 4-Way Test of the things we think, say or do as follows:
1. Is it the truth?
2. Is it fair to all concerned?
3. Will it build goodwill and better friendships?
4. Will it be beneficial to all concerned?
I placed this little test under the glass top of my desk and determined to try it for a few days before talking to anyone else in the company about it. I had a very discouraging experience. I almost threw it into the wastepaper basket the first day when I checked everything that passed over my desk with the first question. "Is it the truth?" I never realized before how many untruths appeared in our company's literature, letters and advertising. After about sixty days of faithful constant effort on my part to live up to The 4-Way test I was thoroughly sold on its great worth and at the same time greatly humiliated, and at times discouraged, with my own performance as president of the company. I had, however, made sufficient progress living up to The 4-Way Test to feel qualified to talk to some of my associates about it. I discussed it with my four department heads. You may be interested in knowing the religious faith of these four men. One was a Roman Catholic, the second a Christian Scientist, the third an Orthodox Jew and the fourth a Presbyterian.
I asked each man whether or not there was anything in The 4-Way Test which was contrary to the doctrines and ideals of his particular faith. They all four agreed that truth, justice, friendliness and helpfulness not only coincided with their religious ideals but that if constantly applied in business they should result in greater success and progress. These four men agreed to use The 4-Way Test in checking proposed plans, policies, statements and advertising of the company. Later, all employees were asked to memorize and use The 4-Way Test in their relations with others.
The checking of advertising copy against The 4-Way Test resulted in the elimination of statements the truth of which could not be proved. All superlatives such as the words better, best, greatest and finest disappeared from our advertisements and bought more of our products.
The constant use of The 4-Way Test caused us to change our policies covering relations with competitors. We eliminated all adverse or detrimental comments on our competitor's products from our advertisements and literature. When we found an opportunity to speak well of our competitors we did so. Thus we gained the confidence and friendship of our competitors.
The application of The 4-Way Test to our relations with our own personnel and that of our suppliers and customers helped us to win their friendship and goodwill. We have learned that the friendship and confidence of those whom we associate is essential to permanent success in business.
Through over 20 years of sincere effort on the part of our personnel, we have been making steady progress toward reaching the ideals expressed in The 4-Way Test. We have been rewarded with a steady increase in sales, profits and earnings of our personnel. From a bankrupt condition in 1932 our company within a period of twenty years had paid its debts in full, had paid its stockholders over one million dollars in dividends and had a value of over two million dollars. All of these rewards have come from a cash investment of only $6,100. The 4-Way Test and some good hard working people who have faith in God and high ideals."