The 4-Way Test
From the earliest days of the organization, Rotarians were concerned with
promoting high ethical standards in their professional lives. One of the world's
most widely printed and quoted statements of business ethics is The 4-Way Test,
which was created in 1932 by Rotarian Herbert J. Taylor (who later served as RI
president) when he was asked to take charge of a company that was facing
bankruptcy. This 24-word code of ethics for employees to follow in their
business and professional lives became the guide for sales, production,
advertising, and all relations with dealers and customers, and the survival of
the company is credited to this simple philosophy. Adopted by Rotary in 1943,
The 4-Way Test has been translated into more than a hundred languages and
published in thousands of ways. It asks the following four questions:
"Of the things we think, say or do:
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Is it the TRUTH?
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Is it FAIR to all concerned?
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Will it build GOODWILL and BETTER FRIENDSHIPS?
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Will it be BENEFICIAL to all concerned?"
Story of the 4-Way Test
By Herbert J. Taylor
President, Rotary International 1954-55
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
bankrupt organization. The company was a distributor of cookware and other
household 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 organization something which our competitors
would not have in equal amount. We decided that is should be character,
dependability and service-mindness 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 too
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 must do, but ask them questions which would make it possible
for them to find out whether their proposed plans, policies, statement 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 ask 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.
I placed this little test under the glass top of my
desk and determined to try it out 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 far I often was from the truth and how many untruths
appeared in our company's literature, letters and advertising.
After about 60 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 time discouraged, with my own
performance as president of the company. I had, however, made sufficient
progress in 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 and Orthodox Jew and the
fourth 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 other.
The checking of the 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. As a result, the public gradually placed
more confidence in what we stated in 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 competitors' 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 with 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 20 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
$6,100. The 4-Way Test and some good hard-working people who have faith in God
and high ideals.
Intangible dividends from the use of The 4-Way Test
have been even greater than the financial ones. We have enjoyed a constant
increase in the goodwill, friendship and confidence of our customers, our
competitors and the public --- and what is even more valuable, a great
improvement in the moral character of our own personnel.
We have found that you can not constantly apply The
4-Way Test to all your relations with others eight hours each day in business
without getting into the habit of doing it in your home, social and community
life. You thus become a better father, a better friend and a better citizen.
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