In 1932, Rotarian Herbert J. Taylor created the Four-Way Test, as a way to promote ethical conduct of himself and of his employees. According to Mr. Taylor, when you get into the habit of applying it in business, and in your personal life, you will thus become a better parent, friend, and citizen. The Test has been translated into more than 100 languages and forms a foundation for all Rotarians to follow, when conducting their business, personal and community lives.
Back in 1932 Herbert J. Taylor was assigned, by the creditors of the Club Aluminum Cookware Company, the task of saving the company from being closed out as a bankrupt organization. Taylor said "While they had a good product, their competitors also had fine cookware with well-advertised brand names. Club Aluminum also had some fine people working for it, but their competitors had the same. Our competitors were naturally in much stronger financial condition than we were."
Taylor felt that the Company needed to develop in their organization, something that their competitors would not have in equal amount. He decided it should be the character, dependability and service-mindedness of the Company personnel which makes the difference, and he felt that a simple measuring stick of ethics that everyone in the company could memorize, would do the trick. He further believed that the proposed test should not tell people what they must do, but ask them questions to help them to find out whether their proposed plans, policies, statements or actions were right or wrong.
After much thought, and not a few prayers, Taylor picked up a white card and wrote out The Four Way Test. The Four-Way Test of the things we think, say or do:
Taylor said "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 waste-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 sixty days of faithful, constant effort on my part to live up to The Four-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 in living up to The Four-Way Test to feel qualified to talk to some of my four department heads. 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 test that was contrary to the doctrines and ideals of his particular faith. All four agreed that truth, justice, friendliness and helpfulness coincided with their religious ideals and if constantly applied in business should result in greater success and progress. These four agreed to use the test in checking proposed plans, policies, statements and advertising of the company." Later, all employees were asked to memorize and use the test in their relations with others.
Putting it into action: when a company advertisement was placed before Herb, declaring his aluminum product as "the greatest cooking ware in the world," Herb simply stated "We can't prove that." The advertisement was rewritten simply stating the facts. The most significant and practical example of the test in action concerned an incident involving a printing contract. One local printer won an order from Herb's company beating all other tenders. The printer, however, soon realized that he had under-estimated his quote by $500. Legally, Club Aluminum could ignore the printer's appeals and compel him to fulfill his side of the contract. Club Aluminum was deeply in debt and had acted in good faith but Herb asked his board to reconsider and pay the printer the extra $500. Remember the second line of the test, he told his fellow directors, "Is it fair to all concerned?"
Over the years, steady progress was made in reaching the ideals expressed in The Four-Way Test. From a bankrupt condition in 1932, our company within a twenty-year period had paid its debt in full, paid its stockholders over one million dollars in dividends and was worth over two million dollars.