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Nightingale-Conant presents Clifford L. Dochterman

The Four-Way Test

In a business and corporate society occasionally labeled "ethically and morally bankrupt," is there still a place for homespun morality and ethics, based on the simple tenets of truth, goodwill, fair play, and friendship?

In 1932, while the nation was caught in the depths of the Great Depression, countless businesses teetered on the verge of bankruptcy. In such desperate times of despair — and often panic — a leader's moral fiber is put to the test. Many companies chose to relax standards or ideals in order to save their business — some aggressively, others only slightly. A delicate negotiation when millions of dollars and potentially hundreds or thousands of employees' livelihoods are on the line, to say nothing of associated vendors, stockholders, partners, and customers that are affected.

Chicago-based Club Aluminum Company was one such company that faced these desperate challenges. However its leader, Herbert J. Taylor, took a revolutionary direction, one that has affected the lives of thousands of people and remains the backbone of some of America's leading corporations today.

Taylor, a man of deep religious and moral convictions, recognized that in the highly competitive business world, the ethical reputation of a company could be as significant as the quality of its products. His analysis of advertising, sales approaches, distribution practices, and customer relations led to the conclusion that many corporations were sorely deficient in basic ethical tenets. Sharp or shady practices were often found in industrial competition.Taylor wondered if his business of manufacturing and selling kitchen utensils really could be successful, and stand above its competitors, based solely on the principles of truth, goodwill, honesty, friendship, and helpfulness. Could these high moral ideals be put into a simple statement, that would be easily remembered and practiced by his employees? Taylor penned a simple 24-word recitation, which would save a multimillion-dollar corporation, teetering on the brink of financial bankruptcy and create a yardstick by which all companies could measure their decisions.

The yardstick that Taylor created became known as The Four-Way Test. It merely asked of the things we think, say, and do:

1. Is it the TRUTH?
2. Is it FAIR to all Concerned?
3. Will it Build GOODWILL and BETTER FRIENDSHIP?
4. Will it be BENEFICIAL to all concerned?

Steps were taken for all employees to apply The Four-Way Test to the entire company operation. All advertising copy removed the superlatives of "best," "finest," and other words that were unproven or untrue. Salesmen refrained from loading up distributors with products that had little chance of being sold. Customers' concerns were cheerfully and effectively handled. Friendships were increased with competitors, customers, suppliers, and the public, which led to greater name recognition and appreciation of Club Aluminum Company in the corporate world. The ultimate value was shown as sales and profits gradually increased, and the company finally emerged from its serious financial problems.

From today's perspective, Taylor's experience might be labeled just an old-fashioned form of business management, which depended upon traditional values of hard work, simple principles, and idealistic theories, where the employees were all considered members of a "corporate family" group. It should be noted that in the years following World War I, dozens of trade, manufacturing, and professional associations were beginning to be so concerned about undisciplined competition and the acceptance of caveat emptor, that extensive efforts were made to develop and adopt codes of business and fair practice, as well as standards of professional performance. Thus, The Four-Way Test was planted in welcome soil.

One of the largest organizations to adopt and promote The Four-Way Test has been Rotary International, the world's first service club, established in 1905 in Chicago. Since the early days of Rotary, the creation of high ethical standards in all business and professions was a primary goal of the organization. Taylor was a very active Rotarian, and became the worldwide President of Rotary International in l954-55. The Four-Way Test was accepted by Rotary International in 1943 as a simple guide for individual conduct. Among the million- plus Rotarians in over thirty-two thousand communities in which Rotary Clubs exist around the world, The Four-Way Test is frequently displayed and recited as a commitment to personal, business, and corporate ethics. It has been translated into more than one hundred languages and may be found in nearly every nation.

In 2002, Walgreens mentioned it in its annual stock report: "We focus on customers, employees, shareholders — in short, on people. Our mission is clear ... and mirrors our basic principles. We will develop people who treat customers — and each other — with respect and dignity. We have a test that's been passed down from generation to generation of Walgreen employees. In 1956, it was adopted from Rotary International by Charles R. Walgreen Jr., our founder's son and the company's second CEO. The words guide employees to consider four questions when making decisions about what they think, say, or do: Is it the truth? Is it fair to all concerned? Will it build goodwill and better friendship? Will it be beneficial to all concerned? That's our 'Four-Way Test,' hanging in almost 4,000 stores, and more relevant today than ever."

In another example, two neighboring colleges in Southern California had considered merging for many years, but without success. The joint meetings of the school trustees always seemed to end with irresolvable differences. Finally, a Rotarian, who was trustee chairman of one of the colleges, arrived early for another meeting to consider the proposed merger. He placed a copy of The Four-Way Test at each place around the table. It was announced that, "Today's meeting will use these four questions in all of our discussions." By the end of the meeting, the merger had been accomplished.

Although The Four-Way Test was never intended to be a definitive code of ethics, there are critics who quickly point out that it merely asks questions, without offering specific business rules or policies. The author of The Four-Way test assumed that business and corporate leaders, as well as other employees, should have sufficient moral and ethical values in their personal lives to enable them to determine the appropriate answers. Tragically, the line between right and wrong answers is not nearly as well defined today as it seemed to be for Depression Era executives and employees.

Other detractors note that the dilemmas of this century are not easily solved with the four simple questions. A journalist may say that although a "breaking news story" may be true in every detail, it may not necessarily be beneficial to all the people concerned. Others might ask how a corporate downsizing will build better friendships or be beneficial to some of the employees involved. The attorney could wonder how a controversial legal dispute would ever build better friendships?

Here again, The Four-Way Test must be considered a personal guide for the things a person thinks, says, or does. The test may not literally provide answers to day-to-day crises, but it can be useful in lifting the consciousness of those who must make moral and ethical decisions. The Four-Way Test becomes the instrument for analyzing moral and ethical implications of current dilemmas. In this sense, The Four-Way Test may help individuals have a better appreciation of how their personal decisions may actually affect others with whom they have direct or even indirect contact. The Four Way Test forces an individual to consider the impact upon others of what one thinks, does, or says. Perhaps this is the best reason that The Four-Way Test should continue to be introduced to students of all ages as initial instruction in ethical and interpersonal relationships.

What is the relevance of The Four- Way Test in this day, when corporate scandals, illegal activities, inside trading, and market abuse have diminished public confidence in big business? Personal and corporate behavior in the 21st century does not seem to demonstrate the same deep ethical and moral roots of a general society that once believed in universally accepted values of truth, honesty, decency, morality, fairness, and goodness. In Taylor's day, society tended to subscribe to "absolute values" — things were either right or wrong. There did not exist all of the "in-betweens," which seem to be founded on a current- day ethical philosophy that says, "It all depends."

Can Taylor's simple statement of moral and ethical principles still be helpful to executive decision makers?

It is not easy to restore tarnished or scandal-ridden reputations. And to do so, business and corporate decisions, at all levels, must rest upon the fundamental moral and ethical beliefs of the decision makers. Daily decisions are determined to a large extent upon the moral principles that guide each individual's life. So, can Taylor's Four-Way Test help today? The better question is, how can we possibly recover from what could be categorized as an era of moral and ethical bankruptcy without a time-tested simple method that everyone from the leaders to the rank and file can adopt as the foundation for all actions.