Records Retention Policy: Store vs. Shred

Today’s agile business environment advances quickly, creating more information each day—often in new formats that weren’t around a few years ago. And as more data accumulates, the more your company can put itself at risk of noncompliance or a potential security breach.

Establishing a records retention policy

Record retention is a requirement underneath document retention laws and is a vital component of controlling an organization’s information. One of the most effective ways a company can manage recordkeeping requirements is by creating a records retention policy. By implementing this type of plan, a company can mitigate risk and comply with stringent federal and state regulations.

Several factors go into developing an effective retention policy to help govern documents throughout their lifespan. An organization must be mindful not only of how long you store documents but of document destruction guidelines, as well.

When determining your retention schedule, it is important to ask yourself the following questions:

• Retaining records: Which records should be kept?
• Records disposal schedule: How long should information be kept?
• Document form: In which form should the documents be retained?
• Where to store: Should documents be stored securely in records storage facilities or a digital filing system?

Having an effective record retention policy in place is essential for any business. Not only does it help to ensure that documents and other records are kept for the required length of time, but it can also minimize litigation threats and discovery costs. When documents are destroyed in compliance with a corporate record retention program, it helps to ensure that any litigation or discovery requests can be handled quickly and efficiently.

Importance of records retention

Records retention or document retention is a crucial part of any information ecosystem. Not all records should be maintained, and the cost of managing and maintaining them might entail a higher budget and more storage space. Records retention is important because it helps organizations save storage and operating expenses when dealing with paper records, reduce litigation risks by abiding by various rules and regulations, and maintain data integrity.

Although it is necessary to clear away clutter, tossing the incorrect piece of paper or deleting a crucial email might result in negative repercussions. In litigation, not having a document might be the difference between winning and losing.

By having a general document retention schedule for all business units, businesses can:

• Reduce storage and operational costs, because maintaining an enormous quantity of paper records requires time, money, and labor. A properly executed policy helps save money on physical storage by controlling the growth of data volume, and also helps improve accessibility and reachability.
• Minimize litigation risks by preventing information from being held for longer than legally allowed, and not destroying documents that should be accessible.
• Enhance security by protecting information that is important to business operations. This is vital for minimizing data leakage and ensuring critical information is available when it is needed.

Should you store or shred your business records?

The answer to this question depends on the type of information being stored. For example, personnel files, financial records, and customer data should all be stored in a secure location. But what about old invoices or marketing materials?

While there may not be a legal requirement to shred these types of documents, it is generally considered best practice. By implementing a clearly defined records retention policy that accounts for your business type, your industry, and the lifecycle of specific documents, you’ll be better equipped to properly execute a disposition program. Shredding old documents helps protect your company against identity theft and fraud.

As with any policy, always consult with an attorney before developing a records retention policy. Federal/state laws and retention guidelines will also define your retention periods. For example, with tax records retention, most businesses can eliminate tax records after seven years. Depending on your industry, you may be able to dispose of paper files after you make digital copies—then be able to destroy the digital copy after seven years.

When it comes to developing a records retention policy, the most important thing to remember is that you need to be able to justify your decision to store or destroy records. If you can’t explain why you are keeping a certain type of record, it might be time to reconsider your policy.

What factors should be considered for a retention period?

When determining how long data should be retained, there are a number of factors to consider:

• Compliance requirements related to data retention: The laws and regulations governing data retention can vary between jurisdictions, so it’s important to be aware of what is required in your area.
• Organizational needs of your organization: Depending on the type of data you are dealing with and what you need to do with it, you may need to retain data for a certain amount of time in order to fulfill your business objectives.
• Legal ramifications of not keeping certain data for a certain amount of time: Depending on the type of data and where it is stored, there may be legal implications if the data is not retained for the required amount of time. It’s important to be aware of all these factors when deciding how long you should keep data.

Automating records retention

Organizations need to have a flexible system in order to comply with industry regulations and business rules when it comes to records retention.

Having accurate records is essential for any organization. It helps to avoid audit findings and, if necessary, can provide critical evidence in a lawsuit. It is important, then, for organizations to have a system for storing and organizing their documents so they can be easily accessed when needed.

With an automated record retention schedule, businesses can:

• Reduce human errors. Automating human processes can significantly reduce the errors that occur in business operations. By automating tasks like record retention and disposition, companies can ensure that records are destroyed on the schedule that is defined.
• Improve employee efficiency. One of the most effective ways to increase employee productivity is to reduce manual and repetitive tasks. Automating certain processes or investing in systems like enterprise content management software helps streamline processes. By taking on the burden of mundane tasks, employees can focus more on their core responsibilities. In turn, this can lead to improved morale.
• Enhance compliance. Using a system to automate the destruction of electronic records is essential for improving compliance with different regulations. It ensures that only the necessary information is available and that any records that need to be destroyed are destroyed in a timely and secure manner.
• Reduce data breaches. With workflow automation systems, organizations can store data in a secure and organized fashion, making it much more difficult for hackers to gain access to sensitive information. Automated systems also make it easier for businesses to comply with regulations related to data retention, such as GDPR.

Benefits of using a digital ecosystem for records retention

Adopting a digital ecosystem to control your electronic records lifecycle can help you achieve the following:

• Automatic retention scheduling: As the volume of documents, records, and other data increases, it’s important to have a system in place to ensure their proper retention. Automatically classifying these records based on information associated with legal and operational retention requirements—and setting their retention period—will allow you to define the document retention process in a streamlined manner.
• Accurate audit trails: Audit trails are a key element of any effective records management system, as they provide an accurate account of changes made to records over time. This can be especially useful in regulated industries, such as healthcare or finance, where organizations must adhere to specific standards and guidelines. Audit trails also offer transparency, allowing organizations to easily track who has accessed or made changes to records.
• Timely destruction of records: An automated system for managing records is becoming increasingly important in the digital age. By automating the process, the potential for human error is minimized, while the overall efficiency of managing records is increased. To achieve this, the system should be designed to take into account the specific record retention schedule and archive or dispose of records through secure document shredding accordingly.

Every company needs to have a solid retention policy. It’s easy to fall behind and not remember what important documents need to be kept. That’s where a digital ecosystem can make your life easy. Reach out to our information management experts for a free consultation to see how you can get started.