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Determining Record Retention Schedules

For many organizations, records managements is often a stepchild and records retention schedules are not well thought out.  This can lead to fines or increased exposure to damaging litigation.

By law, many types of records have specific record retention requirements.  Other records have retention schedules based on business practices.  And in some cases, these two overlap.  What is often overlooked when planning record retention schedules are event-based triggers.  Organizations that take these triggers into consideration are less likely to face government fines or have increased exposure to litigation.

So what is an event-based trigger? 

Consider contract management.  How long are you required to retain a contract?  While I can’t answer that globally for all organizations, I can point out that the contract expiration date is the point from which the document retention schedule begins.  The expiration date is the event that should trigger the retention period.  To illustrate this point, if you are required to keep a contract on file for 7 years and the term of the contract was 10 years, you would not want to delete the contract 7 years after the date it was signed.  Now I will admit that this is an obvious example.  However, if you set up automatic retention schedules, the unthinkable could happen if you don’t use the correct event to trigger the retention period.

The same is true for employee records.  You would want to use the termination date.  What about mortgage documents, stock option agreements, or tax audit documents?  Many documents have milestones or expiration dates.  It’s these dates that trigger retention schedules.

How do you ensure that you use the correct event-based triggers?

  1. Determine if different types of documents have events associated with them.
  2. Gather the stakeholders for each record type which will include records management, business management and your legal department.
  3. Document the trigger types.
  4. Automate the business processes associated with triggers so that the triggering event and date becomes part of the business record.

So why do organizations fail to implement records retention schedule properly?  For some organizations it’s because they don’t understand the consequences of not having correct records retention schedules in place so they don’t focus on it.  For other organizations it’s because they are small and don’t believe that records retention schedules apply to them.  And for many organizations it’s because they don’t have an automated records retention system in place.

With an online document management system that includes automated records retention management, there is no excuse for any organization not to be in compliance.  Online document management and records management systems that are delivered as a subscription model are easy to implement and extremely cost effective.  It’s cheaper to implement these systems than it is to pay government fines or suffer the costs of litigation.

For more information please visit our records management page.

Topics: Records Management, Contracts Management

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