Helping clients understand the importance of establishing records retention schedules could lead to more business for your firm.
I have been told many times that our industry isn’t the sexiest one out there. We try hard to find new and inventive ways to get a prospective client’s attention, hoping for a reasonable return on investment. Sometimes we get it, sometimes we don’t.
Instead of this hit-or-miss approach, I suggest a return to tried-and-true principles. Doing so may help commercial records and information management (RIM) companies spend less money and develop a reputation for expertise and quality. I know most of you have heard it before (especially if you have ever attended Shred School or met Ray Barry), but on the small chance you missed it: “Education is the best and most cost effective way to attract and maintain your client base.”
To support this general principle, as a commercial RIM company you have many tools at your disposal. One such tools is a retention schedule.
According to Expertglossary.com, a retention schedule is defined as “a plan for the management of records, listing types of records and how long they should be kept; the purpose is to provide continuing authority to dispose of or transfer records to historical archives.”
A records retention schedule captures all of the types of records created and used by a company in the course of its business. It organizes a company’s records into categories called record classes. Each record class consists of a description of the process the records support and examples of the types of records that fall under the record class.
A retention period, or rule, is associated with each record class. A retention period may be stated in terms of months or years or it may be contingent upon the occurrence of an event, such as the termination of a contract or the conclusion of a project. The retention schedule is accompanied by supporting documentation that references the current laws and recommendation source for the assigned retention period. If a record falls into two or more retention periods, the longer retention period is the best choice, according to the Association of Corporate Council.
In researching his book Heart, Smarts, Guts and Luck, author Anthony K. Tjan found that “about 70 percent of entrepreneurs with successful exit strategies did not start with a business plan.” It’s a safe guess that some of those same entrepreneurs don’t spend time creating other documents for their businesses, like retention schedules and policies and procedures, either. They may not see the need for a retention schedule or recognize the legal requirements.
This gives you the opportunity to help your clients understand the importance of creating this document and the policies to support it. Not having a retention schedule may result in increased litigation exposure and costs. Retaining records longer than legally required may lead to delays in responding as a company sifts through unneeded documents. As the volume of retained business records increases, so do the risks associated with not having a retention schedule.
If you can provide useful information to make your clients’ lives easier, you will be in a much better position to gain and retain their business. However, when providing information to clients for developing a retention schedule, you need to take a couple of important things into consideration. First, a retention schedule and policy should be viewed as dynamic, not static. In other words, the retention schedule should be reviewed periodically (approximately every 12 to 18 months) to determine if there have been any legal changes concerning retention periods. I like to recommend tying the update to a specific time of year. Some clients like to review their retention schedules at the beginning of a new year, when they are updating all of their policies and procedures. Others prefer the end of the fiscal year, when they are preparing for their new budgets.
Representatives of commercial records and information management companies may want to compile a list of resources before meeting with a client to assist in developing a records retention policy. Here are some suggestions:
- Websites clients can consult for information;
- A check list of documents to retain, such as payroll records, checkbook registers, medical records, insurance policies, vendor information, magnetic tapes, property lease, cost accounting records, mortgage receipts, workers’ compensation reports, job applications and resumes (Don’t recommend how long they keep these documents.); and
- A list of “tickler questions” to help clients realize how they use the information in the documents and how often. Examples include, Is this information necessary for tax audit purposes? Does this document have historical significance? Is it helpful for future budget and fiscal planning? Does it help prevent a legal liability?
– Marylee Jacobs
Additionally, the records classification system should be updated at this time to reflect changes in a company’s business and record classes. Your client may want to consider getting input from as many team players as possible in doing so. If a company has representation from different business segments from throughout the organization, it is less likely to miss a document type. Explain to your client how this is an opportunity for all employees to support the organization and to have direct input in shaping their employer’s policies.
Second, every retention schedule is unique to the business developing it and involves consideration of federal and state regulatory requirements, contractual obligations, intellectual property requirements and statues of limitations. These various legal requirements must then comply with business considerations, such as the type of document and its use throughout the organization, according to Records Retention: An Essential part of Corporate Compliance, by R. Thomas Howell Jr. and Rae N. Cogar. For Example, if multiple departments use the same document for different purposes, the retention of the document may need to be extended.
Records retention schedules also should reference hard drives, computers, emails, drafts and personal notes.
Where do you direct your client to start looking for information? I recommend your state’s archives and records website. A complete list of state archives is provided on the National Archives website at www.archives.gov/research/alic/reference/state-archives.html. The Internal Revenue Service (IRS) also publishes a booklet called “Starting a Business and Keeping Records” (pub. No. 583), which provides guidance for tax records. The IRS also answers frequently asked questions on its website at www.IRS.gov. Another great source is ARMA.org, the website of ARMA International, the nonprofit professional association for records and information management. This organization has developed guidelines called Generally Accepted Recordkeeping Principles (The Principles). According to the ARMA International website, “these principles are intended to set forth the characteristics of an effective recordkeeping program while allowing flexibility based upon the unique circumstances of an organization’s size, sophistication, legal environment or resources. The objectivity of the principles, combined with a reasonable approach to applying them, will yield sound results for any organization: a responsive, effective and legally compliant recordkeeping system.”
ARMA International also has local chapters in most major cities. I like to take clients or prospective clients to local chapter meetings. This provides them with the opportunity to meet and develop relationships with other professionals in the records management arena who may be able to help them in the future.
State attorneys general offices also may provide information on which laws, such as HIPAA (Health Insurance Portability and Accountability Act) for medical records, apply to your clients’ specific type of business. Florida’s attorney general has pages of information, most of which are in PDF format, so they are easy to download. (By poking around on the site, I found out that even folks who sell at flea markets are required to keep good records. Who knew?)
Once your client composes a retention schedule using the resources you have provided, you will have earned his or her trust and substantiated your reputation as an expert.
Lastly, most of us are not attorneys and we don’t want our information misinterpreted as legal advice. Provide your clients with good reference material but don’t write their records retention policies for them. Use a disclaimer that lets the client know you are not providing legal advice. Make sure to direct your clients to legal counsel before they finalize anything.
A retention schedule is only as good as the retention program it supports. Help your clients understand that records retention is an important component of many of the laws with which most corporations must comply. Sell the program, not the schedule, and you will have dedicated clients.
The author is vice president of Crown Shredding, based in Winter Haven, Fla.