HOW TO BUILD A RECORDS RETENTION POLICY: THE COMPLETE BUSINESS GUIDE
If your business handles sensitive information; having a clear records retention policy isn’t optional. It’s a core part of staying compliant, reducing risk, and operating efficiently.
At GRM, we work with organizations that manage everything from patient records to financial documents, and one thing is consistent across industries: businesses without a defined retention policy are exposed legally, operationally, and financially.
WHAT IS A RECORDS RETENTION POLICY?
A records retention policy is a formal set of guidelines that defines:
- What records your organization keeps
- How long those records are stored
- When and how they are securely destroyed
It applies to both physical documents & digital records
A well-structured policy ensures that your business:
- Retains critical information for as long as required
- Eliminates unnecessary or outdated records
- Maintains compliance with industry regulations
WHY YOUR BUSINESS NEEDS A FORMAL RETENTION POLICY
Many organizations hold onto records “just in case.” Others delete too early to save space. Both approaches create risk.
1. Stay Compliant with Regulations
Industries like healthcare, finance, and legal services are subject to strict regulations. For example:
- HIPAA requires healthcare organizations to safeguard and retain patient records appropriately
- Financial institutions must comply with SEC and FINRA rules
- HR departments must follow federal and state employment laws
2. Reduce Legal Exposure
Keeping records too long can be just as risky as not keeping them long enough. In legal discovery, everything you retain is potentially discoverable.
3. Improve Operational Efficiency
When employees know exactly where records are stored and how long they’re kept, it reduces time spent searching, duplicating, or managing files.
4. Control Storage Costs
Unnecessary document storage — both physical and digital — adds up quickly. A structured policy keeps storage lean and intentional.
WHAT HAPPENS IF YOU DON’T HAVE A RECORDS RETENTION POLICY?
This is where things get serious. Without a formal policy, businesses often face:
Regulatory penalties
In healthcare, HIPAA violations can result in significant fines if records are mishandled or improperly retained.
Audit failures
Missing or inconsistent records can derail compliance audits.
Legal risk
Destroying records too early, or keeping too many, can create major liabilities during litigation.
Data security exposure
Old, unmanaged records are a common source of data breaches.
Operational chaos
Teams waste time searching for documents or recreating lost information.
We’ve seen organizations try to fix these issues after they become problems and it’s always more expensive than getting it right upfront.
LEGAL REQUIREMENTS BY INDUSTRY
Retention requirements vary depending on your industry and the type of record.
| Industry | Example Records | Typical Retention Period | ||
|---|---|---|---|---|
| Healthcare | → | Patient records, billing info | → | 6–10+ years (HIPAA-related) |
| Financial | → | Tax records, audit documents | → | 5–7 years |
| Legal | → | Client files, case documents | → | Varies by jurisdiction |
| Human Resources | → | Employee records, payroll | → | 3–7 years |
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HOW TO BUILD A RECORDS RETENTION SCHEDULE STEP-BY-STEP
Creating a retention schedule doesn’t have to be overwhelming. Here’s how to approach it:
Step 1: Identify Record Categories
Start by listing all types of records your organization handles:
- Financial documents
- Employee records
- Customer or patient data
- Contracts and legal files
Step 2: Determine Retention Requirements
For each category:
- Research legal requirements
- Consider operational needs
- Factor in industry-specific regulations (especially for healthcare and HIPAA)
Step 3: Assign Retention Periods
Define how long each type of record should be kept.
Step 4: Define Storage Methods
Decide whether records will be:
- Stored physically
- Digitized and stored electronically
- Managed through a hybrid system
Step 5: Establish Destruction Policies
Clearly define:
- When records should be destroyed
- How they should be destroyed (secure shredding, digital deletion)
Step 6: Document and Train
- Create a formal policy document and ensure your team understands it.
DIGITAL VS. PHYSICAL RECORDS RETENTION CONSIDERATIONS
Most organizations today operate in a hybrid environment, managing both paper and digital records
Physical Records
- Require secure storage facilities
- Need controlled access
- Must be protected from damage or loss
Digital Records
- Easier to search and retrieve
- Require strong cybersecurity measures
- Must comply with data protection standards
RECORDS DESTRUCTION AND SECURE SHREDDING REQUIREMENTS
Proper destruction is just as important as proper storage. A secure destruction process ensures:
A secure destruction process ensures:
- Sensitive data cannot be recovered
- Compliance with privacy regulations
- Reduced risk of data breaches
Best practices include:
- Using certified shredding services
- Maintaining destruction logs
- Following consistent, policy-driven schedules
DOWNLOADABLE RECORDS RETENTION SCHEDULE TEMPLATE
To help you get started, we’ve created a ready-to-use records retention schedule template designed for regulated businesses.
👉 Download the template to:
- Quickly map out your retention categories
- Align with compliance requirements
- Standardize your internal processes
FREQUENTLY ASKED QUESTIONS
How long should a company keep records?
It depends on the type of record and applicable regulations. Most financial documents are kept for 5–7 years, while healthcare records often require longer retention.
What is a standard records retention policy?
A standard policy defines what records are kept, how long they’re retained, and how they’re securely destroyed.
Are there federal requirements for document retention?
Yes, but they vary by industry. Many requirements come from regulations like HIPAA, IRS rules, and labor laws.
How long must medical records be retained?
Healthcare organizations typically retain records for at least 6 years, though many states require longer periods.
What happens if records are destroyed too early?
Premature destruction can result in compliance violations, legal penalties, and loss of critical business information.
FINAL THOUGHTS
A well-built records retention policy does more than keep you compliant; it gives your organization structure, clarity, and protection.
At GRM, we’ve seen how the right systems, from secure storage to digitization and compliant destruction can transform how businesses manage their information.
Whether you’re building your policy from scratch or refining an existing one, taking a structured approach now can prevent costly issues down the line.
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