All right, it’s now 2008. Do you know where all your data is?
Unfortunately for most companies, the answer is probably no.
For nearly every business, regardless of size or industry, managing the huge volumes of information that employees churn out every day is an enormous task. And according to experts, few companies have risen to the challenge.
Yes, amendments to the rules of civil litigation have heightened Corporate America’s awareness of the importance of information. Several high-profile cases where companies were slapped with huge fines for failing to produce records in litigation or regulatory probes also helped focus the corporate counsel’s mind. Still, companies “are all struggling under a weight of their own information,” says Rick Wolf, founder of consulting firm Lexakos.
Prignano
The first mistake companies usually make regarding their data retention and destruction policy is not having one, says Stephen Prignano of the law firm Edwards, Angell Palmer & Dodge. “Many companies, even sophisticated ones, still don’t.”
Many companies also make the management blunder of ignoring the need for data destruction. “Far and away, the largest problem companies have is keeping data they should’ve gotten rid of years ago,” says Tony Reid of Deloitte Financial Advisory Services’ analytic and forensic technology group. In the face of litigation, those information hoarders could end up producing something damaging to their case that could (and should) have been destroyed according to proper retention practices, he says.
Businesses should keep information around for only two reasons: legal or regulatory compliance obligations, or the company’s own business purposes. Too often, says Andrew Cohen, vice president of compliance solutions at EMC Corp., companies keep documents (electronic or otherwise) around just because they can.
“There’s a big subset of things that people want to keep because they’re viewed as ‘productivity documents,’” he says. “In reality, after a modest period of time, they rarely ever go back and look at them.”
Joerling
Kevin Joerling, senior manager of standards and records management at the ARMA International industry group, agrees. “We hear of companies keeping things ‘just in case,’” he says. “That’s not a legitimate reason to retain records.”
Reid says companies often keep legacy data—historical data from decommissioned systems or old backup tapes—longer than they should “because they think they might need to access it later.” Even after his firm has analyzed legacy data and determined that it can be destroyed, he continues, “Companies are still reluctant to pull the trigger.”
The Costs of Keeping Data
If litigation risk, discovery headaches, and potential sanctions by courts or regulators aren’t reason enough for companies to get their records management houses in order, experts cite another reason: cost.
Reid
“Companies are bearing unnecessary costs to store, manage, and maintain data that shouldn’t be around forever,” Reid says. “People argue that the cost of storage has come down quite a bit, and it has, but not so far that it isn’t a major burden on companies.” In addition to the cost of storing data, companies can incur steep costs to retrieve data during the discovery phase of civil litigation.
Still, others advise proceeding with caution. John Stigi of the law firm Sheppard Mullin Richter & Hampton recommends, “erring on the side of preservation.” Inevitably, he says, the workpaper inadvertently shredded long ago becomes the most important document in the litigation at hand.
“There’s always been a school of thought where folks have said put as little in writing as possible, keep as little evidence as possible,” Stigi says, but he disagrees. He says his mantra is a combination of “better safe than sorry” and “when in doubt, preserve.”
“Judges and juries are skeptical of business executives that don’t keep good records, electronic or written,” he says. Corporate defendants might also need to explain inconsistent recordkeeping or add context to fragments of data after a document purge—“which makes people suspicious that there’s something nefarious,” he adds.
“We hear of companies keeping things ‘just in case’ ... That’s not a legitimate reason to retain records.”
— Kevin Joerling,
Senior Manager,
ARMA International
Of course, any records management policy—no matter how much it emphasizes destruction or retention—isn't much good if it isn’t current.
“Retention schedules and records management policies … typically don’t do a very good job capturing electronic data, which is 99 percent of what companies produce these days,” says Reid. While some businesses have “fairly decent” policies in place for managing paper records, he says, most have been slow to get a handle on all of their electronic data.
The Human Factor
Then there’s that other nettlesome problem that can render even the best, most current and comprehensive records management policies useless: your employees.
“As a consultant, I found that most larger organizations had polices in place,” Joerling of ARMA International says. “The problem was that employees weren’t always following them.”
Employees who inadvertently (or deliberately) flout retention policies, both by destroying documents that should be saved and by preserving documents that shouldn’t, can cause trouble for their employers.
“It’s a rare that documents disappear,” Stigi says. “There are often copies all over the place that are misfiled and take longer to find,” which can lead to unpleasant surprises. For that reason, he advises, “Never be so bold as to swear on a stack of Bibles that something doesn’t exist.”
Failure to audit or monitor retention policies for compliance is another frequent stumbling block for companies. Experts recommend annual compliance audits; that means assuring that the documents that are supposed to be retained are kept and those that are slated for destruction are actually destroyed.
Companies should also designate a “document management guru” to oversee their policies and ensure they run smoothly, Prignano says. Many policies “work on paper but fail in practice” because of a lack of oversight, he says.
Wolf at Lexakos recommends that companies make strong business cases for records management polices, since employees will be more inclined to adhere to a policy if they can realize efficiencies by better managing their information. “Lawyers shaking their fingers, saying ‘Thou shall’ tend to be ineffective and largely ignored,” he says.
Wolf
For example, to prod employees to manage paper documents stored offsite, Wolf advises having the invoice for offsite storage sent to the head of each department or function whose information is being stored. “They‘ll have a natural incentive—reducing their overhead—to look more carefully before they send things to offsite storage,” he says.
Experts note that technology can also play a big role in helping companies control their data. For instance, Wolf says, companies can reduce their e-mail volume by using repositories for electronic data, such as storing all project-related information in one central database where those who need it can access it.
“Look at e-mail as a notification and or communication tool, not a collaboration and document management tool,” he says.
In addition, Joerling notes that retention modules built in today’s electronic documents management systems can make it much easier for companies to manage their electronic information.
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