How to Set Up Document Retention Policy: 7 Steps to Slash Compliance Risks Fast

Are compliance risks keeping you up?

You’re always juggling new regulations, tight deadlines, and a mountain of scattered documents, hoping nothing slips through the cracks. But every extra hour spent wrangling files just adds more stress.

What I’ve seen is the pressure to get retention right never really goes away, especially when your leadership expects zero compliance mistakes but doesn’t grasp how chaotic your data actually is.

AIIM reports that 60% of organizations say compliance drives their document retention policies. With all that at stake, it’s obvious why you can’t afford to fumble this—and why so many companies spin their wheels trying.

The good news is, there’s a smarter, faster way to solve these headaches so you’re set up for audit-readiness and peace of mind.

In this article, I’m walking you through exactly how to set up a document retention policy in 7 practical steps, so you waste less time and stay a step ahead of compliance.

You’ll learn what to prioritize, how to streamline the process, and where to avoid common pitfalls.

Ready? Let’s get started.

1. Assess Your Current Data

Is your data situation causing compliance headaches?

If your files and records are all over the place, it becomes really tough to spot risky gaps or blind spots.

I’ve seen firsthand that when you don’t know exactly what data lives where, compliance audits quickly turn into a scramble. You might miss records you’re supposed to keep—or hold onto stuff you shouldn’t, blowing up your storage costs and exposing your company.

Gartner reported that 47% of enterprises report lacking a comprehensive inventory of their information assets, making audits and data assessment a top challenge. This means nearly half of IT managers are flying blind during regulatory reviews, and every missing record increases your risk.

So if compliance risk is on your mind, fixing your data visibility problem is the place to start.

A clear data inventory changes everything.

When you take time to find and assess all your data, you can finally spot duplicate, outdated, or risky files before an auditor (or hacker) does.

Assessing your current data sets you up to make smarter retention rules, since you now know exactly what you have instead of making guesses.

Once you’ve mapped out all your documents and digital files, it’s so much easier to flag sensitive stuff, group by department, and see where you’re over-retaining or missing key records.

For example, I usually start with a scan using document management software that picks up scattered files from shared drives, inboxes, and cloud folders. If you’re ever unsure, a quick inventory report shows you exactly what’s out there—so deciding which documents to keep or delete is suddenly much simpler. That’s the real first step in setting up document retention policies that actually work.

You’ll thank yourself for being proactive here.

By knowing what information you actually hold, you finally get control and make compliance possible—before anything snowballs into a much bigger problem.

Ready to make your data inventory effortless? Start a FREE trial of FileCenter and see how it helps you organize, scan, and manage your documents quickly.

2. Identify Legal Obligations

Legal risks can catch your team off guard.

If you haven’t mapped out your legal requirements, you could be exposing your business to fines, litigation headaches, and data breaches.

What I see most often is that regulations differ wildly by region and industry so it’s really easy to miss a critical rule until something goes wrong. That uncertainty can lead to gaps in your document retention policies and puts your compliance at risk.

According to Deloitte, 84% of companies find identifying and mapping legal and regulatory data retention obligations across jurisdictions to be a significant or extreme challenge. Most IT teams end up spending hours each week manually researching rules or chasing down regional policy details, which makes the job even tougher.

If you’re not keeping track of every rule that applies, it’s hard to know you’re protected—especially as you grow or expand into new markets.

Legal mapping is what saves you here.

By taking the time to identify every legal obligation that applies to your documents, you can actually prevent surprises and save your team a lot of guesswork while setting up your document retention policy.

The trick is to research what’s required for the data you handle and document each regulation with its respective retention period. List privacy and industry-specific laws, like HIPAA or GDPR, then add local requirements if you store documents across multiple states or countries.

You’ll want to build your schedule around these mandatory rules—so the legal backbone drives every decision your document management software makes.

This step is a game changer.

It puts you in control, strengthens compliance, and helps make sure every other part of your policy falls in line.

3. Create Retention Schedules

Retention chaos keeps you up at night, right?

If you’re trying to define how long to keep documents, it’s easy to end up with scattered rules across different departments.

That’s usually when compliance gaps start to show up—files end up kept too long or deleted too soon because nobody follows the same timeline. Suddenly, you’re facing greater risk of audit failures or data breaches with every passing month.

According to Osterman Research, 68% of organizations struggle to consistently apply retention schedules across business units, risking inconsistency and non-compliance. When your schedules aren’t clear or universally enforced, you just multiply those problems.

If you want to protect your team, getting systematic about retention rules is key.

Making retention schedules consistent will change your game.

Once you lay out which documents get saved, for how long, and when to destroy them, you have a clear blueprint your entire company can follow. That’s one of the main steps in how to set up a document retention policy that actually passes audits.

Here’s where things get easier: mapping those document types to timeframes means nobody’s guessing what to do. Instead, everyone has clear, easy-to-follow instructions for every kind of file.

Let’s say HR keeps employee records for seven years, finance holds invoices for five, and marketing content stays for three—your schedules will spell that out for each. No more guesswork, and way fewer chances that something critical gets lost or kept past its legal window.

It’s a simple move, but it brings clarity fast.

Build these schedules once and suddenly retention is no longer a stress point—it’s a strength, and your compliance posture instantly improves.

4. Draft Your Formal Policy

Most teams skip this step and regret it later.

If you don’t create a formal, written retention policy, you risk confusion, inconsistent handling, and missing compliance requirements that could put your company at risk.

What I often see is that teams just use ad-hoc rules and email chains—then nobody is sure what counts as the “official” word on retention. This creates headaches for IT, compliance, and legal teams every time there’s a regulatory change or a request for documentation.

As ARMA International showed, only 42% of organizations have a formal, written document retention policy—and that leaves most teams scrambling during audits or legal hold events, wishing they’d set one up earlier.

If your current “policy” lives across scattered chats, then it’s probably time to fix it with something official.

A strong written policy will save you headaches.

To stop those last-minute scrambles, you need a real document that answers all the who, what, where, and how questions for document retention—one approved by leadership and easy for everyone to follow.

When you draft your formal policy, you actually set the foundation for compliance, so you’re not relying on emails or memory anymore.

Think through every requirement as you pull together your policy: outline who owns document management, which regulations matter, where documents live, and exactly how long every document type is kept. For example, a financial services firm could list out email records and transaction logs with their legal retention periods in one central doc everyone can access. Documenting all this is a key step as you set up your policy and, honestly, what separates teams that avoid problems from those that don’t.

That’s what pulls everything together.

Making this policy your source of truth is what turns compliance chaos into a routine—no more scrambling, just clarity and control.

5. Gain Leadership Approval

Getting buy-in from executives is always a hurdle.

If you’re running into resistance at this stage, it’s usually because leadership isn’t seeing the compliance risk or cost savings as clearly as you do.

The real challenge is this: if you don’t have leadership support, nothing sticks. I’ve seen plenty of great policy drafts gather dust because nobody at the top took real ownership, or even understood why it mattered.

PwC actually found that 64% of organizations achieve significantly higher compliance outcomes when leadership is directly involved in approving the policy. That means leaders making it a priority, not just rubber-stamping it. It’s the difference between guidelines that everyone ignores, and rules that actually drive results.

So if you want your policy to matter, you’ll need leaders on board.

That’s where you have to make a case they can’t ignore.

When you bring executives into the approval process, you show exactly how document retention aligns with audit readiness, risk reduction, and company growth. Getting buy-in unlocks the budget and resources you’ll need.

You get more than a signature—you bring your policy into everyday business and make compliance part of your company’s DNA.

For example, inviting your chief legal officer or CFO to review your plan gives them a clear stake in its success. I’ve found that demonstrating how to set up a document retention policy with leadership engaged is what gets everyone moving in the same direction.

This is what finally moves things forward.

It’s the step that takes your policy from theoretical to actionable, and ensures everyone at your company knows compliance isn’t just IT’s problem.

Ready to see how leadership buy-in drives compliance success? Start a FREE trial of FileCenter and experience the tools that help make compliance part of your everyday business.

6. Automate Policy Enforcement

Manual policy enforcement drains your team’s time and budget.

If you’re chasing paper trails or monitoring every rule by hand, staying compliant feels almost impossible—and way too slow.

I’ve seen too many situations where overworked IT staff spend hours tracking down policy violations, and manual monitoring always leads to missed deadlines or policy gaps. Not only does this add stress, but it also increases your risk of non-compliance and fines.

Forrester’s research revealed that automating document retention policies drives an average 40% reduction in compliance-related operational costs. That’s a massive potential savings, especially if you have tight budgets and growing data.

All of this means your current approach might be holding you back from both audit-readiness and real, sustainable compliance—so let’s talk about what can actually fix this.

Automation solves it by flipping the script completely.

Instead of chasing errors after the fact, a good document management tool applies your rules automatically—as part of setting up your document retention policy.

What I love is how automation lowers your risk, saves hours, and ensures no file gets kept or deleted by mistake, even if your team’s busy or a key person is out.

You set parameters for every document type, such as when to archive or delete based on policy needs. For instance, you could set legal contracts to auto-delete after 7 years, or employee records to lock after a compliance review, so you never miss crucial retention windows.

That’s one less headache on your plate.

With these tools, compliance becomes a routine part of your process—letting you focus on bigger projects while knowing your risk is way down.

7. Review And Update Routinely

Has your policy become outdated without realizing it?

If you’re not reviewing your retention policy often, you could easily fall behind on new regulations or internal requirements.

I’ve noticed that when reviews fall through the cracks, you start missing legal changes or business needs. Before you know it, critical files pile up, or worse, you lose compliance—sometimes without any clear warning. Old rules might not cover fresh threats, leaving gaps your auditors or regulators notice right away.

According to Iron Mountain, 53% of organizations update or review their document retention policies at least annually, yet 21% do so only after a compliance issue. If you’re in that latter group, you’re stuck reacting instead of staying ahead.

That makes it a lot harder to keep your risk low and your processes smooth—so there’s a better way.

A quick, structured review process solves this fast.

If you work regular reviews into your routine, you make sure your policy stays current as rules or business processes change. It saves headaches and prevents frantic scrambles after something goes wrong.

With the right document management software, you can automate reminders and reviews every quarter or year. Set up recurring checks tied to regulatory deadlines and any audit cycles you face. Show leadership that your retention policy isn’t just a one-time doc, but a living process. Reviewing and updating routinely is really the secret to setting up a document retention policy that never gets stale.

You’ll be ready before your auditors even ask.

This approach keeps your policies in sync with the real world, so you cut compliance risk and support the business as it grows.

Conclusion

Compliance headaches aren’t going away.

When you’re running a small business, every new regulation and audit feels like another landmine waiting to go off. Unstructured document chaos just adds to the stress.

Here’s the eye-opener—according to IDC, organizations with mature document management and retention programs report 70% higher audit readiness and risk mitigation scores than those without a set process. That means it really pays off to get this right, so you’re not scrambling during audit season.

But you’re not stuck where you are.

The 7 steps in this article show exactly how to reclaim time and confidence for your small business by building a simple but bulletproof retention framework.

From mapping your data to automating enforcement, learning how to set up a document retention policy lets you ditch the chaos, reduce risks, and get leadership buy-in—without burning out your IT team.

Why not take your first step today and set up a quick data audit or draft that formal policy?

You’ll see your compliance risk and audit stress drop fast.

Ready to simplify compliance? Start a FREE trial of FileCenter now and see how easy document retention can be with the right tool.