What is Records Management?

Records and information management is the management of the information resources of the organization.

It has always been a key function and can be compared with the management of the human resources and the capital resources of organizations. Executives and managers have long understood that they needed to make sure that their divisions and departments met their performance goals, but in addition, they were responsible for the human resources of their operations (hiring, firing and employee retention) and the capital resources (financial forecasting and the budget process). It was never made clear, and apparently it was not taught in any MBA programs, that these leaders were also responsible for the management of their information resources.

Most organizations have gotten away with having poor records and information practices in the past. Organizations’ losses in productivity resulted in costs that were difficult to measure and/or ignored. Financial penalties have generally been small and were defended by the view that “nothing could have been done about them”.

In the past, information management was associated with filing paper documents, which was considered beneath many people’s aspirations, were relatively small in volume (larger volumes of documents could always be microfilmed or imaged) and meant, in many cases, that the needed documents could be found, eventually, if enough time and effort was made.

While the control of an organization’s information, the tools for doing business, should have resulted from following good management practices and common sense, it is the fact that the business and regulatory climate has changed drastically, since 2002, that the need to control an organization’s records has become important.

Why is Records Management so Important?

As a result of the failure of Enron and the subsequent collapse of Arthur Andersen, Enron’s external auditor, the Sarbanes-Oxley Act (Sox) was passed by the Federal Government. This act holds senior executives responsible for failures in business financial reporting and makes conviction of fraudulent financial reporting much easier to pursue by regulators. From this last sentence, one might question what this has to do with records and information management.

Senior executives, and businesses, need to be able to show, through the records and information of their organizations, that the summary financial numbers they report in the Securities and Exchange Commission (SEC) required reports and annual business reports are based, and supported, by lower level summary analyses and, at the very bottom, the actual Accounts Receivable accounts and actual Accounts Payable accounts. Business records are required to show that the business accounting decisions satisfy Generally Accepted Accounting Practices (GAAP).

The avalanche of electronic records in businesses has made the control of records and information vital to businesses operations. A study that is widely quoted found that 93 percent of all business records were created by the use of computers. The increase in volume of electronic documents makes it paramount for organizations to manage them. The volume, and mere nature of the documents, makes them hard to control. Looking at a file directory on a computer and reading the document titles makes it much more difficult to discern their content and importance than the old fashion way, of opening dusty folders to examine the paper contents.

Companies and firms are no longer ignoring their records and information practices. Executives and management are addressing their shortfalls in many, many businesses. Those companies that do not join this trend will experience regulatory fines and penalties, loss of earnings and suffer public ridicule. This latter result has already been termed “reputational risk”.