The Cost of Not Following Policies

Investing in a policy management system is never “fun,” but neglecting good policy comes at a steep cost.

December 22, 2020

Article highlights
  • The areas most affected by policy negligence.
  • The legal ramifications of deliberate indifference.
  • How to maintain consistency in policy practices.

Keeping policies and procedures up-to-date is an essential part of protecting your organization and ensuring operational excellence. But policy management largely happens behind the scenes, so it can get pushed aside in favor of more “urgent” priorities.

It may be hard to convince organizational leaders to invest in a policy and procedure management system, especially when budgets are tight.

It’s true: policy management systems can be expensive. But the costs of policy negligence can be far higher.

A good policy and procedure management system is kind of like an insurance policy. You may not be able to see the benefits of homeowner’s insurance every day, but if your house burns down, you’ll be glad you have it.

Neglecting your organization’s policies is like letting your insurance coverage lapse.

The truth is, even a fairly small lawsuit can significantly harm your organization. Good policy management is the first line of defense.

Developing and regularly updating policies helps your organization reduce litigation risks, properly train staff, and maintain a culture of excellence.

Policy negligence—neglecting to update policies and ensure they make it to employees—is simply not an option for well-run organizations.

Legal Costs of Policy Negligence

By clearly outlining expectations and practices, well-maintained policies can prevent incidents that could result in lawsuits. If a lawsuit does arise, courts will often look at company policies to see if the organization is at fault.

Letting policies get outdated could mean that your organization is no longer compliant with ever-shifting laws and regulations in your industry. This can have significant legal ramifications.

Avoiding deliberate indifference

What happens if policies and procedures are not followed?

The legal term for this is deliberate indifference. It occurs when an organization fails to address an inadequacy that is likely to result in the violation of constitutional rights.

For example, for corrections agencies, court cases such as Estelle v. Gamble have established that refusing to respond to an inmate’s requests for medical attention can amount to deliberate indifference.

To avoid deliberate indifference, organizations need to make sure to maintain thorough policies in high-liability areas such as harassment and discrimination.

Organizations should keep up with current regulations and case law in important policies. Neglecting to update out-of-date or inaccurate policies could contribute to a finding of deliberate indifference.

Of course, simply updating policies isn’t enough. Organizations must follow through on training and supervising employees to make sure practices align with policies.

Avoiding deliberate indifference is especially important for government organizations such as law enforcement. In Monell v. Department of Social Services, the Supreme Court held that government can be sued as a “person” in a civil action for violating constitutional rights.

Allegations of Monell violations center on official agency policies. The plaintiff must show that the violation of their rights resulted from an agency’s official policies and practices.

To meet Monell liability standards, government agencies must be able to prove that they have good policies and training in place.

Records and privacy

Policy and procedure management usually also governs how organizations store and maintain records. In industries that handle sensitive information, record keeping can be a liability issue.

Ineffective document management may put organizations at risk for violating laws such as the Sarbanes-Oxley Act and HIPAA. Violations of these laws can cost organizations millions in lawsuits, damage company reputations, and erode client trust.

Financial Costs of Policy Negligence

Surveys from law firm Norton Rose Fulbright have found that litigation costs are taking up an increasing percentage of revenues for U.S. organizations.

Sixty-nine percent of companies surveyed in 2014 had legal budgets of more than $1 million, as opposed to 52 percent of companies in 2012. Even without a huge payout, the legal fees from fighting a lawsuit can do significant damage to your organization’s budget.

A lawsuit resulting from policy negligence diverts funds your organization could invest in expanding the business. In some cases, it could do enough financial damage to shut down your organization entirely.

Security Costs of Policy Negligence

As technology advances, storing important documents on a shared drive or free cloud storage solution has become increasingly risky. Policy negligence can leave your organization open to hacking.

According to the Breach Level Index, nearly 6 billion data records have been lost or stolen since 2013.

Data breaches can be especially risky for organizations that keep records that include personal information of clients and employees. Hackers also target retail organizations to expose customers’ financial information.

Along with investing in a secure location for sensitive records, your organization also needs to establish procedures to make sure those documents stay private. This may include regularly updating passwords, creating a system for deleting irrelevant or outdated information, training employees to spot potential hacking attempts, and more.

Policy Negligence Hurts your Operational Excellence

As you may imagine, a lawsuit, financial loss, or security breach could ruin your organization’s reputation and threaten its very existence. But even when you’re not facing a crisis, well-managed policies keep things running smoothly.

When you neglect your policies, processes get tangled, employees don’t get the information they need, and operational excellence is compromised.powerdms-assets-photos-019-man-desk-files-737x394

You lose consistency in practices

In every company, practices shift and evolve with time. But if you fail to regularly update, maintain, and distribute policies, employees won’t know how to perform the processes that keep your organization operating smoothly.

Instead of following official procedures, every employee will do things slightly differently. This results in inconsistencies. It may mean that customers have vastly different experiences depending on which employees they interact with.

Or it may result in missing or misplaced information and records, which puts you at risk for many of the things described above. Policies and procedures keep employees on the same page and guard against bad practices.

Well-maintained policies and procedures can grow with your organization and help course correct when practices aren’t working.

Employees don’t get the training they need

Policies provide a basis for employee training. Policies often outline what training will cover and how often it should occur. Therefore, when you neglect your policies, your training programs suffer, as well.

Good policy management, however, can help your organization streamline training. By giving staff members access to the information they need, a policy management solution like PowerDMS can free up time for more hands-on training.


You can’t hold employees accountable

Employees can’t meet expectations if they don’t know or understand the expectations. Policy negligence leaves you with little control over the actions of your staff.

It’s impossible to stay on top all your employees unless you have a systemized way of informing them, training them, and keeping them accountable for proper behavior.

Good policy defines terms, sets clear guidelines, and establishes disciplinary measures. But it’s not enough just to have those policies written down—you also must follow through on them in order to hold employees accountable.

You waste valuable time

Holding employees accountable to policies includes making sure every staff member reads and signs off on policies and procedures. Without a good policy management system, you’ll have to chase employees down to collect signatures and ensure understanding.

This eats up valuable administrative man hours that could be better spent on higher-level planning to improve your organization. Also, bad policy management can leave your employees spending too much time searching for the information they need to perform their jobs.

Studies show that the typical worker spends roughly 2 hours searching for information. And a LexisNexis survey found that 62 percent of workers say that they can’t sort through the information they need quickly enough, and their work suffers as a result.

When your policies aren’t managed well, your employees spend too much time trying to find the information they need instead of actually doing their jobs.


Investing in Policy Management

Doing nothing to secure and actively manage your policies leaves your organization exposed to liability. Policy negligence leaves you at risk for financial losses, security breaches, and a ruined reputation.

Why is it important to review policies and procedures? Outdated policies hurt your day-to-day operations resulting in inconsistencies, inefficient training, little accountability, and wasted time. Implementing a policy management system can be a significant remedy to these issues.

The costs of a policy management solution are nothing compared with the cost of doing nothing. A secure, web-based solution like PowerDMS can help you efficiently organize and manage your most crucial documents.

PowerDMS lets you easily collaborate on policy updates, control document privacy, and view the complete history of every document.

You can distribute policies with just the click of a button, track employee signatures, and even conduct online training. This reduces risk, increases compliance, and allows you to focus on operational excellence.

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