Best Practices for Developing Your Corporate Password Policy

With HR balancing countless responsibilities, updating a company password policy can be easily overlooked. But it’s a bit like locking the doors but forgetting the windows.

Creating a solid password policy might be the very reason your company avoids a massive data breach. More than 60% of data security incidents are linked to credential issues like stolen, weak, or reused passwords.

Despite this, some studies show that less than half of organizations provide their employees with guidance and best practices for governing passwords.

In this article, we’ll cover exactly what a password policy is, best practices and standards to follow, and even how you can bolster your organization's security beyond passwords.

What is a Corporate Password Policy?

A corporate password policy is a set of rules and guidelines an organization establishes to govern how employees and stakeholders create, manage, and use passwords across company systems and accounts. The policy helps reduce the risk of data breaches and ensure compliance with industry regulations.

Password Policy Best Practices

A solid password policy sits on three main pillars: 1) strong password creation guidelines, 2) clear management enforcement, and 3) keeping employees up to date with regular training. And don’t forget — review and update your approach regularly to stay ahead of evolving security threats.

Let’s examine these fundamentals in detail and see how they look in practice.

Define Purpose and Scope

The first step in creating any policy is ensuring that all your stakeholders understand the importance of a corporate password policy. Define the policy's objective with concrete statements like, “To protect sensitive company data and systems from unauthorized access.”

Outline which stakeholders must adhere to the policy. This might include all employees, contractors, and third-party users with access to company resources.

List Password Creation Guidelines

One of the most fundamental parts of any company password policy is the creation guidelines. This might include:

• Minimum length requirements: Longer passwords are exponentially harder to crack. In particular, 18-character unique passwords, even if they only contain numbers, would still take 11,000 years to crack. When creating your password policy, include a password-length best practice, noting exactly how long the password needs to be for maximum security.
  
• Required use of complex characters: Many organizations require using uppercase and lowercase letters, numbers, and special symbols. That’s because special characters to an 8-character password can increase the time it takes for hackers to crack your password from 37 seconds to seven years.
• Usage prohibitions: Emphasize what’s unacceptable in a password, like easily guessable information (e.g., birthdates, company names, or common words). The most common passwords, which often include this information, can be hacked 96% of the time.
• Screening and scoring: Many organizations implement a scoring or screening system to ensure all password standards are met. Your password policy should note whether your organization will implement one and what it will look for.

Create Password Management Rules

It’s also crucial to manage passwords and ensure they’re not accessed in storage or transmission. This part of your corporate password policy might include:

• Password reset periods: Most companies enforce a strict password re-creation policy, asking employees to change their unique password every 90 days or so.
  
• Best practices for password reset: When prompted to change a password, LastPass found that 62% of employees simply change or add a digit or character to their password. And 69% of the time, Gen Z uses a variation of a single password. So, when enforcing a reset period, ensure that passwords meet rigorous standards.
  
• Password history rules: Most systems keep track of past passwords to ensure employees aren’t reusing them. LastPass also found that employees reuse the same password an average of 13 times.
  
• Password storage and transmission: Mandate the use of encryption to store passwords in company systems, and prohibit the transmission of passwords via unsecured channels (e.g., email, instant messaging).

Facilitate Training, Awareness, and Enforcement

According to a Bitwarden report, only half of internet users are familiar with best practices of password security. So, while password creation and maintenance might feel like a no-brainer, plenty of employees probably aren’t aware of the fundamentals.

When creating your corporate password policy, provide ample training so employees understand how important it is to take password creation and management seriously. Be sure to mention consequences for policy violations — like lockout standards — and the process for addressing them.

Review and Update

Like any corporate policy, you’ll want to review and adjust as needed. This might include:

• Creating a schedule: Conduct regular reviews of the password policy (e.g., quarterly, annually, etc.) to assess whether it’s successful or not. You might collect information about data breaches, password reset creations, etc.
  
• Establishing a process: As your organization develops, so will your security measures. Be sure to create a process for updating the policy to address new threats or technologies.
  
• Assessing employee sentiment: There is such a thing as password reset fatigue. When reviewing and updating your policy, conduct periodic employee surveys to understand workplace sentiment around your guidelines and where employees are satisfied or frustrated.

Beyond Passwords: Top 3 Other Methods of Securing Accounts

While strong password policies are crucial, they are just one part of a comprehensive security strategy. Here are other essential methods to enhance account security:

Multi-Factor Authentication (MFA)

MFA adds an extra layer of security by requiring two or more verification factors to gain access to an account. There are a few types of MFA that organizations can use:

• Something you know (password, PIN)
• Something you have (smartphone, security token)
• Something you are (biometrics like fingerprints or facial recognition)

MFA can further reduce the risk of unauthorized access if passwords are compromised. Plus, it can detect and prevent credential stuffing attacks and provide visibility into access attempts.

When implementing MFA into your organization, start with high-risk accounts and offer users multiple MFA options, depending on their needs.

Single Sign-On (SSO)

SSO allows users to access multiple applications with one set of credentials. When used correctly, it can alleviate the burden of creating unique passwords for multiple accounts for employees and improve the user experience overall.

Learn More: HR’s Guide to Identity and Access Management

Cybersecurity Training and Awareness

Besides a corporate password policy, education is another key weapon in your cybersecurity arsenal. Your employee training may include:

• Cybersecurity fundamentals: Basic concepts and terminology
  
• Email security: Identifying phishing attempts, safe handling of attachments and links, and email best practices
  
• Safe internet usage: Secure browsing practices, how to identify malicious websites, and safe use of public Wi-Fi safely
  
• Mobile device security: Securing personal and company-issued devices, safe app installation and usage, and lost device procedures
  
• Data protection: Handling sensitive information and secure file sharing and storage
  
• Incident reporting: Recognizing a security incident and proper incident reporting procedures

But like with any training, it’s important that leaders make learning materials memorable, says Paylocity Risk Investigator Nate Peacher in an HR Mixtape podcast.

“One thing I like about some of our training is they sometimes can be a little funny, which makes it less boring,” Peacher said. “If you do the same training every year, employees will try and just skip to the end. But if you have training that is engaging and a little funny, you're going to remember that in ways that you may not think you will.”

Let Paylocity Take Care of All Your Cybersecurity Initiatives

Handling security measures across an organization can be stressful. But with the right best practices and tools, it can become a standardized, robust aspect of everyday operations.

With Paylocity’s IAM Solution, organizations can take advantage of a unified system and process in one place, integrating HR data and IT systems with:

• Integrated SSO and MFA: Unlock one-click employee access to productivity software without separate passwords. Smartphone and smartwatch apps with integrated SSO and MFA add additional protection to safeguard company data, making logins faster and easier than typing a password.
  
• Stronger Security & Compliance: Reporting and activity logging, centralized provisioning and role management keep you audit-ready while also meeting stringent security & privacy programs including: SOC1, SOC2, SOC 3, ISO 27018:2019, ISO 27017:2015, ISO 27001:2013, and GDPR.
  
• Seamless security success: With standardized security measures and simplified SSO tools, employers can ensure that password management and creation are a simplified process — making security simple and safe for everyone.

Ready to get started? Request a demo today.