How to Create Strong Password Policies for Your Team

✨ Why Password Policies Still Matter

In a world of biometrics, MFA, and zero trust, passwords remain a critical line of defense — and often the weakest link.

According to the Verizon 2024 Data Breach Investigations Report, over 60% of breaches involve stolen or weak credentials. For SMBs, where users may share devices, reuse passwords, or rely on memory, a single compromised password can expose the entire business.

But strong passwords alone aren’t enough. You need a clear, enforceable password policy that balances usability and security.

This guide shows you how to create one — step by step.

What Happens Without a Password Policy

Let’s start with the risks of doing nothing:

• Users set short or common passwords (e.g., "Welcome123")

• Password reuse across work and personal accounts

• Admin accounts remain unrotated for years

• No MFA or alerting for suspicious logins

• No rules around shared passwords or guest access

Real-world consequences:

One compromised email account can lead to vendor fraud, internal phishing, and unauthorized system access — often silently for months.

Core Elements of a Strong Password Policy

A good password policy doesn’t just dictate length — it defines expectations, protections, and recovery procedures.

Let’s break it down.

1. 🔢 Minimum Complexity Requirements

Set a baseline for all user accounts:

✅ Minimum 12 characters (16+ for privileged users)
✅ Must include upper + lowercase, number, and symbol
✅ No dictionary words, company names, or keyboard patterns (e.g., "qwerty123")

💡 Tip: Consider passphrases like Giraffes!Love!Clouds7 — easier to remember, harder to crack.

2. 🔁 Password Rotation

For standard users:

• No mandatory rotation unless compromise is suspected

• Encourage long, unique passwords stored in a manager

For admins and privileged users:

• Rotate every 90–180 days

• Audit access logs and remove stale credentials

Note: Forced rotation every 30 days is outdated and can encourage bad habits like Password1!, Password2!, etc.

3. 🔐 Multi-Factor Authentication (MFA)

MFA is non-negotiable.

Require MFA for:

• Admin and IT staff

• Finance and HR portals

• Cloud management consoles (AWS, M365, Google Workspace)

• VPNs and remote access tools

Prefer TOTP apps (e.g., Authy, Microsoft Authenticator) or FIDO2 keys (e.g., YubiKey) over SMS.

4. 🧠 User Education

Even the best policy fails if users don't understand why it matters.

Include training on:

• How to build strong passwords

• Why password reuse is dangerous

• How attackers use credential stuffing

• How to use password managers

✅ Provide screenshots and examples in onboarding materials.

5. 📲 Password Managers

End the sticky note era.

Provide a vetted, secure password manager such as:

• Bitwarden (open source, affordable)

• 1Password for Business

• LastPass Teams (check breach history)

• Keeper Security (strong SMB features)

Enforce usage policies:

• Required for storing shared passwords

• Disallow saving credentials in browsers

• Auto-lock after inactivity

6. 🔒 Account Lockout & Monitoring

Protect against brute-force attacks.

Policy tips:

• Lock accounts after 5 failed attempts (with cooldown or admin unlock)

• Monitor login attempts by region, IP, and time

• Alert IT on anomalies (e.g., midnight login from another country)

Tools like Microsoft 365 Security, Google Workspace Admin, or Okta can handle alerts and automated responses.

7. 🔁 Guest and Shared Account Rules

For shared environments:

• Avoid shared logins wherever possible

• Use individual accounts with role-based permissions

• If shared access is required (e.g., kiosk), log usage with session recording or access auditing

🚫 Never allow email or cloud app access via shared passwords.

Sample Password Policy Template (Excerpt)

Here’s a snippet you can include in your official documentation:

Minimum Password Requirements

• Must be at least 12 characters

• Must include 1 uppercase, 1 lowercase, 1 number, and 1 special character

• Must not include the user’s name or company name

• Passphrases are encouraged (e.g., Time2!Drink-Coffee4)

Password Rotation

• Privileged accounts: rotate every 180 days

• User accounts: change only if compromised

Authentication

• MFA is required for all remote access and sensitive systems

• SMS-based MFA is discouraged unless no alternative exists

Password Storage

• Passwords must not be written down or stored in browsers

• Use the company-approved password manager for all credentials

Password Policy Do’s and Don’ts

Real-World SMB Example

A small marketing firm had one shared Gmail account for client coordination. It used the password Marketing2022!.

This password was reused on a compromised site. An attacker accessed the inbox, spoofed invoices to clients, and rerouted payments — costing the firm $17,000.

After the incident, they adopted:

• Unique accounts

• Bitwarden for shared logins

• MFA across all Google Workspace users

• Alerts for login attempts from outside the U.S.

Compliance Considerations

If your business is subject to:

• HIPAA: Requires “unique user identification” and secure login procedures

• SOC 2: Password complexity and access control audits are common

• ISO 27001: Controls for authentication, password storage, and policy management

Make sure your password policy aligns with the NIST SP 800-63B guidelines.

Final Thoughts: Making Password Policies Work

A password policy isn’t a document — it’s a culture. When you:

• Provide tools (password manager)

• Enforce smart defaults (MFA, complexity)

• Train your people

• Monitor your systems

...you create a team that understands security is everyone’s job.

🔐 Passwords may be simple — but their impact is profound.

📥 Download: Free Password Policy Template for SMBs

Get started today with our editable Password Policy Template (PDF + DOCX) — crafted for SMBs, MSPs, and IT teams.
👉 Download the Template →