Explain the Difference Between an Inside Board Member and an Outside

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The Answer is An inside board member is one who is a founder, employee, family member, or retired manager of the firm, whereas an outside board member is someone with no direct connection to the business. Which type of board member is better is a matter of opinion and circumstance; research has not provided any clear results on this issue. In general, however, outside directors are beneficial for succession planning and for raising capital. They can often bring a fresh point of view to the strategic planning process, along with expertise that the founders may not possess. Insiders have the advantage of complete knowledge about the business; they are generally more available and have demonstrated their effectiveness in the particular positions they occupy in the business. Typically where the entrepreneur/CEO has power to configure the board, the board will be small and composed primarily of insiders, particularly family members and co-founders. But there are political ramifications when the board members report to the CEO; insiders may not always be objective and independent. They also may not have the broad expertise from outside the company that is necessary to effectively guide the growth of the business.

Explain the Difference Between an Inside Board Member and an Outside

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