Both Type of the Board of Directors Have Their Own Advantages and Disadvantages Essay Example

in this scenario have authority to collect any sort of information from management, resultantly their recommendations could only be based on what management had informed them and they might not be aware of the issue that management was not willing to share with them.

The embers of boards of directors composed of insiders usually have no say or very little influence on the company’s strategy and performance oversight of management.

Since they lack legal responsibilities therefore it becomes hard to hold the members of the board of directors in any scenario accountable or responsible of any advice they gave.

The board of directors might not consider their roles seriously and they might not contribute effectively in accordance to the duties of the real board members.

Advantages and disadvantages of the board of directors composed of outsiders:

Advantages:

1. A board of directors composed of outsiders have a variety of expertise collected together for making the business flourish more and more
2. The outsiders bring a outside vision and broad perspective on the control of business and the strategy.
3. It adds to the knowledge, enhances the skills that might be missing within the company previously.
4. Since different experienced people get together so more brain becomes available for the discussion to flourish the business.
5. The hiring/firing process and the promotion method become independent of the insiders view and hence the chances of favoritism decrease.
6. An outside member can become an objective judge of disagreement for the insider managers and can provide balance to the difference among the members.
7. The outside members can increase the business through their contacts and connections.

Disadvantages:

• The outside member of the board of director is usually a burden on the
  

business finance as they require high salaries and other fringe benefits.