Society For Human Resource Management (SHRM) Certified Professional Practice Exam

What type of worker is Larry if he is joining a business' board of directors with an outside perspective?

1. Ethical director

2. Outside director

3. Chief Audit Officer

4. Consultant

The correct answer is: Outside director

Larry is classified as an outside director because he is joining the board with an external perspective. Outside directors typically come from outside the organization and are not involved in the day-to-day operations of the company. Their role is crucial as they provide independent judgment, diverse experiences, and a well-rounded viewpoint that can help guide the company’s strategic decisions. They are often brought in to enhance governance and provide an unbiased perspective on the company’s performance. In contrast, an ethical director focuses on maintaining moral standards within the company, which may or may not relate to being an outside director. A chief audit officer is usually an internal position that oversees the audit processes, ensuring compliance and financial integrity within the organization. A consultant provides expert advice and specific recommendations but may not hold any governance responsibilities on a board of directors. This distinction highlights the unique value that outside directors bring to a board, particularly in terms of independence and objectivity.