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Internships - Paid Versus Unpaid |
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Written by Tom Stanfield, Chief Operating Officer at Simplicity Tactics
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I have been involved with internship programs for 8 years. I have managed the program for 2 companies and have help many other companies start or improve their programs. In those years I have seen the tremendous positive effect an internship program can have on a company or organization. I consider myself a champion for the cause of internship programs.
It seems through the recent economic situation more and more companies have considered unpaid internships. This is hot topic within the U.S Labor Department. The Fair Labor Standards Act addresses the criteria required for an internship to be unpaid. The Labor Department says;
• The internship is for the benefit of the intern
• The intern works under close supervision
• The intern does not displace regular employees
• The employer derives no immediate advantage
• The intern is not entitled to a job after the internship
I must clearly state that I personally have a problem not paying an intern in a normal business situation. In my years involved with internships I have not seen an internship that did not bring value to the business. If the intern brings value to the business, they are actually part-time employees.
I would like to see this conversation about paid versus unpaid to be changed to return-on-investment (ROI). I have witnessed tremendous value derived from a well instituted internship program. Some have been for-credit, others have not. That is not the question. A well instituted program will bring ROI. If that is true, the intern must be paid.
An internship program can bring the following returns:
• Reduced turnover by allowing a “4 month interview”
• Allows a controlled development program for potential new staff
• Gives a business a perpetual source of new full time talent
• Creates “flex” in the business cycles of “ups and downs”
• Allows managers to focus on critical aspects of the business by moving work down the “chain”
We have witness turnover reduced from double digits to less than 2% simply by recognizing the value of the “4 month interview”. During an internship you will clearly understand if the student has the attitude and abilities needed to become a staff member after graduation. Can you really determine a candidate’s “fit” in the normal 3 or 4 interviews that typically last 30 minutes each? Think about the normal interviewing process taking around 2 hours in a “best face forward” situation compared to 4 months of day-to-day interaction. Which do you think would create lower turnover?
Internships are an inexpensive future staff development program. The intern is obviously paid less than a staff member. If you see this as training time for the future employee, it reduces the cost of training.
Having interns in every area of a business allows the business to have a continuing source of candidates for future full time staff. When you need to add a full time employee, you will have many to choose from. Interns are also your best “recruiters” on their campus. If they have a great experience, all their friends will know it.
We have all just experienced the “down” side of the economic cycle. In 2009 it was a much easier choice to eliminate an internship position instead of release a full time employee. Now that we are approaching the “up” side of the cycle, do you ever really have growth so fast you need to go from 6 to 7 full time employees in a given area of your business? Don’t you really just need 6 ½? This is a perfect place for an intern. If your growth continues, you will have your full time candidate in your business and potentially already trained.
To me the biggest ROI is moving work off of managers’ desks and giving them time to invest on projects they currently “don’t have time to do”. Over the last 8 years we have discovered that most employees have work they do every day that is actually “below their pay grade”. If you complete a review of an area of your business, you will typically find you can move a total of 20 or more hours from your employees’ desk onto an intern’s desk. If you paid that intern $10/hour, it would cost you $200/week to free up 20 hours for current employees. Do you believe your managers could put more than $200/week on the bottom line with this freed up time? I have seen it happen over and over.
My answer to the question of paid versus unpaid internships is to change the paradigm. Businesses need to see internships are a profit center, not a cost.
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Last Updated ( Wednesday, 21 July 2010 )
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