How to Convert Your Unpaid Intern Program Into a Paid Intern Program
Creating a paid intern program is good business. It helps you find more talented students (in fact paid positions get upwards of 2.7 times as many applications as unpaid roles), helps increase conversion of interns to full-time hires, and creates more buy-in form students during their internship. In addition, an increasing awareness about the laws and rights surrounding unpaid internships has made it even more important than ever in the past to pay interns. Costly lawsuits, PR scandals, and renewed focus from Department of Labor to enforce paid internship laws, are just a few of the reasons why.
The video below will help share some of the key issues surrounding unpaid internships, benefits to hiring paid interns, as well as detail how you can turn your program (large or small) from unpaid to paid, by getting buy-in from your team and budgeting appropriately. Enjoy!
Today’s topic is on “How To Create A Paid Intern Program,” and the subheader is “Getting On The Right Side Of History.” The reason for that is, here at Looksharp, we have a really strong belief that there is a powerful, legal, social, and business benefits that come with transitioning your program to a paid program. If you haven’t read it yet, I highly recommend you go to our employer blog. If you search Looksharp University Recruiter Blog into Google or go onto our site on the employer’s section and look up the blog, you’ll be able to find it.
But, we wrote a really in-depth article outlining some of the bigger, societal reasons that we feel strongly about this. It was definitely a hotly debated post, and we welcome all that feedback from different businesses, and we recognize the complexity around paid and unpaid program, but really want to foster more conversations on the topic. It’s interesting, but on Looksharp itself, on our site, we do currently allow both paid and unpaid positions to be posted.
It’s our general belief that, right now, one of the main reasons why unpaid programs are so prominent is because a lot of companies don’t have the information that you’re going to get today. A big, big focus is going to be on what are the benefits to you for paying interns, and how do you manage to budget that in? For a lot of companies, we get this question that, “It just feels like it’s this decision between having no intern program at all or having an unpaid one.”
We’ve definitely been a small company and hired interns who we pay, and we’ve worked with tons of small companies who have done that. It’s a matter of structuring your program in a way that you get more value than what you end up paying, which is something you can definitely do. That’s why we do want to have an open community, where you have both unpaid and paid positions on our site because ultimately, we want to be able to have that opportunity to convince you why you’re going to benefit from paying your interns.
So with that context, just getting into it … A quick roadmap for what we’re going to talk about today is one, if you’ve been on a webinar before with us, I apologize for some redundant information here, but I always start with a quick background on me and our company. Two, we’re just going to quickly run through the real deal behind unpaid internships, looking at the Department of Labor’s six-point tests and the legal side of … the legal definitions behind unpaid interns.
Next, we’re going to look at the really critical reasons why you should pay your interns. These will become the arguments that you can make to anyone in your organization who’s uncertain about adding and budgeting in this amount that can be substantial, but not too substantial for a paid intern program. Next, we’re going to talk about getting buy-in from other people in your departments and company for a paid intern program. I recognize that that process can take a little while, and so it’s something that we want to work with anyone to really empower you to make strong arguments if you feel that’s something that … a direction your program should go.
Next, we’re going to talk about typical levels of compensation for different interns and make some arguments on why you can sometimes … Even going to a paid program, you don’t need to pay a ton if you structure other parts of your intern program really effectively and offer all kinds of other compensation benefits to students. One way to reel in costs is to pay less, but still pay, and then really supplement that with fantastic resources for the students who participate in your intern program.
Last up, we’ll have plenty of time for question and answer. One other high-level note … The point here is to address issues for both small businesses and large companies. Definitely recognize that there’s different challenges for either side, although a lot of it just comes down to the process of figuring out why it might be worth it to pay an intern, and so a lot of the content focuses on that fact.
Real quick about Looksharp … We were started in 2009. We have over 600,000 students visiting our site monthly, and work with about 850 universities at this point. We’re extremely dedicated to creating an easy resource for students to search all of the different types of internships that are available and find amazing positions, and ones that really fit their specific needs and interests. We always find that the best internship matches are when a student works somewhere that they’re really excited about and comes in every day wanting to create value, work hard, and support your goals. Our site is built to foster those types of matches.
At the top of the page, here, is just a note that we got from a student that is one of our main motivators for why we built Looksharp and continue to work on it. It’s a student who’s a first generation college student, who fought this struggle of going online and finding a ton of unpaid internships. It wasn’t until they were able to come onto our site … and where they were able to really easily distinguish paid versus unpaid positions, through some of the badges that we have on our site, and find one that was going to pay them and also be a great learning experience, and so a really ideal summer match for this student.
I think it’s just important to highlight that one of the main reasons that this issue is so critical is that there are a lot of students out here, like this, who are making this distinction between, “Do I get a job that pays me and helps me recoup college loans? Or, do I get one that gives me experience and a foothold into a new industry?” With that in mind, it’s a really … There’s a really great good that comes from offering paid programs if you’re able to.
Another reason why we have some experience in this area … We’ve hired over 50 different interns for our company, everything from graphic design students to local campus ambassadors, who do marketing work for us on different campuses. So, we really do have a depth of experience. When we were a three-person company, we hired our first ever intern, paid them $10 an hour, and they built graphic design resources, like our resume template that has seen hundreds of thousands of views from different students and continues to drive significant value for our company. We’ve always had interns that have far exceeded the costs that we’ve paid them, and so, with that experience in mind, it’s one that we really enjoy sharing.
Then last, just a really quick recap of why hiring interns … The top three reasons we see are filling in critical skill gaps … So, like I mentioned, if you’re a small company and you don’t have graphic designers in house, sometimes it’s very worthwhile to hire an intern to fill in that skill. I’ll put these all in the context of why it’s worth to pay. In that particular instance, hiring an intern and teaching them something about your broader business, such as graphic design, is going to be far less expensive than hiring a great graphic designer who’s a contractor, and you won’t get the added benefit of getting to work with a student who might eventually become a full-time employee.
The second piece … Eighty-seven percent of employers say that they use interns as a component of making future hires, so there really is no better way. It’s fantastic to have interns who are with your company for three to four months. There’s a set end time, so if they’re not working out, then it’s very easy to transition them out of the company. If they are working out, they’ve had the opportunity to get to know your team and culture, and there should be no reason why you haven’t created a compelling experience that will be likely to have that person want to come on board.
So, interns are an incredibly powerful tactic for making future hires, and there’s very, very large costs that you can avoid by making hires through an intern program versus other resources, like recruiting or … basically yes, going on campus and trying to hire entry-level students. Lastly, some companies do use interns for regional expansion. That’s more of a less common case, but if you’re opening a new office somewhere, and you need more of a ground presence, and you don’t have the staff there yet, some people do like to ramp up using interns.
Okay. So, diving into the topic today … The first part of this presentation is going to be really focused on education, and getting a good sense of the shifting landscape of the unpaid internship, and why it’s becoming increasingly important to pay interns. Then from there, going into how you might be able to implement that. So again, many of you might know some of these rules, but for those who don’t, this is a really important first step in understanding the internship landscape.
It often feels like there might not be laws around unpaid interns … that it has become a very common cultural practice. Around 48% of total internships are unpaid, and so it’s just a very common practice, and there are entire industries that have … the status quo is to not pay interns. Oftentimes, people wonder, “Why should you pay interns when so many people are not?” The fact of the matter, though, is that under the Department of Labor’s ruling, unpaid internships at the vast majority of for-profit companies are illegal.
So, the Department of Labor has issued this six-point test that can come off as a little bit vague sometimes. It talks about how an internship experience should be for the benefit of a student … that an intern should not displace regular staff. There’s six points that are important. Just as a quick note, we have a intern compensation guide on Looksharp, so you can download. That goes into way more depth on each of these points. But, the most important point that gets sited in this process is that an employer should receive no immediate advantage from an intern. In fact, the employer might be impeded.
So, the Department of Labor basically brackets internships as something that’s for the benefit of the student. It’s highly educational. Because of this, the Department of Labor has come out and said that for the vast majority of for-profit companies, if you’re not paying your interns, you’re not abiding by the law. So, with that in mind, it has become pretty clear. Although, there’s so many instances of companies, who are clearly not paying their interns and getting away with it, that it still creates a gray area.
The other gray area that some companies think through is that with all the training that you invest into a particular student, and if you’re doing a really good job of making a highly educational program, it might be that the cost that you’re incurring as a company, from all that training, outweigh the benefits that you gain from the work that the intern’s doing. So, maybe you can make this argument that the point five of the six-point test does not apply to you. Again, that has not been proven very frequently. It actually has never been proven in a court of law.
All of the internship lawsuits that have come about, they’ve usually resulted in settlements, and so again, this issue is becoming more and more prosecuted. So, it’s one where that argument that some people are taking just feels like a way to kind of try to get out of this issue rather than an actually valid … It’s not really a valid argument for why not to pay interns. So with that in mind, the legal arrows definitely point towards the fact that you should be paying your interns if you’re a for-profit company.
So, tying into this … I mentioned how this has been a rule for a long time. It hasn’t been heavily enforced, but what is interesting and worth noting is that the cost of having unpaid interns seems to be going up, and it doesn’t seem to be a trend. There is a … Right now, there’s a rising social awareness about the issues of unpaid internships, and so we can go through a few examples to help indicate why this is happening and how it could ultimately cost you a lot of money if you’re on the wrong side of this debate.
So, the first thing to know is that there’s been an increasing number of high profile internship lawsuits. A lot of these fall into the entertainment and fashion industries, which are sort of notorious for having not only unpaid internships, but ones that don’t really provide extensive experience for the student, and so really skew towards the negative end of the spectrum of what an unpaid internship can be.
But, you can take the example of the Charlie Rose Show, who suffered from some significant negative publicity over having had an unpaid intern who ended up suing them. It got written about hundreds of times in the news, and then they ultimately settled for roughly a quarter million dollars. So, when you start weighing in the costs and benefits of an unpaid internship program, the potential for having to make a really large payment and settlement is going up. So, that’s just one area of concern to keep in mind.
When we think about the reasons why this likelihood for a lawsuit and likelihood for negative PR continues to go up, what’s happening is that there’s a lot of awareness around how unpaid internships fit into some of the broader social issues taking place in the U.S. So, a lot of people who are unemployed are starting to do internships as a way to break into an industry.
Oftentimes, they’re not getting paid at one internship, and then they’ll take on a second internship and won’t get paid for that one. They’ll do what’s called an eternal … become an eternal intern, and so they’re just constantly interning and not breaking through to the next step. It’s caused some really poignant responses from the unemployed community, and this is starting to kind of get interwoven with all of these different labor rights issues that are taking place right now.
So, this trend is on the rise, and it’s also been taking place in the UK, and in Canada, and is now starting to happen more and more here in the U.S. So, our predictions are that awareness around this issue are going to only go up, and more and more interns and legal groups are going to seek out prosecuting companies that are not following these rules. So, while you can definitely get away with things right now, I would put up a warning that this won’t be the case for too much longer.
Another example of what happens with unpaid intern programs is HootSuite, which is a Canadian company who had an absolutely stellar intern program. They do everything from training their interns religiously to getting them out to great events and showing them … teaching them a lot about their business and rotating them through different departments, and so everything that would comply with a really good internship program. Yet, on the social media website Reddit, someone started talking about how their intern program did not sync up with the legal rules around what a for-profit company should be doing, which is paying their interns.
Because of this, there was a massive outcry. It got mentioned in numerous Canadian publications, and over 500 comments were made on the Reddit post, and so significant negative PR towards HootSuite’s intern program, which by all other means outside of payment was fantastic. They ultimately rolled back their policy and started paying all of their interns from over a year ago, and so again, not only the negative PR, but a significant cost involved with their unpaid intern program.
Okay. So, that’s kind of … I didn’t mean to jump in too quickly into fear tactics on this, but just want to make people aware that certainly there are a lot of unpaid internship programs right now, but the general trend is that this might not be something you can do for much longer. So, you should really take note of that and start thinking about how to change your program towards a paid program.
The next topic I think is even more important. This is on why you should pay your interns, and it’s all from a business perspective of how your business is going to benefit from having a paid program. There’s extensive data and research on this topic, and there’s a reason why the best companies in the World, who hire the best talent, all pay their interns not just minimum wage but really market competitive rates.
They want to be able to hire the types of students who are going to be extremely successful both in their intern program and drive value during the time that they’re there, but also ones who are ultimately going to want to … who they’re going to want to hire. With that being such a critical goal for most companies, it’s really important to think about what your goals are with your intern program and what kind of investment you’re able to make to reach those goals.
So, just getting into reasons why to pay interns … The first topic on diversity. A lot of intern programs are … One of the number one reasons that companies do have intern programs is trying to hire a large number of entry-level students, and trying to accomplish some of their broader HR goals, from the ground up, with their intern program. For most companies of any size greater than 50 people, and that should be the case for all companies, creating a really diverse culture within your company is a huge, hugely critical goal.
To connect the dots here, from unpaid internships to diversity, it’s known that there’s a higher percent of students who are minorities … are those who are going to be first generation college students, and those who are going to be saddled with student loan debt that inhibits them from taking on unpaid internships. In fact, 81% of African American students are receiving some sort of financial aid and paying back financial loans.
So, with that in mind, you think about the fact that the vast, vast majority of African American students, and a huge percentage of all minority students, are in the process of repaying school loans. You can sort of assume what the impact of having an unpaid program is going to be on the types of candidates that you’re going to receive, and thinking that through on how it’s going to impact the overall makeup of your company and, ultimately, your bottom line results as a company.
Another important thing to note is we hear … One of the most common points of feedback we hear from employers is that we really want to pay our interns, but we want to see how well they do first. So, we want to have them on board for a month and get a sense of their … Are they really going to drive value? Then, we’ll switch to a paid program. This creates a catch 22 because ultimately, the way that you get high quality interns is by offering a fair and well incentivized program. Then, those types of interns are the ones who drive tremendous value through your organization, and those are the ones you want to hire.
There’s a lot of companies who have had a bad intern experience, hired someone who didn’t really quite fit their culture or give them value, and because of that, they’re sensitive to paying future interns. But, it’s definitely … You kind of get caught in some circular logic there. So, the point we make here is that there’s a massive delta between good interns and really great interns. Great interns don’t necessarily need to be the ones who have a 4.0 GPA.
They’re the ones that have … If you’re a social media company, they have their own social media accounts, and they followed your company for a little while, and they’re really excited about all of the new trends in social media. They’re the ones who have started a club that’s relevant to your company’s mission. These students … The reason why they’re such a huge delta is when you hire the right student, they’re the ones who come in, every day, with massive amounts of energy, new ideas about how to improve your product and different processes within whatever department they’re working at.
The just okay intern, they can have great GPAs and they can have a really strong resume, but they’re going to come in and not be super motivated. They’re going to see this as a three-month resume building experience, and they’re going to be the ones that are going to be tricky to manage and motivate, and ultimately cause a bigger drain on your team and resources. So, whatever intern you hire is a huge investment in your time and your team’s time, and so getting some who everyone’s excited to work with and really drives results will far outseed the salary of that given intern.
So, just recognizing that there is a big, big difference between a really great intern and just a good intern helps, I think, solidify the argument for paying that extra amount to make sure that you get that really great intern versus an okay one. If you want a more data driven reason to understand why greater quality interns come when you pay, looking at the last few months of data on Looksharp, positions that offer a paid role get over two-and-a-half times as many applicants as ones that offer an unpaid role.
So, students really do seek out positions that are paid. It’s really hard to state enough how big of a difference in quality that that expanded pool is going to result in when you make your hire. It’s going to be the difference of someone who your team loves working with and who really gets great results on all the projects they do, and someone who’s going to be less experiences and take a lot of time and effort to manage.
The next thing to speak about is paid versus unpaid is something that’s deeply reflected within your culture. If you’re a company that really just brings in interns, has them do low level work, and then at the end of the internship, three months later they leave, it says something to all of your employees about how you think of your employees and what value you place in the people who are contributing work into your company.
Here are a few quotes. Again, this is pulled from … and the URL is on this slide … our blog about why you should pay interns. But ultimately, there’s a strong consensus among students that they’re being exploited when they’re getting pulled into unpaid internships even if they’re getting taught a tremendous amount. So, when you think about the type of culture that you want to build with future employees, thinking about payment is a really important part of that.
Okay. So, diving deeper into value, here are some more numbers that really highlight why it’s going to be an ultimate business benefit for you to pay your interns. So, 41% of unpaid interns get a job offer, compared to 63%. This is really indicative of the quality of candidates that are had through a paid role. They’re just more likely to exceed your expectations and warrant a job offer. Eighty percent of employers, as I mentioned before, are aiming to use their internship program to make full-time hires. So, if you think about this as something that’s going to be driving the long-term value that a future employee will, the upfront cost of a paid program is extremely minimal.
Then diving deeper in, there’s a large difference between the retention rate of an intern versus someone that you hire directly through recruiting. So, someone who has started at your company as an intern will, after one year, have a retention rate of just over 75% … versus someone who did not start as an intern will be 66%. Then looking at five years out, there’s a 62.4% chance that an intern will still be with your company … or that employee will still be with your company if they started as an intern … versus an under 50% chance that they will be if they were just hired directly out of school and never interned through your company.
What this all points to is that interns are a uniquely powerful way to source candidates who are going to stay at your company for a long time, and really create value for your company five years down the road. So, again, just thinking about this as a short, three to fourth month investment is really not a great way to attribute the cost that you’re putting into your intern program. Ultimately, you’re spending money now to get value, for five to ten years out, of really great and highly suitable future job candidates.
Last and not least … Paid interns are far more likely to accept the job than those who aren’t paid. So, this is the critical piece that ties it all together. Not only are interns an exceptional way to source future hires, but you’re going to be far more likely to get them to accept those offers if they’re paid. So, at this point, it becomes a no-brainer. You just don’t want to miss out on that ideal candidate because you weren’t willing to pay what’s rapidly becoming status quo for an internship program.
So, the next topic is great. We’re starting to get a real sense of why this is meaningful to our company. You’re going to get more applicants. You’re going to make better hires. You’re going to make the hires that actually drive value for your company, and you’re going to get value from your interns, as they convert to full-time employees, over many, many years. So then, the next question is how do you get buy-in from your company?
Buy-in from your company is typically … It typically comes down to budgeting. There’s not a ton of mystery into what it’s going to take to change your internship program from unpaid to paid. It’s an investment, so you’re going to need to really think through all of the arguments we made in the last slides and see if it’s right for you, and then think about what they costs are going to be. So, up here I just wanted to have some specifics around what costs might look like.
So, I assumed a ten-hour … $10-an-hour internship program, and the reason why I picked that is … and I’ll dive into this a little bit later in the presentation, but for most interns, financial compensation isn’t the number one reason why they apply. But, having some baseline payment is a really important criteria for them consider a role. So, $10-an-hour is not unreasonable for most positions, outside of engineering roles, to get extremely high quality candidates.
I tallied this at 40 hours a week, in a 12-week internship, which is within the really standard range of an internship period. So, looking at all of this, having one intern for this length, a 12-week, full-time intern, would cost you $4,800. Having 10 interns over the summer would cost you $48,000, and having 100 interns would cost roughly $480,000. Now, with that general amount in mind, this is a really good place to benchmark when you think about starting your intern program and whether or not you can pay. It’s important to counter this against some of the potential value points that you’re going to get from an intern.
So, if you hire a graphic design student, one thing to think about is just exactly how much value this student’s going to create. What this comes down to is having a well-structured intern program. If you have a program where someone comes in and they just are there to help out on random tasks, they might not exceed the amount that you’re paying them. But, if you have someone who’s a really good fit, you meet with them once a week and assign high value projects, and they’re the caliber of intern who can deliver on those, they’re going to far outweigh the very minimal cost and roughly minimum wage payment that a lot of interns do make.
So, a graphic design intern can very easily knock out 10 infographic designs over the course of the 12-week internship. Most infographics, if you’re working with a contractor, will cost somewhere around $2,000 to make, and so by hiring an intern, you can easily create $20,000 worth of value for your company on an intern whose salary might be $4,800 over that time period.
Another great data point to look at is what’s going to be the cost of making an entry-level hire? According to GrabStats.com and research done through a National Association of College and Employer study show that the average entry-level hire costs anywhere from $5,700 to $8,900 to make. That’s recruiting costs, travel costs, interview costs, etc. Then, it’s also estimated that there’s about $1,000 in new training costs that go into every employee.
Now, when you consider also that there’s … When you make a new hire without having had them intern first, there’s a huge potential that they could not be the right fit for your company. You might have to hire them and fire them in a relative short period thereafter. The cost of this kind of hiring can double or triple.
So, just looking at this, and given the high percentages of interns who convert to full-time hires, and then thinking about the really excessive costs of what it takes to make an entry-level who hasn’t begun as an intern … There’s clear value in paying upfront for interns so that you get a chance to view the very best candidates, and to get a chance to make offers to them, and make hires at, ultimately, a cheaper price than it would cost to try to hire an entry-level grad straight out of school.
Obviously, the other clear benefit to the interns are just everything they bring to the table in terms of improving your company culture, bringing fresh ideas and energy to different projects, being able to jump into a variety of projects and really help out on different areas of your business … and everything that sort of validates an intern’s cost, even if they’re not someone who comes on board full-time.
The next question is … Okay, assuming that we do do this, your boss or whoever’s going to kind of give approval to transition your program, from unpaid to paid, is going to also want to know the logistics for hiring of any interns. So, one question we get very often is can we pay via stipend? The typical answer is stipends definitely help skew your program closer to being paid, and therefore are better than a totally unpaid program, but the main problem is that most ways of paying an intern a stipend are not legally compliant.
So, to pay an intern a stipend, they would need to be set up as a contractor. The general rules for hiring a contractor is that they’re someone who can choose their own work hours, their own workplace, and they generally have a clear contracting business that they’ve had that other people can hire them for. So, given those limitations, very few interns fit that mold. If you have someone coming in every day to your office and you have required hours for that intern, they simply do not fit the bill as a contractor.
The few instances where, maybe, an intern could fit that bill is if they’re doing content writing for you from home, or they’re doing a sales job that’s outside of your office and allows them to pick their own hours. But, most of the time, if you’re hiring an intern as a contractor, they’re not really providing all of the benefits that a traditional intern would.
With that in mind, a typical intern should be hired as an employee, should be put onto your payroll. You’ll have to pay workers’ compensation, and deduct all of the traditional taxes that you would for any other employee, and send that intern … their W2 at the end of the year, end of the tax year. If you have an accounting team, that should be relatively simple. If you don’t, obviously there’s an extra burden to hiring and intern, and that’s why for so many small businesses and startups, it feels like the cost of hiring an intern is more challenging. But again, for all of the reasons mentioned, the value really is there, and so you shouldn’t let a few logistical hurdles deter you from offering a really great paid intern program.
A couple other notes on this front is that in an ideal World, an intern should receive an offer letter. We have a template on your site. You can see the URL down here. But, this one is … it’s one that you can definitely work off of. I highly recommend that you have your own lawyers review whatever you end up drafting as an offer letter. But, some of the benefits here is that one, it makes your program feel a lot more formal.
Two, it gets a commitment from interns who are coming on board to stay through the entire internship program, and helps minimize any of those issues of … [Inaudible 00:35:03] might have an intern could jump ship before your internship is over. Lastly, there’s a lot of other complex and really serious issues around intern hiring when they haven’t been given an official offer letter. If someone’s not on board through payroll, they aren’t covered through, they aren’t covered by workers’ compensation. So, if they get injured while on the job, there’s a lot of liability your company comes under.
Furthermore for interns, if they experience sexual harassment or discrimination in the workplace, and they haven’t been given an official offer letter, and they haven’t been added onto payroll, they’re also not fairly covered under all of the labor laws that cover these major issues. Again, this creates some potential for some highly discriminatory and really negative practices that can seriously impact your company through bad PR. So, those are important notes to make and why offer letters are such a fantastic, best practice to have within your intern program.
One last question on that is on interns are only there for three to four months … We talk to all of the largest companies, and the majority of them do not offer interns the normal benefits, like paid vacation and paid sick leave, just because there is such a short period of time associated with the position. So, this is something that can typically be written into an offer letter that you provide. If you can offer those kinds of benefits, I think that’s fantastic, but there’s definitely … It definitely is reasonable and accepted by most students that some of those benefits are built in to only be there for people who are on your time for a year or longer, and so it makes sense that they’re not available to an intern.
All right. Next, we’re going to dive into just typical levels of compensation so that you can further get a sense of how much it might cost to have a paid intern program. So, when we think about compensation, we definitely have written these numbers to skew towards what’s the minimum that you can pay an intern and still get the highest caliber candidates? At the bottom of this slide, I note that educational compensation is worth far more than money.
In a recent survey we did to students, financial compensation ranked, in terms of importance to students, below professional networking, building their resume, and getting professional experience. So, basically all of the important steps of getting a foot in the door into an industry, and so if you can provide those other things, then the amount of compensation, as long as it’s above zero, really doesn’t impact candidate quality that dramatically. So, for marketing and business students, about $12.50 an hour is very, very common, but you can also go down to as low as $10 an hour and still hire great students as long as you’re really getting students excited about your mission, the team that they get to work with, and all of the cool things that you do as a company.
When it comes to computer science students, it’s almost impossible to hire great computer science students at less than $12.50 an hour. More common is anything up to $20 an hour. The largest companies, like Facebook and Google, typically pay around $35 an hour. So, you know what you’re competing with here, and your willingness to pay more or less depends on how much you want to compete for that really top one percent of students. Like I said, you can still hire that really upper echelon of students if you are very dedicated in your search, and really work hard to highlight the other benefits of working with your company outside of pay.
I wanted to add this slide in just to reiterate that the educational value of your position is still key, so even if you have a paid intern program, it’s definitely not rationale to not have an educational program that trains students in your industry. As I mentioned, these skills are even more important to students when they’re considering your role, and even more of a driver of high quality candidates. So, giving this up will sort of negate the benefits you’ve picked up by offering a paid role.
So, that being said, the training portion of your internship program doesn’t have to be something that’s really draining on your staff or resources. You should find a manager who’s really thrilled to work with students and likes to teach, and there’s definitely going to be a lot of upfront investment in training students on your processes and how they can be successful at your company. But, it doesn’t mean incurring massive costs, in terms of time or money, to succeed.
So, what are some of the ways that you can offer great benefits that are outside of financial compensation? One of them is offering software that is … Training students in software that they’re never going to learn in the classroom. So, HootSuite is a great tool for social media management, and letting students know that this is something they’re going to learn on the job, and something that they likely haven’t learned at a high level in any of their classrooms … in any of their classes or extracurricular activities … is a huge selling point for your program. Same for teaching students sales force if they’re in sales role, or base camp if they’re in a project management role.
Furthermore, highlight mentorship opportunities, like brownbag lunches with executives within your company, weekly one-on-ones with different executive staff members at your company, bringing in … If your company is one that brings in speakers that talk about the future of your industry, or anything that benefits the student by teaching them more about this profession than they would normally get at another internship is a hugely helpful compensation benefit to highlight. So, it’s one to put directly into your listing and to certainly mention, as much as possible, in any interviews you do.
Lastly, another benefit that a lot of companies don’t always recognize is that a lot of students are still exploring different job opportunities, so if you can even rotate them through … One thing that some companies that is really successful is having a rotational program, where a student spends one month in different, given departments. This is a great way to sell a student on your company, and sort of provide different ways in which they might end up accepting a full-time offer because there’s multiple departments that might be a good fit for them.
Even just having different speakers, from within your company, speak to your entire class about their different roles at your company is a huge benefit for a student who’s really curious about how a business or non-profit runs, and getting a sense of all of the different roles that really make the organization hum. So again, mentioning this in your job description and interviews is another fantastic way to attract great students that just compliments what you’re doing, which is already having a paid program.
So, lastly, before jumping into questions, I just wanted to say an internship program is an investment that comes with a multitude of value points. We talked a ton about being able to hire great people, being able to have students who drive value for your company. But, one of the biggest ones that we’ve always found is that having fantastic interns is simply a fun thing for your organization and office to have.
Interns are … They’ll come in with high amounts of energy. They’ll share any new ideas that they’ve had that your company might not be thinking about, and will really create a new atmosphere within your company, especially if you have a large summer program where there’s a disproportionate number of new employees coming on board. I think this is something to accept and be really proud of.
At one of our summer programs, we had a few interns, and they got really excited about Shark Week, and they brought in this shark piñata, and tied one of our t-shirts onto the head of it, and hung it up from the office. It’s something that’s sat in our office ever since. It was just a really fun experience having these students who really brought a different attitude into our office and helped shape our culture. So, just highlighting that as another reason why it’s worth paying interns to bring in great people because you don’t know everything about where they’re going to take your company, and all of the benefits that they’re going to provide.
With all of this in mind, for everyone here, we’ll be shooting out this slideshow as well as a discount for posting roles onto Looksharp. But, we’d love to have your positions up on our site, and if you are ever interested in resources that we have or finding interns on Looksharp, you can use the link below here, Looksharp.com/employers, to get more info about our site and post roles. So, that’s everything that we’re going to cover today.
We will be providing a internship payment calculator on our site in the near future, and I’ll send that out in an email to everyone here who participated. But, the goal there will be letting you calculate what the costs will be for any given intern base on their length of the program and how much you anticipate paying, and how many interns you’re trying to hire. So, once you can get a sense of the cost of interns, then ultimately, you should be able to budget them in … and certainly, if you follow the best practices for hiring, find students who are going to far exceed the costs of hiring them, and also avoid yourself many costly PR scandals or lawsuits.
On this last slide, I have up my email address and phone number. These are openly available for anyone who has questions about this topic. It’s one that we’re extremely passionate about, and we love talking with employers and trying to help educate on the benefits of paying interns. So, if you want to learn more about any of the data of increased applicants or increased hiring rates, feel free to email or call me, or have anyone in your office email or call me, and we’d love to have a discussion about this. Or, if you’re just trying to transition your program and you’d like any advice on how that process can best be done, that’s something that, absolutely, I’d love to talk with you about and help you through that process.
With that in mind, we’ll quickly check in to see if we have questions. We did … I apologize for people whose questions I didn’t answer as they came in. There was a bunch of initial questions, at the top, about the sound. The first question was, “Will the session be recorded and available for a later time?” The answer to that is absolutely. I’ll sent out the slides and also the video recording as soon as we edit it and post it live, so if you miss anything, don’t worry about it.
Okay. Someone was wondering what the … On the graphic, about the difference between really high quality interns and simply good interns. So, we had denoted that a really high quality intern can add $50K in value for your company, while a lower quality intern might actually have a cost associated with it. So, this kind of point was meant to really demonstrate the difference between good and great quality interns. It’s actually based off a slide that was done by a really famous co-founder Mint.com, who did a fantastic slide on when you’re thinking about employees and the difference between A+ employees and B+ employees.
As a company, there really is a difference between someone who excels, loves your mission, and generates a lot of value. That difference comes in so many intangibles, from the attitude they bring into the office to a deeper understanding of your industry because they’re really passionate about it. So, they get how to email people, and get how to complete projects in the right way. These intangibles are ones that don’t come out until you have seen the difference between a really great intern and just a simply good intern.
So, our goal as a company is to always send businesses the really great interns, and those are the ones that add the $50K of value to your company. They over deliver throughout their internship experience. You’re going to want to hire them, even if you don’t have the bandwidth to hire employees, because they’re so exceptional. That’s the kind of experience that makes internships rewarding and worthwhile, and that’s the kind of experience that only comes, really, through a paid intern program.
Until you’ve had a really standout intern who just knocks everything out of the park, you won’t know what that plus $50K in value feels like, but it is something that’s really possible for businesses. The businesses that we speak to have spoken so highly of it. We’ve worked with startups who hired their CTO, their first ever technical employee, through an intern. It was because they paid that person, got someone great, and the value that they got through that was really massive.
The negative $25K in value is really just through feedback that we’ve heard from tons and tons of employers who have had this mixed internship experience. They hired someone who was sitting around on the job, not getting things done. They’d assign projects; they’d get half completed. Really, what happened there was that they didn’t build the type of internship program that drives in those high achievers. Because of that, they had a really sour experience on interns.
I definitely understand the challenges there, and then sometimes it feels like it’s hard to fire an intern. It’s definitely hard to fire an unpaid intern. A paid intern, especially one who’s got an offer letter … That’s definitely an option you can go just like a normal employee. So, when you think about those really negative experiences, they typically come from having an unpaid program where you didn’t get a ton of applicants.
You hired someone just because they were one of the few applicants that you had. They weren’t a great fit for your company. You spend a lot of time training them and managing them. I can definitely see how that would be a negative internship experience, and it’s one that we want to definitely hope steer as many companies away from as possible.
Maj [00:50:02] asked a question about the ruling and where there’s more details about the laws around someone who’s being paid a stipend, having to be a contractor. So, I will dig this up and email it out to everyone. I’ve spoken to multiple lawyers about this, and there’s definitely a consensus that stipends … So, the deal here is that a stipend is not an actually legitimate way to pay someone. If you’re going to be paying someone who works for you, they’re either an employee, and if they’re not an employee, then they’re a contractor.
Non-profits can operate a little bit differently. They can hire volunteers and you can pay volunteers a certain amount of money, but there also are stricter regulations on that than most companies assume or abide by when they do give a stipend as a non-profit. So, the deal here is really that stipends have become a practice for paying interns, but there’s never been a legal ruling at which stipends operate successfully under.
So, it’s definitely interesting because it’s better than no payment at all, but it’s very tricky in terms of trying to get your program to be fully legitimate and fully legal. So, I will send out … It was a great question, and I will send that out, with the deck [00:51:17], to everyone here who attended the webinar.
The last question was, “Is it true if the stipend comes through a university?” So, I think this brings up a really question, which is one that I didn’t dive into too fully … which is, “What’s the deal around college credit and how that factors into unpaid internship programs?” So, this is also builds up into another gray area that’s worth thinking through.
On occasion, there are opportunities for which a student can receive college credit for an internship. They can fill out some really complete forms for making sure that that is a legitimate opportunity that they’re receiving credit. There are, in the six-point legal standards that the Department of Labor has set out … receiving credit helps skew your program towards being more like training, more like an educational opportunity, and therefore a lot more in line with the best practices and rulings for unpaid internships.
On the flipside, for a lot of students … A lot of students are getting sufficient college credit through their normal coursework. There are, again … There are certain degrees, majors that require an internship to graduate, and so for those students, yes, doing something for college credit is absolutely essential. That’s sort of an important distinction of whether a student is getting college credit because they need it, or whether they’re getting college credit because you, as an employer, are requiring them to get that in order to try to make your program more legitimate.
If it’s the latter … If you’re just requiring a student to get college credit because you think it makes your program more legal, the fact of the matter is for most students, they’re going to get a college credit that maybe they don’t need. Or, they’re probably just going to get that credit to kind of suit your intern program rather than because it’s something that they actually need. So, that’s interesting too because sometimes they’ll have to pay, for that credit, to have it count within their university. It could be an instance where the cost of doing an internship actually goes up with receiving college credit.
So, what I would recommend on the credit side is that you really check in with students to see if they’re getting the credit as a mandatory part of graduation, or if it’s something that they’re just doing to fulfill the requirements of your internship. I would always strive to create an intern program that pays as well as gives students the opportunity to get credit if it’s something they want, but doesn’t view credit as a replacement for payment. From the strict legal definitions, credit is not a replacement to payment.
So, I hope that answers your question there, and I hope that answers everyone’s questions. Obviously, if people have followups, I’m always open to hearing or responding to them. But, that uses up just about our full hour, so this has been a really fantastic time, and I really appreciate everyone who’s tuned in and listened in. We will have this up on tape and on our blog about the beginning of next week. Please expect an email from me, with this information as well as an answer to the stipend question. Thanks so much for attending. Take care.