There is a bit of controversy around paid vs. unpaid internships with good arguments being made on both sides. Having hired over 70 paid and unpaid interns over my career, I thought I would weight in with my own perspective. The fundamental goal of any intern should be to either identify or accelerate your career path. The difference between the two is the difference between unpaid and paid. Let me explain with examples:
Anne is a third-year software engineering student. She wants to be a developer and is trying to get ahead of the pack. She knows how to code and has built a few projects in the past. She is a classic career-accelerator.
John is a third-year political science student. There aren’t any jobs that neatly correlate with his studies, but he has always had an interest in “business”. Unlike Anne, he wouldn’t know the difference between Product Management, Sales Operations or MarCom (which, in Anne’s world would appear as different as Software, Chemical and Civil Engineering). John isn’t stupid, he as career-identifier.
Let’s follow Anne and John through their internships at TandemLaunch.
Recruiting:
Anne applies for a specific position. During the interview we discuss her future project and rigorously test her skills (coding tests, peer coding, architectural diagrams, etc.). Anne is hired for aptitude.
John doesn’t have any specific skills to show during an interview. Asking him to lay out a CRM structure, customer development plan or product requirements document will only result in blank looks. John is hired for attitude.
Onboarding:
Anne and John go through the same onboarding process during their first week. Then their lives diverge. Anne is immediately assigned to development activities that interest her, match her skill set, and are commercially relevant to TandemLaunch. Her supervisor defines project goals and off she goes.
John lacks this certainty. Instead of immediate assignment, he spends his first month exploring. First, he gets an introduction to functional area in a series of presentations. Afterwards, he job shadows different team members until he finds his sweet spot. After 4-6 weeks of shadowing, he picks his area and defines his internship goals.
Day-to-Day:
Anne’s goal is to improve her skill set and accelerate her career. The best way to do this is to continuously challenge her just a bit above her comfort level. Combined with mentorship and training, this allows her to advance her skills at an optimal rate. Her supervisor will guide her through this process, raising the bar when required and fixing mistakes as they come up.
John needs broader exposure to make a meaningful career decision. Seeing the next higher level of challenge isn’t particularly useful if your starting position is near zero. If John is interest in Product Management, he really won’t benefit from assisting with copy-editing of requirement documents. He needs to actually manage a product launch. Providing that opportunity is part of our internship offer. He will get his product, project or sales responsibility. He will do what the veterans do and go where they go (I rarely travel without a John by my side for example). And he will screw up a lot in the process. Our commitment to John’s education includes tolerance of these mistakes and the mentorship needed to bring him back on track.
By now it should be clear that John’s internship will be far more expensive to TandemLaunch than Anne’s. Both receive the same incentive payments and basic benefits (to the extent allowed for interns). Add supervision time from senior staff and you get Anne’s non-payroll cost.
John’s cost structure is far more complex. His travel expenses alone account for half of Anne’s payroll. Supervision time roughly doubles compared to Anne. Add the cost of educational mistakes which collectively cost more than Anne’s payroll. Finally, take away the first month of productivity due to orientation*.
And that’s why Anne is paid and John isn’t. In fact, truly balancing cost would have us charge John for the internship. Sounds outrageous but in another context this is simply called tuition.
So why do we offer both types of internships? Why not just focus on Anne and avoid all the hassle with John? We do it because of the difference between aptitude and attitude. Any company needs a solid core of strong skill sets and our paid internship program is the recruiting mechanism for this. With good performance, Anne is likely to get an offer for a staff position (school permitting). She is effectively occupying a trainee position during her internship already, so there will be an opening almost by default. Add some leadership skills and she might very well find herself in a staff or project leader role.
But companies also benefit greatly from diversity and that’s where the unpaid internship program shines. It allows us to recruit solely for attitude, take a risk and see what happens. On average this yields the motely results that you would expect. Most John’s won’t stay with TandemLaunch but leave with a positive experience and hopefully a clearer picture of their future career path. But once in a while, John has an innate talent and attitude that just blows us way. Those we embrace. Regardless of background, education or experience, we will find a way to bring them into the company in the career of their choice**.
Anne will finish her internship as a better software developer. John will finish his internship with a career path. Both should have gotten what they came for, though their time at TandemLaunch will have been quite differently.
We are offering both paid and unpaid internships, so send me an email if you are interested.
* All based on actual accounting and timesheet data from the last quarter, averaged over all Anne’s and John’s at TandemLaunch.
** My example uses a specialised engineer versus a vague political science major but the distinction here isn’t between tech and arts. I hired plenty of unpaid technical interns and paid business interns (though admittedly engineers tend to be more streamlined in their career choices and generally possess better “out of school” skills than Business or Arts majors – it is appalling how poorly our education system prepares those students for their future career). Ultimately, the distinction boils down to certainty. Career-accelerating interns have certainty of path, skills and role. Career-identifying interns have some uncertainty in one or more of these areas (e.g. career changers, lack of formal background, lack of language skills, etc.). Obviously the distinction isn’t always clear-cut. We cover blurry middle with flexible stipends, including full transitions from unpaid to paid during the internship.
Like this:
Like Loading...
“But companies also benefit greatly from diversity and that’s where the unpaid internship program shines.”
Diversity ? What about poor kids who need a paying job and can’t afford off their parents while they do an unpaid internship ? I guess they don’t show the right “attitude”.
Thanks for your comment. Attitude has nothing to do with wealth. It is a function of ethics, willingness to go the extra mile and mental capability. None of these correlate with financial resources. I have had my share of interns (paid and unpaid) with financial limits (all the way to the legal poverty line and below). For strong candidates there is always a way cover their basic expenses (e.g. we obtain government grants for about half of our interns, offer travel and cost-of-living stipends for about a third of our unpaid interns, etc.). This support is a function of economic hardship, not skill. It is the level of uncertainty in the latter than defines the training expense and (statistical) productivity of the interns – and consequently the pay economics.
Why not at least pay minimum wage ?
Companies have always done so in the past – when I first started in my career (software developer) I got paid minimum wage out of college as a trainee. Once I proved my worth after a probation period I was given a significant rise, but during probation I was still paid.
Furthermore unpaid internships outside carefully monitored college/work experience run the risk of being illegal in many countries and states, regardless of what our opinions for or against may be. A company is better off paying at least some minimum salary and avoiding any legal issues.
It sounds like your past internship falls into the first category at TandemLaunch. You had the skills necessary to qualify for the trainee position. Would you have gotten your trainee position without any coding background?
The decision isn’t whether to fill the internship with a paid or unpaid intern. It’s whether to take somebody with a lot of qualification uncertainty or not. If they qualification are certain then the paid internship is the right choice. If the qualifications are uncertain than the default option is not to hire the person at all. Most companies take that option and that’s the end of the story. The unpaid internship is a way to offer an opportunity to resolve the uncertainty (i.e. show that you can do things *despite* the lack of experience, background or formal skills).
PS: Almost all our internships are part of eduational programs (in fact most of our interests complete their thesis as part of the internship).
I did some paid internships in the past and most of them were very task oriented, like putting something in an excel spreadsheet, doing some cold calls and so forth. It was OK, it was paid. But in most of these cases I gained nothing in terms of career-acceleration or in understanding their business model.
Currently I’m doing my first unpaid internship at TandemLaunch and for me it’s a huge difference. I don’t want to deny that it’s difficult to find his way in such a position, especially in the beginning, but as a student you are always in a process of self-discovery and an internship if it’s paid or not gives you the possibility to define your goals for the future. And you have to consider that even if you are doing an unpaid internship you are investing in yourself which gives you the best interests you can get