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Internships are arrangements in which college students and career changers lend their talents to companies in return for an opportunity to develop business skills, learn about a new industry, and gain exposure to the work environment. Internship programs are set up as either non-compensated or compensated internships. Whether paid or unpaid, an internship position is often quite beneficial to the student who participates, for he or she receives “real world” business experience and an early opportunity to impress potential employers. Employers too benefit from internship programs by obtaining the services of skilled personnel for modest cost and by being exposed to new ideas and perspectives.

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Benefits Of Internship Programs

Internships are seen by college students as potentially valuable tools to explore general career avenues as well as specific companies. Such arrangements can provide them with valuable work experience (both practical and for resume enhancement) and an opportunity to line up a job before graduation. In addition to securing good work experience, students also may be able to gain academic credit and financial compensation (albeit modest in size) for internships. As Steven Bahls and Jane Easter Bahls observed in Entrepreneur, “when an internship is set up through a local college or university, students can often obtain academic credit for their effort. The fact that they’re receiving credit, though, doesn’t mean they’re not also entitled to minimum wage if your business derives immediate benefit from their labor.”

Internship programs are also potentially valuable to employers. Unfortunately, some companies continue to regard interns as little more than a free source of labor to catch up on filing and other tedious office tasks. But many business owners and managers realize that internship programs can provide them with an early opportunity to gauge the talents of a new generation of workers and, in many cases, sell themselves as a quality place for students to begin their careers after they graduate.

Internship programs are understandably most prevalent in larger companies. But small companies can realize significant benefits as well. In many respects, interns can be ideal workers for small- and mid-sized companies.

They are typically hungry to gain experience, eager to perform well, and willing to perform less-desirable tasks (although a steady diet of such tasks is apt to wilt their enthusiasm). Moreover, their fresh perspectives often challenge entrenched processes and attitudes that have outlived their usefulness. In addition, internship programs enable businesses to sort through a pool of potential employees. As the weeks pass, intern performances can be evaluated, and the pool can be culled down to good workers who are already familiar with the company.

The organization has the opportunity to observe the student at work and review work habits, technical ability, interpersonal skills, and adaptability before making a fulltime commitment, wrote Larry Crumbley and Glenn Sumners in Internal Auditor. “Internships substantially reduce the risks in cases where offers of permanent employment might be made. Not only can the organization pre-screen the intern; the student also can learn about the company. The possibility of dissatisfied employees seems far less likely when both employers and employees have clear expectations of each other.”

Interns also often prove to be invaluable recruiting tools when they return to campus. “A student returning from an internship with a favorable impression becomes an on-campus advertisement,” observed Crumbley and Sumners. “Students listen to their peers and often trust their opinions more than those of campus representatives or professors. The cost of recruiting permanent employees is reduced as students become familiar with the opportunities the organization has to offer and top students are attracted to permanent positions.”

Setting Up Internships

Small businesses can benefit enormously when they establish an internship program, but such initiatives should not be launched in haphazard fashion. “Before you bombard colleges with leaflets announcing the availability of internships, decide what it is you want to achieve,” counseled Deborah Brightman in Public Relations Journal. “These goals will help you determine the length of your program (two months should be a minimum) and the number of interns you should hire.

The latter will also depend on your experience in managing an internship program, the available budget and space, and the number of people on staff who are available to supervise and train interns.” In addition, companies should have a full understanding of the specific tasks to which interns will be assigned, and make plans to ensure that interns will have an opportunity to receive meaningful feedback on their performance.

A written plan providing details of the plan should then be prepared. This plan serves to educate potential interns and internship directors at colleges and universities, and can serve as a blueprint and guide for the company after the program is launched. “The plan,” wrote Brightman, “should cover the program’s purpose, recruitment, activities and responsibilities, evaluation, and follow-up steps. Be sure to make those employees who will be involved in the program aware of their parts before the interns arrive.” Once these materials have been created, companies can go about the process of contacting appropriate colleges and universities, many of whom have established internship centers in recent years.

The Internet offers resources for publicizing an internship program as well. Bulletin boards exist that offer to match up students and others interested in participating in an internship program with employers offering such programs. One such service is offered by Wetfeet.com and can be located online at http://www.internshipprograms.com/.

The interviewing process for internships is not unlike the regular interview process in many respects.

Factors such as attitude, academic achievement, and suitability for the job are paramount. Small business consultants also counsel their clients to set up summer internship programs when possible, since the pool of both full- and part-time students available for internships is deepest at that time of the year.

Internship programs need oversight and the choice of the supervisor is often essential in determining whether the program will be successful, mediocre, or an outright failure. Business experts recommend that interns be monitored by enthusiastic people who have time to tackle the responsibilities associated with the job. “The internship director should have regular contact with both the interns and their … supervisors, monitoring the quality of work that’s being performed, the experience the interns are gaining, and how happy they and their supervisors are with the program,” wrote Brightman. “The supervisor must also be available to mediate any problems, oversee the recruitment process, and handle administrative details such as salary, office space, and evaluations.” Finally, the supervisor should be able to handle necessary communications with the intern’s university.

Distinguishing Interns From Employees

Internship programs can be tremendously helpful to small businesses, but there are legal hazards associated with such programs of which employers should be aware.

Unless your internship program is essentially educational, caution Entrepreneur contributors Steven Bahls and Jane Easter Bahls, “your interns may look suspiciously like employees, who are entitled to the federal minimum wage.” Companies that operate internship programs that are found to be not primarily educational may run the risk of being found in violation of the Fair Labor Standards Act (FLSA), which applies to all companies with two or more employees and annual sales of at least $500,000.

Bahls and Bahls note that the U.S. Labor Department’s Wage and Hour Field Operations Manual establishes six criteria for distinguishing interns from employees: 1. Interns may be trained using equipment and procedures specific to the employer, but internship experiences must be akin to experiences that they would be able to gain in a vocational school.

2. Regular employees cannot be displaced by interns, who should be closely supervised. “Farming work out to unpaid interns after a regular employee quits would raise a red flag,” said Bahls and Bahls.

3. Interns are not guaranteed jobs at the completion of their internship. “If they are,” wrote Bahls and Bahls, “the experience looks more like the training period at the start of a new job, for which they’d be entitled to fair wages.”

4. Both employer and intern need to understand that training time does not entitle interns to wages.

5. Training should be primarily for the benefit of the intern.

6. Companies providing training to interns, noted Bahls and Bahls, “must derive no immediate advantage from the activities of the intern… .

Although an internship program will benefit your business over the long term by providing a pool of trained applicants with familiar work habits, it’s not meant to be a source of free labor.”

Most business consultants offer soothing advice to small companies that might be scared off by such criteria.

They point out that the overwhelming majority of firms that establish internship programs are pleased with them, and as Bahls and Bahls wrote, “while the Labor Department closely adheres to its six criteria, courts tend to look at the spirit of the internship program as a whole.”

Business owners and managers also need to be aware that, generally speaking, even unpaid interns have the same legal rights as employees when it comes to protection against discrimination or harassment. “It’s best to cover them for workers’ compensation, too,” said Bahls and Bahls, “because if they’re injured on the job and not covered, they can sue your business for medical expenses and possibly for negligence, which can subject your business to unlimited damages.” However, interns do not have the same rights as employees in the realms of unemployment compensation or termination procedures.