Great Interns Make Great Employees

An internship program that is mutually beneficial to employers and interns doesn’t just happen. It’s up to HR to plan carefully for success.

Do your managers visualize student interns as willing volunteers for the grunt work no one else in the office wants to do? Or do they groan at the thought of handholding students who are clueless about the business world? If either scenario exists in your company, HR isn’t doing its job, which is to ensure that a well thought out internship program gives value to both students and managers.

It’s easy to see why internship programs benefit college students. They gain valuable work experience, get a foot in the door with a potential employer and may earn a good summer salary. In a recent survey of more than 1,000 member employers, the National Association of Colleges and Employers (NACE) found that 97 percent of members paid their interns, with the average wage being $12.43 per hour.


Protecting Your Company

The status of interns may pose problems for employers. Are interns employees? Is the company responsible for their actions? Who pays if they get hurt on the job? Limiting liability for the company is just one more function HR needs to build into a good internship program.

“A big issue for interns is, are they entitled to payment,” says Von Hays, associate attorney with Kirkpatrick & Lockhart LLP in Dallas. “The Department of Labor [DOL] gives six criteria to determine pay status, but the internship is supposed to be more burden than benefit for the employer, so to speak, if interns aren’t paid. If an employer decides not to pay interns, then the experience must be truly educational.”

The DOL provides criteria to help employers determine whether a trainee is an employee under the Fair Labor Standards Act. If all of the following criteria apply, trainees or students are not considered employees:


  • The training, even though it includes actual operation of the facilities of the employer, is similar to that of a vocational school.
  • The training is for the benefit of the trainees or students.
  • The trainees or students work under close supervision and do not displace regular employees.
  • The employer that provides the training receives no immediate advantage from the activities of the trainees or students and, on occasion, his operations may even be impeded.
  • The trainees or students are not necessarily entitled to a job at the conclusion of the training period.
  • The employer and the trainees or students understand that the trainees or students are not entitled to wages for the time spent in training. However, employers should base their decision to pay or not pay interns on the advice of their legal counsel.


Workers’ compensation is another issue for employers. “If interns are not covered by your workers’ compensation policy, they can sue you,” says Rita Risser, attorney and CEO of Fair Measures, a legal training company headquartered in Santa Cruz, Calif. “It’s in the best interest of the employer to put the intern on the company’s policy,” Risser advises, “though if interns aren’t on the payroll, this step might be easy to forget.” Hays adds that most states have a fairly broad definition of employee. “Some cases have found that interns contributed enough to be considered an employee for workman’s compensation purposes.”

Interns also fall under Title VII protection against discrimination and harassment, so hiring practices for interns must be in line with those for regular employees.


The benefits for employers may be less obvious, but they are there. For example, internship programs can be important recruiting tools, particularly for entry-level employees. NACE’s Job Outlook 2004 reports that employers rated the conversion of interns to employees at 4.6 on a 5-point scale for recruiting effectiveness. Similarly, 76.3 percent of employers reported higher retention rates among employees who have had prior internship or co-op experience; 85.5 percent see higher retention rates among employees they have converted from interns.

Internships can help companies become better known on campus, both by providing coveted work experience and by using satisfied interns to give them good publicity the following year. Some companies use internship programs as part of their diversity recruiting efforts. “We work with historically black colleges through the Tom Joyner Scholarship Program,” says Tracy Mudd, senior corporate recruiter at Nationwide, a Columbus, Ohio-based insurance and financial services company. “We provide round-trip airfare and a $2,500 stipend in addition to the internship experience.”

Keys to Success

“College interns are high maintenance, and internship programs are high maintenance,” says Julie Cunningham, president of The Cunningham Group in Naperville, Ill., which specializes in university relations and recruitment consulting, and author of Building a Premier Internship Program: A Practical Guide for Employers (NACE, 2002). “It’s important to design them well and put structure into them.”

At Bloomington, Ill.-based State Farm Insurance, the goal of the internship program is to build a pool of candidates for full-time employees, according to Tim Ellison, HR representative and college internship coordinator. “We also see it as an 11-week interview opportunity.”

Nationwide has a similar goal—to bring entry-level employees into the company. “We started out wanting to ‘test’ potential employees,” says Mudd. Later, the company saw an opportunity to reach students even before college.

“Our local high school students had a lot of talent, but they weren’t prepared,” he says. “We started a program that includes externships for high school teachers, showing them what we need so they can go back to the classroom and educate students. We also give high school students the opportunity to learn about the business environment.” The company reaches out to interns with mentors and activities such as business etiquette luncheons.

The bonus for Nationwide? “Our cost per hire is much less when we hire an intern as a full-time employee,” says Mudd.

Along with goal setting, advance planning is critical to success. At State Farm, HR works with corporate departments to predict their needs for the following year, says Ellison. “We get our marching orders in late summer and do our heaviest recruiting during September through December.” A majority of the slots are filled by the beginning of February.

It’s also important for HR and the business departments to be close partners, says Kathy Loverude, recruiting consultant at Hewitt Associates in Lincolnshire, Ill. “You want to know you can go ahead with full-time offers at the end of the summer, pending good work performance,” she says. “With good forecasting from the business managers, you can identify how many full-time opportunities you will have and hire the appropriate number of interns. You need to be able to extend offers to your great performers.”

To avoid requests for nonmeaningful assignments, Ellison asks managers for job descriptions, needed skills and a list of the kinds of subjects they expect interns to have studied. “Actually, our interns are often surprised by the quality of the work they get to do,” he says. “They get hands-on, live projects and don’t always expect the freedom and independence we give them.”

Another success factor? A good screening process, says Cunningham. “What comes out at the end is no better than what you put in.”

Melissa Vela-Williamson, public relations coordinator at inHOUSE Consulting Group, a full-service bilingual public relations company in San Antonio, stresses the importance of making a good match.

“Take the interview process as seriously as you would for any job applicant,” she says. “At first, we just wanted to get people on board,” and the results were disappointing. “You need to get someone responsible. Screen candidates for an internship just the way you would for a permanent job,” advises Vela-Williamson, and make sure the students are willing to devote the necessary time to the program.

Once slots are filled and jobs are defined, HR should provide appropriate training and orientation for participants. “Interns need an orientation to learn the ground rules and hear about the resources available,” Cunningham says. “But managers and mentors need an orientation as well, probably a few weeks in advance [of the interns’ arrival]. Everyone needs to be on the same page.”

HR also needs to set the expectations on dress, behavior and technology use, says Loverude. “You want the interns to have fun but to stay professional.”

And HR needs to be on the alert for unanticipated issues that may call for additional training or orientation. “We found that some of our managers didn’t understand Generation Y,” says Mudd. “[They] were surprised at what they saw as a sense of entitlement. These students also have different learning styles, needs and approaches to work/life balance.” Some training about the millennial generation gave managers the direction they needed, Mudd says.

Activities and social occasions should be part of the internship experience, too, and it should be geared toward college-age needs and sensibilities. “We had a ‘Survivor’-based team-building exercise last year, and we’re bringing in people from PBS’s ‘Roadtrip Nation’ to speak this year to our interns,” says Ellison.

“We also do something called Speechcrafters (our version of Toastmasters specifically for the interns) each week,” Ellison adds. “We have a semifinal and then a final competition the last week of the internship. The vast majority of interns tell us that they love this program. They were scared at first, but saw great value in it by the end.”

Because most programs want to eventually extend offers to candidates, performance should be addressed. “We ask managers to create three goals and objectives, and then allow the intern to create a goal to work toward,” says Mudd. “We give interns feedback so they know what to improve on, and we keep the performance information on file so a potential hiring manager can refer to it later.”

At Hewitt, each intern is partnered with a manager for performance and feedback sharing, and with a mentor or coach for day-to-day questions, says Loverude. “Mentors can help interns understand the corporate culture, invite them to meetings and introduce them to reference tools and materials.

“Our interns perform the same jobs as our regular employees, though they may have lessened complexity due to the position length of only three months,” adds Loverude. “They’re coded as full-time temporary employees, have the same ID badge, go through the same new employee orientation and so on, just like any other new hire. We integrate them into our team environment.”

Loverude points out that it’s well worth the company’s time to give good candidates a meaningful experience. “They go back to school their senior year as ambassadors for the company—you want to give them a positive experience.

“It’s important for everyone involved to think through and understand the difference between an intern and a summer temp,” Loverude says. “Summer temps help with filing and administrative tasks. Interns work on meaningful projects to meet a true business need. Internships need to provide a good learning opportunity that can be done in three months.”

Measuring Success

Measuring the effectiveness of internship programs in light of their goals is critical to success, say the experts. HR can use conversion rates as a primary metric to determine the program’s success if the goal is to turn interns into future employees. “A conversion rate derives from the number of interns that work for you as full-time employees when they graduate,” says Cunningham. “If you have 100 interns graduating but you only make offers to 80 percent [of them]—20 percent don’t match up—and 80 percent of those accept, that’s a 64 percent conversion rate,” she says.

The conversion rate also alerts you to problems with the program, she adds. “If you aren’t making offers to at least 80 percent of graduates, something is wrong from earlier in the process,” she says. “If they’re not accepting your offers, something else is wrong.”

Cunningham also suggests tracking the following factors:

  • Retention rate. Do former interns stay with the company longer than those who weren’t interns?
  • Performance. Do former interns perform at a higher level than other employees? How do they perform as interns?
  • Productivity level. Does the productivity level in departments rise or fall when interns are present? (Be aware that productivity levels may decline simply as a function of the training interns require, which doesn’t necessarily mean something’s wrong.)
  • Management satisfaction. Are you providing good quality candidates?
  • Student feedback. Are interns satisfied with the program?
  • Diversity. Is your program contributing to diversity recruitment?
  • Cost per hire. How do historic costs for hiring interns compare over the years? Don’t measure these costs vs. hiring regular graduates because you should be deriving some additional benefits from interns, Cunningham warns.

HR also needs to guard against an internship program becoming a “friends and family” operation. If that occurs, the program “won’t be taken seriously as a business solution to a real need,” says Cunningham.

Feedback also provides an important method to measure program success. At Hewitt, the internship program includes a goal-setting session at the onset, a mid-summer review and a very formal review at the end of the internship, says Loverude.

“Based on intern feedback, we make changes throughout the summer,” she says. “Some organizations collect feedback at the program’s completion and then correct any issues for the next summer’s program, but we prefer to respond to feedback as we go along.”

Ellison says State Farm also adjusts its program along the way. “We constantly look at the program’s effectiveness, and one change we’ve made is to focus our recruiting,” he says. For example, State Farm’s Midwest location can be problematic for some candidates, says Ellison. The company found it gets better results by concentrating on Big Ten country—states like Illinois and Indiana. “We have more trouble attracting people from New York or the West Coast; in the Midwest, people have a better idea of who we are.”

When they succeed, internship programs provide a talent pipeline to employers. Nationwide has a 90 percent conversion rate for its MBA interns; Hewitt has close to a 100 percent conversion rate for its technology interns, 80 percent for management interns and between 60 percent and 70 percent for actuarial interns.

Although the payoff can be huge, internship programs aren’t cheap, says Cunningham. “You must have a good business case and buy-in from anyone touching the program at any level—senior management, hiring supervisors, mentors and so on. If you do,” she continues, “the company can build and mold its new grads into future leaders.”

Mudd emphasizes that HR, as a department, must be committed to the program. “Have an intern yourselves, and it will help business units accept the program,” she says. “But business units will usually knock down the door to get an intern, especially if they’ve had one before.”

Best Practices

Experts familiar with internship programs often cite the following best practices:

  • Offer valuable work experience/meaningful training.
  • Make diversity a focus.
  • Make information about the program accessible to students.
  • Plan for activities.
  • Provide one-on-one guidance.
  • Provide new employee orientation/training.
  • Provide opportunities to network.
  • Give frequent feedback and formal evaluations.
  • Make changes as needed.

Additional Resources

  • Association of Experiential Education (AEE)
  • Cooperative Education & Internship Association Inc. (CEIA)
  • National Society for Experiential Education (NSEE)
  • Society for Human Resource Management, “Organizing an Internship Program,”
  • U.S. Department of Labor



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