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Why unpaid internships are bad for everyone

By Ruth
August 28 2015

Posted in Community


The future of NZ’s tech industry depends on investment in our future talent pipeline. It might be cheaper to get students/grads to work for free to prove themselves, or to outsource low value IT jobs overseas, but when everyone does that, where are the roles for juniors? Where are our future senior IT superstars going to come from, if there’s no investment in their training and experience?  If NZ’s fresh IT talent isn’t given a chance to learn their craft, then the supply of senior IT talent will dry up. Talented migrants are DEFINITELY part of the solution, but good businesses and a thriving economy includes hiring and investing at all levels: senior, junior, and everything in between.

If you’re shocked at the thought of having to pay interns, we’d like to humbly ask you to think about the value of the work you’re asking interns to do, if it’s not worth your while paying for it.  And how about the viability of your business model if you can’t train & invest in your (future) people? 

Our definition of an Internship is a paid 10-12 week full-time  job for an undergraduate or *just* graduated tertiary student, which involves close mentorship from a company, and provides value to both sides.  Value to the company in the form of fresh energy, fresh ideas, fresh talent, the latest academic thinking and, ideally at the end of it, a new team member.  There’s an element of giving back & supporting our education system, but mostly it’s an investment in an individual, with the hope that they’ll stick around as an employee, but if not, you’ve helped feed their passion for the industry, and kick-started their career. We think there’s a line in the sand after about 2 weeks where a student should be paid for working in your business. There’s a fuzzy area in NZ employment law, but the line between work experience, on-the-job training and exploitation is a fine one, and exploitation of students and trial employees is a real problem, not just in IT, and not just in NZ.


Student projects

A growing number of tertiary institutions in NZ are pushing for work experience projects for students. This has resulted in oversupply of student projects in the market, one of the unintended results of the shift towards more industry-led, experience-based training is that businesses are approached to host students for short-term academic projects that are designed to give a real world element to their qualification.  We don’t know how to solve this one, but one of the negative outcomes of this is that it’s undermining the job market for graduates in some sectors (especially design). Why pay a graduate when you can get a final-year student for free?

We applaud the connection to industry, but on behalf of industry – ARRRRGH! There’s a lot of demands on our time, and the value of a qualification-driven student project to our business is usually limited!  Some of these projects are well managed & supervised by lecturers. Some of them OMG take up a lot of our time.  Can we do this better? Yes, we can, and Summer of Tech is reaching out on behalf of employers & industry to help tertiaries improve the process of work experience and industry projects.

Over 9 years of running our programme, talking to employers about the ins & outs of hiring students and grads, and having hosted & supported paid and unpaid student projects ourselves, we have found that if students are working on a project for a grade, then it’s very rare that the project goals & outcomes are well aligned to the host company.  If the business owner is involved in carefully designing a meaningful project that is adding value to the business, then there’s MUCH more likelihood of accountability on both sides. The student will be managed & mentored well, they will have to work within normal business frameworks, with the tools & methodologies and results-driven outcomes.

So… why pay your interns?

It’s good for business

Savvy IT Employers are looking for potential. For the right attitude and aptitude, the ability to learn. Good problem solving. Good people to join their team.

You generally do get what you pay for. We do hear stories of companies getting great results from unpaid student projects (where students are working for course credit or “experience” rather than wages), and from voluntary roles or unpaid internships. This tends to be when the company is committed to mentoring and supporting students, and when they get a highly motivated individual for a short period of time.

Most of the time, however, companies don’t mentor & train students that are unpaid, they don’t hold them to commercial standards, they don’t let them loose on real live projects, and the outcomes are mediocre for all involved.

People who are new to the IT industry don’t have bad habits, prejudices or need re-training in your ways. They’ll have passion, hunger to learn, and will be eager to develop their craft.  80% of interns from our programme last summer were retained by their host company.  IT companies are getting benefits when they invest time & support to onboard all new staff, pay a fair wage, and afford a level of respect to nurture NZ’s next generation of top talent.

To summarise, if you’re running an IT business and you’re screaming out for talent, instead of complaining that the schools aren’t teaching properly, how about taking a chance on someone new to the industry? Yes, you probably do need to join the scramble for senior IT talent, which is a global play. But we strongly believe you need to hire at all levels to create a thriving business (not to mention a thriving NZ tech economy).


It’s an investment

There’s a lot of time & work involved in hiring a student or a graduate.  Hiring anyone is risky, but hiring the wrong person can be hugely costly (in time and money) for any business. Investment in finding, onboarding and retaining the right people will always pay off, as it’s investment in the culture and capability of your team. Spend more time on getting the right person, training them, and retaining them, and this will pay back – often quicker than you think!

There may be fees associated with recruitment (Summer of Tech charges to cover the costs of our programme, for example, attending campus career expos can cost time and money, and using a recruitment agency or having your own HR team costs, too!)  You’ll probably find that an intern’s (or graduate’s) wages are not the majority of the investment. The time you’ll take to identify good candidates, interview them, test them, scope work for them, get a mentor/manager ready for them, onboard them, train them, and support them through the role will add up to a lot more than you’re paying in fees & wages.  That’s why the work has to be meaningful and valuable – we want you to look at this as an investment in your future talent, AND for your intern to be adding value over the summer.

It’s good for New Zealand

Everyone needs a career break, the catch-22 of no experience without a job, no job without experience is as true for students today as it was back in OUR day.  Creating opportunities for fresh local talent is the only way to grow our economy in a sustainable way, to ensure there is talent coming through for the future of NZ’s tech industry.

It’s good for students & grads

Top students have options. Most of the top final-year tertiary students already have jobs. Many of them are being snapped up at the end of 1st or 2nd year, by Google, Facebook, Microsoft, Atlassian and a bunch of other organisations that are investing a lot of time and $ into attracting, training and retaining top talent for their global organisations.  If you want to be an attractive option for smart students, you need to know they’ll be weighing up the opportunity of an unpaid role compared to a paid role, and some paid roles come with travel, adventure and incentives waaaaaay shinier than the average NZ IT company can match.  

Unpaid internships have been in the media recently (not just IT ones, and that story about the kiwi living in a tent working for the UN is part of a bigger movement, here) In the digital information age we no longer live in an information vacuum. Even in the USA, home of the unpaid internship, there has been a shift in the past few years to recognise the value of talent. This article and this one from 2013 talk about high profile disputes in the US, this one from 2014, where the CEO of InternMatch (now Looksharp, the US’s biggest intern matching programme) talks about paid interns being more likely to convert to full-time hires.  More recently we’re seeing Glassdoor for Students help showcase companies like Facebook and the 25 highest rated US internships having something in common: they’re paying for talent, and they’re concerned about how they treat their people (and being known for treating people well is just plain good for business).

Back to NZ: how can we expect students to get excited about a career in IT if we treat them so poorly at the start of their career?  There’s a huge push to get more people into technology subjects at all levels of their life & education. More diversity in our IT teams is widely acknowledged to be essential for the future of the industry, and it’s our responsibility as industry to provide pathways.

Unpaid internships are the privilege of rich people (or people with rich parents). If you value diversity in your business and in our industry, pay for interns. If we make first jobs or work experience the domain of the rich & privileged, then there will be no culture change in an industry that is crying out for it. The fewer barriers to entry, the better. The majority of people in NZ don’t have the luxury of being able to spend their leisure hours volunteering for work experience and working for free. Getting an education is expensive, most graduates are coming out with $30-40K loans. If it’s easier to get a job in a non-IT related field, then that’s where many students will stay.


Value on both sides

We’ve found that committing to hire a student or graduate for a short period of time, giving them real work to do (either as part of a team or on a stand-alone new project), assigning a mentor and paying them a wage leads to better value for both parties. Students get real work experience. 80% of last summer’s interns in our programme were retained beyond summer. It becomes a strategic recruitment and talent pipeline development process.

More to say on this topic?

If you have an experience or opinion on this topic, we’d love to hear from you. Tweet us or comment here.
We talked to the Grid about this topic back in February, here’s a link to their blog post.

Here’s some examples of what students can achieve during summer internships.

This article was co-authored by Ruth McDavitt and John Clegg, and draws on 9 years’ experience running Summer of Tech, an industry-led skills development and internship programme that started in Wellington in 2006, and expanded to Auckland in 2015.  John and Ruth’s experience in the NZ IT industry also spans employee/founder/CEO/support/mentor/advisory roles, and paying interns & developing NZ’s future tech talent pipeline is a topic they feel rather strongly about.

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