Ahva Sadeghi, cofounder and CEO of Symba.
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If you think an internship program is just a "nice to have" at your company, think again. Your internship program is a strategic recruiting strategy that can impact your bottom line. At a time when the market is unpredictable and the competition for talent is fierce, companies are tightening their purses and it is increasingly important to have your finances in check.
With a strong bottom line, a company can have more resources to improve products, increase what it can offer employees and further drive shareholder value.
There are several challenges to seeing how internships impact your bottom line. One, they are distributed across the entire organization meaning that they pull funds and resources from different budgets. Second, the results and cost savings of internship programs are long-term so it can be difficult to see the immediate impact of investments in parts of the business.
Just like the stock market, long-term capital investments, although slower, are more likely to yield better results. An internship, thought of as a long-term talent acquisition strategy, might take multiple years to impact your business but through tracking the data and spend, you could see a clear story of reduced costs and risks.
Here are four ways you can use internships to positively impact your company's bottom line:
Grow your own talent to save on recruiting costs.
The long-term ROI of an intern, especially one supported by a fine-tuned program that nurtures them, could be more significant than hiring seasoned professionals. For example, bringing on an intern that turns into a manager can be more cost-effective than going out and shopping for a manager. Think ahead and your internship program could be a powerful talent pipeline.
Especially with the talent crunch in the labor market, businesses could be rewarded in the next decade for this long-term thinking. It could remain hard to find specific skills in the marketplace, so training people in-house to grow into roles you need means no costly or frantic searches when a new skill is needed. Management can forecast the need for certain skills years in advance and work the foundational aspects of those skills into the internship program.
There’s more than anecdotal evidence backing this up, too; ESI International found in a study that staffing challenges are best addressed by developing talent already in the organization rather than bringing in outside hires. According to that study, training new graduates provided a 500% return on training investment.
Reduce turnover costs.
According to Gallup, voluntary turnover costs businesses in the U.S. $1 trillion dollars every year. This is partly due to how expensive it is to replace even a single employee; Gallup’s “conservative estimate” is that it can cost between one-half and two times that of the employee’s annual salary.
Individuals who have completed a company’s internship program tend to have higher retention rates at that company than those who did not. In fact, research from NACE shows that interns who interned at the company are "32% more likely to be retained than new hires who lack internship experience." With the cost of turnover being up to two times an employee’s annual salary, it’s clear that higher retention rates and lower turnover are good for the bottom line.
Leverage your talent pipeline to reduce onboarding time and costs.
Not everyone who goes through an internship program will be hired upon graduation. A portion won’t be a fit for full-time employment or you might not have enough open positions for all the all-stars who participate in your internship program.
In some fields with significantly longer train-to-hire pipelines, internships can take place years before hiring. Life science companies especially use this tactic to stock their talent pool, offering undergraduate internships but not hiring until those interns earn their Ph.D.s.
The good news is that these candidates form a talent pool that you can source from quickly and inexpensively. No need to bring on an external agency to find people—you already have their number. Additionally, the ramp period and onboarding costs can be reduced as the intern has already worked at your company.
Track the data to see the payoff.
While it can be hard to see the immediate business advantages of investing in internship programs, diligently tracking long-term shifts in cost per hire and employee retention rates can unveil the payoff. With a successful internship program intact, the benefits of a reliable and talented pipeline of employees can be effectively measured with real data.
The return on this investment could make its mark on the bottom line, with more highly engaged—and more affordable to acquire—employees powering an organization. Especially with no end in sight to the difficult labor market we’ve found ourselves in, the interns of today could be vital tomorrow.
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