Employment, entrepreneur, internship »

[6 Aug 2010 | 0 Comments]

I recently read this article on the BBC website: http://www.bbc.co.uk/news/business-10822784 it outlined how un-paid interns are probably illegal and they can claim back pay for the last 6 years at the minimum wage. This made me feel as if someone had poured some cold water on my entrepreneurial spirit as I had been seriously considering looking for some interns to help get my websites off the ground. In this article I will outline why I think that there is a lot of value in having un-paid internships for both the employer, the un-paid employee and UK plc as a whole.

So what is the problem

image The problem is there is a risk that an employer could be sued and then be liable to pay backdated pay for 6 years. This could be a lot of cash all of a sudden when there was an open and well know agreement in place between consenting adults.

If the cost of hiring an Intern was known up-front then it could well have been that the employer would have decided it was not worth having them in the first place. There are such things as cost benefit analysis and if the numbers don’t stack up the it is not worth doing it. In my view business deciding not to take risks makes everyone a looser and having cheap labour to try some things out is a good thing.

Employing people is expensive

image From personal experience I can safety say that employing people is really expensive.

  1. There is the obvious bulk of the cost, salary.
  2. There is national insurance to pay to the government as a thank you for having 1 less person on the dole.
  3. There is getting them a chair, a desk, a computer, coffee, toilet paper, heating, ink for the printer, paper for the printer, phone calls, etc (there is a lot more)
  4. There is then buying insurance to cover them from hurting themselves when at work or being negligent to one of your customers, extra payroll costs to the accountant, mileage, travel expenses etc.
  5. There is the sick leave and holiday you have to pay for.
  6. If someone goes on maternity you have to keep paying them and keep the job open
  7. There is training them and showing them what to do. This takes up my time which means is costs me money.
  8. I’m sure there is more but that is just what comes to mind

Will I employ people again? For another self funded start-up or idea i have, probably not. For an organisation that makes money, yes – in fact I have a knack of putting together great delivery teams in companies I contract for.

Experience can be better than cash

image So an Intern will be taking home a £0 salary. Perhaps some travel expenses but that will not be much so why would people do this work? The answer is getting experience, industry knowledge and making business contacts. This, in my opinion, is better than cash. If you get the right experience the you can convert that to cash later on in life by getting a better job or work on a better project or know how to do your own start-up. In fact this is the exact argument that the government uses about levying student fees on university courses in the UK.

If I was an employer looking to hire someone and I saw that a candidate had worked un-paid in the industry just to get relevant experience it would say a few things to me:

  1. They are keen about the industry
  2. They have a good work ethic to achieve a goal in their life
  3. They understand about long term investment / strategy for reward rather than short term gains.
  4. A good attitude and a will to get on in live, knowing that it isn’t always fair but something will work out and that nothing is truly given out in this world.

It would certainly set them apart from candidates that have not done this. It does not guarantee them a job but it will certainly help.

Helps pre-revenue low revenue start-ups at a time of need

image So I’m pretty sure that I cannot afford to employ anyone at the moment, but I still believe there is value in my websites. The whole project would really benefit from having someone do some basic customer management, research and social media updates. It is not going to be technical stuff but it needs someone to put in the hours. The cost benefit analysis is marginal but if I had the time then I would want to be doing this work.

So my situation is that I think I have a good idea but can’t afford to take the risk of paying to see if it works or not. I looked at getting grants from the likes of SEEDA and Business Link (I won’t miss you when you are gone) but that would be a lot of work with no guarantee of money or benefit at the end of it. I would be better off spending that time doing what I felt needed doing.

So a good solution in my mind would be to able to give an eager motivated person the opportunity to prove (or disprove) my idea. They can get some real work experience of dealing with customers, technologies and business tools and I get to see if my idea works at a low cost (remember I would still have to pay for the interns running costs). If they do a good job, I’ll give then a professional job reference to further their career or perhaps I know of other opportunities they could take advantage of.

What can be done about it?

I have a couple of ideas which would make me think about spending my time and effort to getting an intern.

  1. Formalise an clear path for interns to be un-paid and take away the risk of employers being made to cough up back pay for the last 6 years.
  2. Can I just become a department at the University of Life? I could then charge interns (which then makes them students) to take my Business Course. These students will graduate with excellent and relevant business experience. Perhaps I could even get some government funding for my new department?

Round up

I’m not going to risk trying to find an intern at the moment. I just cannot afford to justify it. In the economic climate where it is hard to find jobs, University funding is being cut, student fees will probably be raised soon, there is talk of a ‘lost generation’ we surely need to encourage people to try things, get new skills. If this means that they have to work for free, then so be it. At least it will allow those who have a healthy outlook on work will be given the opportunity to show what they can do.

If people with industry experience and ideas can be given the opportunity to see if the idea works at a low cost then this is surely the definition of a win-win-win situation for the entrepreneur, the Intern and UK Plc. Allowing un-paid internships is an enabler of the Entrepreneurial Spirit of both Interns and businesses.