Paying Overtime to Finance Interns Marissa Guiang December

Paying Overtime to Finance Interns Marissa Guiang December 4, 2014

MG&Co. Consulting can provide relevant expertise Marissa Guiang SENIOR PARTNER

“Where will I be rewarded for my hard work? ”

Today’s topics of discussion 1. THE STATUS QUO What are the issues with compensation policies? 2. THE PROPOSITION How can you make your workplaces better? 3. THE BENEFITS What is the positive impact of this change? 4. THE CONCERNS How will failure be minimized?

The Status Quo § An Overview of Current Compensation Policies § A Look Into Financial Services Companies

The set salary amount interns are being paid is a deceiving number Summer 2014 Average Finance Intern Salary: $10 K - $12 K § § Per hour amount is less than the living wage No cap on hours worked Not including expenses from in-office meals Not including car service or taxi reimbursements Current NYC Living Wage: $13. 13 (New York Times, 2014) 100 Hour Weeks X 10 Weeks Total Divide 1, 000 Hours by $10 K = 1, 000 Hours Worked = $10 Per Hour

Only 3 companies out of the 15 with the largest intern classes pay for overtime

The Proposition § The 3 Prong Structure and Customizable Change § The Proposition Within Other Industries

There are many options in restructuring your interns’ compensation plans The Proposition’s 3 -Prong Structure Hourly Overtime Rate Amount of Overtime Other Perks Main Takeaway: Flexibility is based on your company’s budget and internship program structure

Other industries have already implemented this change successfully Tech Companies Consumer Staple Companies Energy Companies Consulting Firms Healthcare Companies Fellow Finance Firms Of the 28%, 92% worked in finance

The Benefits § The Importance of Compensation for Students § Studies on Productivity and Motivation § Applicant Pool Analysis

Compensation is an extremely important factor when students are choosing between internships 98% Compensation plays an important role in 98% of students’ decision when choosing to accept an internship offer (Investopedia. com, 2013) The Top 3 Internship Deciding Factors: (Investopedia. com, 2013) 1. 2. 3. Compensation Appealing Perks Company Fit “Fairly paid internships usually have students and graduates working in environments where their skills are put to beneficial use” (Investopedia. com, 2013)

Fair intern compensation will attract more applicants to the finance industry Class of 2013 Class of 2007 46% VS 31% (New York Times, 2014) “The prestige and salary in Finance are lucrative, but when you step back and look at the big picture, the pay usually doesn’t equal the effort you put in. I would have gone back if my nights in the office were rewarded” - Greg Kraft, Princeton University 4 OUT OF 5 Class of 2007 48% Class of 2013 VS (CNBC, 2014) 25% STUDENTS would choose a job offer with paid overtime over one without (all other factors aside) 2014 Cornell Student Internship Survey

Paying interns for overtime boosts motivation and productivity within the workplace From the 2013 Harvard University Study, “Do Employees Work Harder for Higher Pay? The Result of Fair Compensation Practices: Greater Effort + Productivity+ Satisfaction = Better Work Environment “Paid workers are motivated when success is clearly defined and responsibilities are task oriented” (Harvard Business Review, 2013)

The Concerns § The Effects on Your Company’s Bottom Line § Abuse of Paid Overtime

New compensation plans are completely tailored to your company’s budget Set an appropriate overtime rate Company Example: Reduce intern salaries Discontinue intern meals and car service § Different rates by division § Strict rules for meals § Smaller internship class

Paid overtime discourages overworking interns and ultimately saves on costs Managers will be more aware of how much extra work they assign Overtime will only be utilized when absolutely necessary Hours worked by interns can be easily monitored by a clock-in system

This change benefits both companies and interns – it’s a win-win situation Other industries are ahead in this change Interns care highly about fair compensation Paid overtime will attract applicants Fair pay leads to productivity and motivation Your new plan is customizable

With the summer 2015 internship recruitment cycle around the corner, now is the time to act Next Steps: § Plan new details with HR § Inform target schools of the new policy § Advertise this change § Fairness § Respect § Appreciation Ask Yourself: § Do you want to be fair? § Do you want your interns to feel valued? § Do you want the best talent? Improvement in the lives of your employees

Thank You! marissa. guiang@mgconsulting. com

Bibliography – compilation of sources used “ 10 Internship Characteristics that Attract Exceptional Interns” Internships. com, June 1, 2014. www. internships. com. Accessed October 28, 2014. Jonathan Salem Baskin, “If Only Your Brand had the Same Bad Reputation as Wall Street” Forbes, July 22, 2013. www. forbes. com. Accessed October 28, 2014. Jillian Berman, “How Wall Street’s Life-Ruining Work Habits Hurt All of Us” Huffington Post. April 13, 2014. Accessed October 27, 2014. Ben Dipietro, “Survey Roundup: Getting on Board with Cybersecurity” Wall Street Journal, October 24, 2014. Accessed October 27, 2014. Marissa Guiang, “ 2014 Cornell Student Internship Survey”, October 25, 2014. Stephanie Landsman, “Wall Street Job Stress Still at Crisis Levels” CNBC, May 25, 2014. www. cnbc. com. Accessed October 26, 2014. Chuck Leddy, “Do Employees Work Harder for Higher Pay? Harvard Business School, October 29, 2013. www. hbswk. hbs. edu. Accessed October 26, 2014. Alan Murray, “How to Create a Culture of Candor” Wall Street Journal, October 10, 2010. Accessed October 27, 2014. Dave Roos, “Do We Work Harder When We’re Paid Hourly? ” How Stuff Works, January 11, 2012. www. money. howstuffworks. com. Accessed October 27, 2014. Kevin Roose, “Will a Dead Bank of America Intern Change Wall Street’s Pledge-Class Culture? ” New York Magazine. August 21, 2013. www. nymag. com. Accessed October 28, 2014.