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Wednesday, April 13, 2011

So should summer interns get prorated stipends?

Its that time of the year(Apr-Jun) where the 2yr MBA students from Indian B Schools fan across the globe(OK not all places mostly India/Singapore/HK/USA/UK) to spend(or party away depending on your orientation) their precious summer break between first and second year. Typically, atleast in the IIMs/XLRI/FMS/SP Jain and other top tier institutes, the internship stipend is prorated to the base pay. So for a base pay of Rs 24 lakh/p.a for example, the 2 month stipend would be Rs 2lakh/month=Rs 4 lakh. Generally, accommodation and airfare is also given as an additional onetime relocation allowance for interns but not for the final offer. Company policies do vary-its mostly the consulting and investment banking companies which pro rate the stipends-with others giving barely enough to live in the city of work.

Without examining the technical merits of this-whether a particular student X is delivering value to his company Z-let us see the assumptions behind this pay scale. The assumption seems that the summer intern will be active from Day-0(like any other full time employee) and will produce work of equivalent quality-if not at start then atleast from the mid/end. But the proposition of pay for work goes against the very tenets of summer internship being an academic requirement as against a work sampling program. Still, given the extreme level of competition to lure the best students to intern with(and eventually join) them, cos go to all levels. And the base Western scales are huge amounts for us Indians because we can live cheaply abroad(Ok most of us).

So while the purpose of the internship may not justify proration, look at 2-3 factors supporting pro ration
  1. Working hours-in these jobs, interns typically work 12+hr days.
  2. Work itself MAY be routine/boring/monotonous
  3. You pay peanuts you get monkeys
So I guess in balance, proration seems the way forward provided the person delivers. 

1 comment:

  1. A new employee to a firm is not very different from an intern. If a fresher, he will also have very little prior knowledge. Yet he will be paid the full amount. To add to that, the fight for a PPO is intense, and so the level of effort put in is surely high for those concerned few (or many :) ).

    So there... Some more points that weigh in favor of prorating the intern stipend. Probably the bias comes from the very word.. stipend. and not salary.

    Btw, I was never paid anywhere close to my base pay during my intern (same firm). And now I am not being paid anything at all :D