Improving Finance Intern Compensation Policies for a Motivated Workplace

1. Paying Overtime to Finance Interns Marissa Guiang December 4, 2014

2. MG&Co. Consulting can provide relevant expertise Marissa GuiangSENIOR PARTNER INTRODUCTION STATUS QUO PROPOSITION BENEFITS CONCERNS CONCLUSION

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

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

5. The Status Quo • An Overview of Current Compensation Policies • A Look Into Financial Services Companies

6. The set salary amount interns are being paid is a deceiving number Summer 2014 Average Finance Intern Salary: 100Hour Weeks 10Weeks Total 1,000Hours Worked = X $10K - $12K • 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 Divide 1,000 Hours by $10K $10Per Hour = Current NYC Living Wage: $13.13 (New York Times, 2014) INTRODUCTION STATUS QUO PROPOSITION BENEFITS CONCERNS CONCLUSION

7. Only 3 companies out of the 15 with the largest intern classes pay for overtime INTRODUCTION STATUS QUO PROPOSITION BENEFITS CONCERNS CONCLUSION

8. The Proposition • The 3 Prong Structure and Customizable Change • The Proposition Within Other Industries

9. 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 INTRODUCTION STATUS QUO PROPOSITION BENEFITS CONCERNS CONCLUSION

10. Other industries have already implemented this change successfully Consumer Staple Companies Tech Companies Summer 2014Cornell Internship Survey: What percentage of respondents were paid for overtime? Consulting Firms Energy Companies HealthcareCompanies Fellow Finance Firms Of the 28%, 92% worked in finance INTRODUCTION STATUS QUO PROPOSITION BENEFITS CONCERNS CONCLUSION

11. The Benefits • The Importance of Compensation for Students • Studies on Productivity and Motivation • Applicant Pool Analysis

12. Compensation is an extremely important factor when students are choosing between internships The Top 3 Internship Deciding Factors: (Investopedia.com, 2013) Compensation plays an important role in 98% of students’ decision when choosing to accept an internship offer(Investopedia.com, 2013) 98% • 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) INTRODUCTION STATUS QUO PROPOSITION BENEFITS CONCERNS CONCLUSION

13. Fair intern compensation will attract more applicants to the finance industry “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 (New York Times, 2014) 4 OUT OF 5 Class of 200748% Class of 2013 25% Class of 200746% Class of 2013 31% would choose a job offer with paid overtime over one without(all other factors aside) 2014 Cornell Student Internship Survey VS VS STUDENTS (CNBC, 2014) INTRODUCTION STATUS QUO PROPOSITION BENEFITS CONCERNS CONCLUSION

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

15. The Concerns • The Effects on Your Company’s Bottom Line • Abuse of Paid Overtime

16. New compensation plans are completely tailored to your company’s budget Set an appropriate overtime rate Reduce intern salaries Discontinue intern meals and car service Company Example: • Different rates by division • Strict rules for meals • Smaller internship class INTRODUCTION STATUS QUO PROPOSITION BENEFITS CONCERNS CONCLUSION

17. 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 INTRODUCTION STATUS QUO PROPOSITION BENEFITS CONCERNS CONCLUSION

18. 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 Fair pay leads to productivity and motivation Your new plan is customizable Paid overtime will attract applicants INTRODUCTION STATUS QUO PROPOSITION BENEFITS CONCERNS CONCLUSION

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

20. Thank You! marissa.guiang@mgconsulting.com

21. 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.