Over the years the importance of work experience for university graduates has become increasingly more important to secure post graduate jobs in highly competitive industries such as the banking and finance industry. Work experience gives you “demonstrable skills that employers really value, and a competitive edge over other applicants.” (FreeCVDownload.com).
Work experience can be gained through different forms including paid or non-paid internships, part-time jobs or volunteering. Each of these forms has their benefits and drawbacks but which one is the most valued is questioned and contested. With the use of three sources I will be giving my view on whether work experience is beneficial, and which one is best based on graduate salaries, time to secure full time employment and skills gained along with other variables aimed at the banking sector. I will discuss how it differentiates you from other candidates, how it develops skills that needed in your sector as well as how it could potentially damage your chances of getting a job after graduating.
Critical skills like leadership and communication are key in the work place in modern time but some people are naturally more confident with these skills than others. Work placements have been proven as a great way to develop these skills that you are weak at and further strengthen your other skills creating a more well-rounded set of skills. Gault et al. (2000 p49), stated that ‘Interns rated the internship as providing a higher level of career preparation in 2 of the 5 academic skills’ which were ‘computer application and creative thinking’. Computer application skills are vital in today’s technology age where software’s especially in investment banking are used every day to carry out tasks and by understanding their systems such as MRI software it makes you more appealing to potential firms reducing their training costs and giving them a higher productivity rate in comparison other graduates. Gault et al. (2000 p46), also stated ‘contact with professionals enables interns to better crystallise their job interests and abilities’. Contact with people in the field would allow you to profit from advice they have gained from personal experience over the years to maximise your development by avoiding the mistakes the professionals themselves made. On the contrary, in Gault et al. (2000) study 7 of the 13 career preparation skills were rated the same including ‘leadership and teamwork’ which affects the overall value of the internship because they are two main skills that employers look for in the recruiting process. This could lead to university students gaining these skills another way for example through volunteering or through sports teams as is allows your leadership and teamwork skills to be amplified through the tasks you will face. Therefore, it causes controversy over whether the key skills are gained are just as easy to develop at university without the need of an internship. This evidence provided backs up how through internships you can develop your skills needed for the investment banking industry for example but does some skills development like leadership can vary depending on the firm you intern at.
In recent years the number of people graduating has outnumbered the amount of jobs available to graduates making the labour market very competitive and therefore crucial to differentiating yourself in the recruiting process. The increased competition has been backed up by Highfliers Research Ltd (2018 p23) which showed in Table 4.4 investment banking has a ratio of 129:100 as shown in Table 4.4 for the number of work experience places (2,075) in comparison to the number of graduate job available (1,925) in the sector. As of 1994 ‘26% of all new hires… had internship experience… higher than the 17% reported in 1993’ (Gault et al. 2000 p51). This rapid increase would project it to rise higher by 2018 meaning that it’s becoming more common to have work experience and therefore less significant when trying to differentiate yourself. This has led to new ways to differentiate yourself such as having your own understanding of the company and their activities or your own investment portfolio. This shows the firm that you have an interest in what they do and will be more willing to learn in the future. The majority of work experience is in the form of placement years for university students however there is also 12% coming from pre-university placements (Highfliers Research Ltd (2018 p22). This form accounts for a lower percentage which implies two different views: one being it can help differentiate you more as less people do it showing you have initiative to gain extra experience about how the industry operates but also gives you a better entry into the sector if you try go back there for a future placement. The other view is that it is less favourable in comparison to a university placement because you do not gain as much from them in comparison making employers look less favourably if you only have a pre-university placement. By showing this initiative some students have received offers after their placement as ‘recruiters are able to offer students a graduate position, often a year before they are due to leave university’ as stated in the Highfliers Research Ltd (2018 p21) if they thought you did well during the placement year creating this gate way shortcut into the industry. This gives the firm more certainty in comparison to other candidates as they have a track record of your performance. While at the same time it will reduce the firms training costs “up to $15,000 per person (Watson 1995)”and therefore the “rewards afforded by internship programmes are significant to all parties” (Guilt et al. 2000 p51) proving the value of internships. This is further backed up with the average time for an intern to secure a job after graduating was ‘1.98 months’ compared to the ‘4.34 months’ for a non-intern (Guilt et al. 2000 p50). However, this will depend on how much the firm prioritise interships as a value to them as it can lead to a ‘lack sufficient quality control across departments…education, supervision, organisation’ (Guilt et al. 2000 p52). Therefore, the benefits of the internships are limited as the contacts are less likely to support you in the future and the personal benefits gained will be fewer. From the evidence provided above it can be said that the benefits of doing an internship can play a massive role in securing a graduate job after you graduate while it is limited depending on what firm it is conducted at.
On the contrary, despite internships displaying their importance for future careers they can also cause drawbacks as they are not perfect and can in some cases put you at a disadvantage when it comes to the recruiting process. This was evident when people who had done an unpaid internship had a ‘lower starting salary than those who hadn’t interned’ (Allcock 2014) suggesting it is looked at negatively by employers. However, the creditability is limited as it doesn’t specific the industry the participants entered into. With ‘starting salaries averaged $2,240 (9.23%) higher than noninterns’ (Guilt et al. 2000 p50) which could be due to their experience meaning the ‘extrinsic success’ is greater for interns. There are also other factors that could contribute to the salary such as the firm itself. But Allcock (2014) also stated ‘” wary of candidates who have a string of short-term internships” – Heather Baker’ as this implies there was no interest in them to come back suggesting they don’t value the intern enough. So, although you might have showed you are ‘”determined and have sacrificed a lot to gain experience”’ (Allcock 2014) it may come across badly and lead to employers overlooking you rather than valuing you more as you have shown valuable skills to get the internship and have got some experience as a result which is better than having none. However, in some cases firms would ‘” rather see a candidate who spent their holidays in a real job earning some money” – Heather Baker’ (Allcock 2014). This is because it shows you have ‘staying power’ and demonstrates loyalty to a company which firms these days value as they want to invest in training for someone who will benefit them for years or even decades to come. This evidence therefore suggests that types of internships e.g. short term or unpaid ones are looked on less favourably and instead would be better to have work experience but from another industry but for longer.
The overall implication is that work experience is beneficial for your future career no matter what type, either paid placement or unpaid internships, based on the fact it gives you better experience, learn skills like computer applications, develop new contacts and focus more on a career path in comparison to university opportunities. The best form is the paid placement year internship as it is looked on my employers as the most beneficial to your development. Its benefits will be shown in the recruiting process to differentiate you helping to reduce the time spend finding a job. Yet the effect of securing a job with an internship can vary by industry due growing amounts of people doing internships and therefore is no longer enough to differentiate yourself in the competitive labour market for example in the investment banking sector. This has led to other forms arising in recent years including the understanding of business operations.