Financial Times: Double profit from the first step in a career: “The success of work placement programmes such as the Shell Technology Enterprise Programme (Step), a scheme supported by Shell and the UK government, highlights the enduring appeal of work experience in helping young people launch their careers.” (ShellNews.net)

By Morgen Witzel

Published: October 12 2004

The success of work placement programmes such as the Shell Technology Enterprise Programme (Step), a scheme supported by Shell and the UK government, highlights the enduring appeal of work experience in helping young people launch their careers.

Research shows that students find a work placement gives them an important boost at the start of their careers. Perhaps more importantly, companies offering placements perceive benefits from the experience. For instance, more than 90 per cent of companies participating in Step have pronounced themselves satisfied with the programme, and studies of other work placement programmes by the Universities of Salford and Kent report similar high levels of satisfaction.

Students themselves identify two main benefits. First, they gain hands-on experience and practical skills. These can include knowledge of specific companies and industries but also more general business knowledge, technical skills and, last but not least, an understanding of working in a team. In other words, they learn what it is like to be in business. Second, they make contacts within the business world that are often of real value later on.

Beyond these, there are material benefits. Research conducted for the Management and Leadership Council shows that graduates who have undertaken work placements command higher salaries.

In the past, business training was usually gained through practical experience. Until the end of the 19th century, those seeking a career in business went through the apprenticeship system. The leaders of the industrial revolution, such as Richard Arkwright, Robert Owen and Josiah Wedgwood, all served apprenticeships. Herbert Austin, the carmaker, Joseph Rowntree, the chocolate maker, and John Reith, the founding chairman of the BBC (later Lord Reith), were apprentices in their youth.

Often the apprenticeships had little to do with their later careers.

Arkwright became famous as the owner of cotton mills but he apprenticed as a barber and surgeon. Lord Reith was an apprentice with the North British Locomotive Company in Glasgow.

This raises another issue for work placements: what is in it for the company? In particular, why should a small business with limited resources take on a student of uncertain knowledge and capabilities? Why expend this effort when they will almost certainly move on?

Work placements can lead to bottom-line improvements as the example of Martina Rieder, who was last week unveiled as the winner of the Step Most Enterprising Student Award, shows. Ms Rieder worked on a development project at Welland Medical, a medical products company, that the company says will save it $90,000 (£50,000) a year. But the biggest benefit is long term.

According to Gary Becker, an American economist and Nobel laureate, who is one of the leading exponents of human capital theory, companies should invest in staff productivity just as they would invest in technology or machinery: to boost overall performance. The key word is "overall". There is no guarantee that the money spent training an individual will ever be recouped; the employee you train today may take a better-paid job with your competitor tomorrow.

At the same time, the qualified employees you hire today may have been trained by another company yesterday. By investing in training, companies are helping to create a pool of skilled and qualified labour from which all can benefit. Many early industrialists knew and understood this.

Charles Parsons, an engineer and himself a former apprentice, created an apprenticeship school at his turbine works at Heaton, near Newcastle, in the belief that both his business and the economy as a whole would benefit from having a better supply of trained engineers.

So it is with work placements. Individually, benefits to companies are often short-term and very few students go on to permanent jobs with their placement company.

But if the result is more graduates with a combination of good qualifications and work experience, it is worth taking part in the exercise.

Good work placements today will create the skilled employees of tomorrow.