While most companies are forced to make deep budgetary cuts due to the sluggish economy, some seem intent on preserving their internship programs, even if in a pared-down form.

Many companies have long embraced internship programs for their ability to bring in top-notch students to perform valuable tasks at a reasonable cost. But now, many of these same companies are gaining a new appreciation for these programs, recognizing that they can also serve as a powerful recruiting resource.

In response, some companies are developing initiatives to ensure that their pool of former interns receive priority consideration as they fill their talent pipeline into the future. Taken together, they say, interns form a desirable group of candidates who have been evaluated and essentially prescreened by internal managers as they have completed company projects.

"As economic times get harder and cost-cutting measures get put in place, we're looking for ways to really build on our investment in student employees," says Monica Hemingway, global design leader for staffing and selection at Dow Chemical. "We do invest an awful lot of time, money and energy in training them." By bringing the best student employees on later as full-time employees, we don't lose that investment to another employer. "From a cost perspective, it's certainly the smart thing to do."

Historically, Dow's National Student Program—which brings in interns and co-operative education (co-op) students in a variety of disciplines—has not had a rigorous assessment methodology for determining the best-performing students, and therefore the top candidates for full-time job offers. "We know that interns bring value to Dow, but we have not had a way to capitalize on that when it comes time to recruit full-time employees."

To address this and other related issues, Dow is in the process of reexamining its entire new college graduate hiring program. In an initiative called Program Effectiveness, the company is identifying the best avenues and methods by which to find talent, focusing on three sources. "One of those sources is students who have worked for us in internships, co-op programs or collaborative research agreements," says Hemingway. (Other sources include the Internet and lists of students in specific targeted groups such as attendees at a particular conference.)

One goal of the initiative is to develop a policy for evaluating the company's interns versus other candidates. "Even if our hiring managers have seen some excellent interns and have been very pleased with them, they are not willing to make an offer until they've seen additional candidates," explains Hemingway. While internships and co-ops are generally reserved for the best students, many opt not to apply to these programs, she notes.

Under the Program Effectiveness initiative, Dow is working on a set of selection standards—company-wide minimum requirements having to do with specific skills and competencies-that it can use (in addition to other criteria such as grade point average and coursework) to evaluate all graduating students, including interns.

"We are looking at methods for measuring competencies like problem solving, leadership skills, and teamwork," says Hemingway. "We would use that information to decide if that person is a good fit for Dow and then we would go through more traditional procedures such as interviews."

Dow expects to have completed its plan for revamping its new college graduate hiring program by the end of this year. Implementation could then take place in the spring of 2004, says Hemingway.

Boston Scientific is another company focused on developing and implementing a strategy to bring its interns into the full-time recruiting fold. Four years ago, the company began the push by simply selling its managers on the benefits of hiring interns to help accelerate project timetables. Pointing to the contributions that interns had been making in its corporate headquarters in Natick, Mass., the company set out to broaden its internship program to other sites, putting some national policies and procedures in place. As a result, the number of interns and co-op students has grown from about 40 interns per year to roughly 175 to 185 students per year, reports Amie Clancy, the company's University Relations Manager.

Now that managers are sold on the idea of using interns, "we want to communicate the next piece-that the internships and co-op programs are a strategic recruiting resource," says Clancy. "We need to use them to start building our recruiting channels for full-time assignments as they become available."

"We want our managers to see that internship programs are really a win-win proposition," says Clancy. They allow both the company and the student the opportunity to "test drive" the organization and learn more about the medical device industry, she adds.

"We look at [the internship program] as an opportunity to develop the students who be unsure about what they want to do upon graduation," says Clancy. "For example, a student who is interested in the medical field but not interested in medical school may find a good fit here with us."

Indeed, internships provide a great forum for students to focus on their career goals, says Paul Plouffe, a lecturer in the Department of Chemical Engineering at the University of California, Berkeley. "There are a good number of students in the chemical engineering program who have only a vague idea of why they are here. But when they come back from an internship or six-month co-op program, they tend to have a very clear idea of what it is they want to do-whether they want to stay and work as an engineer or whether they want to pursue something different," he adds. "And if they do decide to stay in chemical engineering, they usually rededicate themselves to their studies and become more directed. The exposure to the professional world along with the opportunity to try on some of an engineer's responsibilities really helps them to mature very quickly."

The trial run that internship programs provide also benefits managers. They can assess students for three months with no obligation to hire them as permanent employees, Clancy adds.

The internship allows you to find out what a particular student is capable of technically, notes Karen Wilkins, engineer recruiting manager for technical recruiting at Rohm & Haas Company. "You don't have to rely just on what is on their transcript or resume. You can witness it first hand."

As companies are forced to run leaner, they are embracing the opportunity to prescreen candidates before they hire them on, says Theodore R. Williams, chemistry professor, emeritus at The College of Wooster (Wooster, Ohio). He has noticed that companies are more inclined to use internships or other temporary work arrangements to evaluate potential employees. "Only if they find they are top performers, will they invest the time and money to put them on the permanent payroll."

"The real value [in internship programs] is in converting the best students into full-time hires," says Boston Scientific's Clancy. "Because it's to our detriment if we design a wonderful internship program and help students develop all these great skills and then they go to work someplace else."

Rohm & Haas also recruits interns from a variety of disciplines with an eye to their future employment potential. In particular, "the MBA internship program is an important source of leadership talent for the company, providing a valuable view of possible candidates for leadership succession," says Trish Maxson, the company's corporate HR director. "Interns are assigned to specific projects that allow them to showcase their ability to derive results and collaborate with others."

Consistent with Rohm & Haas' strategy to develop leaders who can manage and run a business from a global perspective, the MBA internship program draws interns from business schools in Europe as well as the U.S.

To increase visibility for their interns, Rohm & Haas creates opportunities for their MBA interns to network with managers throughout the company. And each summer, the company tries to set up a luncheon or social hour during which the interns can talk with the company's CEO and president.

Similarly, Boston Scientific sets up weekly networking luncheons that bring its MBA interns together with senior managers from its teams, divisions, and functions. "This allows them to ask questions about our future strategy or how the company plans to address critical corporate issues," says Clancy. "More than anything, it's really an opportunity for them to get some visibility and exposure within the company's management."

Boston Scientific also hosts a weekly luncheon program called "Lunch and Learn" for its undergraduate interns. In addition to providing a networking forum, the program is aimed at helping the student develop and hone some of the skills necessary to be a well-rounded professional, says Clancy. For example, the company might offer workshops on critiquing resumes, developing interview skills or making presentations. "Basically," she adds, "we are trying to get them to maybe go a little bit outside of their comfort boundaries."

Company efforts to put co-ops and interns in the recruiting spotlight seem to be paying off. Dow Chemical reports that about 20 to 30% of its student employees are eventually hired on as full-time employees. At Boston Scientific, 22% of its interns end up on the permanent employee payroll and "we are working hard to increase that number," says Clancy.

And internship alumni seem likely to stay once they are hired on full-time. After completing an internship, students have a good idea of whether they like that particular company, culture or industry. They are not likely to apply unless they see a future for themselves there, reasons Clancy.

Rohm & Haas can point to several examples of individuals who have come to the company over the past 20 years as MBA interns and have stayed long enough to reach the vice-president level. Those examples are useful in selling Rohm & Haas to prospective interns and employees, says Maxson.

Interns themselves can also be a great resource for promoting the companies they have come from. "If an intern has a valuable work experience, they see our company in a good light," says Wilkins. "And they are likely to go back to campus and act as a ambassador for Rohm & Haas, which may prompt more students to sign up to interview with us for full-time positions."

Dow's Hemingway echoes that point. "If interns have had a good experience with us, they are going to tell their friends about it. And anything that increases an awareness of Dow on campus is a good thing as long as it is positive."

However, attracting students isn't a worry for most companies right now. There are more students clamoring for internships than there are open positions. Indeed," companies have fewer internship positions to offer than they did a few years ago when the economy was hotter," observes Mary Kay Zimmerman, graduate admissions and career services coordinator at The University of Wisconsin, Madison. Companies typically recruit interns at the same time that they are lining up interviews for full-time hires, she explains. "If they don't have a need for permanent employees, they are not going to visit here in the first place, which severely impacts the internship opportunities for our students."

"Internships are much harder to come by these days," agrees Williams. "It used to be relatively easy for us to find summer positions for our best students at major chemical companies," he adds. "However, internship opportunities within government agencies have not diminished as much. And companies are still using internships to help bring more minority students into science," he says.

Still, some companies say they have not cut the number of intern hires as deeply as full-time hires. "We are backing off a lot with our full-time hires; that's no secret," says Dow's Hemingway. But we are not cutting our intern numbers as deeply," she adds. "There's still a lot of work that needs to be done where interns are a valuable resource for us."

Rohm & Haas, too, says it has tried to buoy its intern numbers. Although hiring of interns for the MBA program fluctuates with business needs, the company tries to keep its legion of technical interns strong in good years and bad. In a poor economy, the number of interns and co-op students might only drop from 100 to 60 per year, reports Wilkins.

Companies that remain committed to internship programs and their inherent recruiting benefits seem to be gaining a competitive edge. "In weaker economic times, when other companies are lying low, that's the time you can get the best people," says Wilkins. "We've done a good job of leveraging those opportunities."

Susan Ainsworth specializes in writing about chemical industry topics and is based in the Dallas, Texas area.