The changing face of grad recruitment
We explore what organisations must do to attract and retain the most demanding student cohort yet, and whether they even want to
In 2017 the word ‘youthquake’ was cemented into cult status. The phrase, defined as ‘a significant cultural, political, or social change arising from the actions or influence of young people’, officially became Oxford Dictionaries’ Word of the Year, joining predecessors ‘credit crunch’ (2008) and ‘selfie’ (2013).
The term was used to describe the unexpected tide of young voters turning out to vote for Labour’s Jeremy Corbyn.
Last year also saw the first fall in five years in the number of graduates hired by The Times’ top 100 graduate employers. The number fell by 4.9%, according to research from High Fliers. The same research pointed out that initial hiring expectations and targets from the start of the 2016-17 recruitment season had been downgraded twice throughout the year.
Several factors are behind a drop in graduate hiring, and the potential demise of the graduate scheme. These include Brexit-related uncertainty around hiring, restrategising on the part of employers around desired skillsets, the introduction of the apprenticeship levy, and increased focus on social mobility. But a key driver behind this is the dramatically changing demands of today’s youth.
Demanding something different
“We’re finding that young people are ready for something different,” says Richard Waite, resourcing lead at Grant Thornton.
In the corporate world this means the balance of power is shifting. Once organisations were able to take their pick of top young talent leaving universities and clamouring to secure a coveted spot on a prestigious milkround graduate scheme. But businesses are now being forced to rethink their approaches to graduate hiring.
“It’s a candidate-driven market now,” says Charlie Taylor, CEO and founder of graduate recruitment app Debut. “Graduates have a stronger voice. Their expectations and demands are driving the market and companies are beginning to realise this. We’ve seen them drive change in consumerism through social media, and now it’s the turn of recruitment.”
It’s a sentiment shared by Rebecca Fielding, managing director of graduate consultancy GradConsult: “Whether we like it or not the psychological contract is different to what it once was, and this extends to the world of work,” she says.
This role reversal is perhaps the product of the environment today’s graduates have grown up in. “This is the generation who saw the big crash, their parents being made redundant, who can’t afford to buy houses… it’s no wonder they have become cynical of bigger organisations and this is playing into their psyche when they enter the world of work,” says Fielding.
This brings us to an oft-cited trend – one you could be forgiven for questioning as an overgeneralisation, but that cropped up in nearly all conversations HR magazine had for this piece – that graduates want to work for a company that has a sense of moral and ethical ‘purpose’.
“There’s a shift towards wanting a protean career; this means it’s less about the job title and pay packet and more about the purpose of the company and doing meaningful work,” explains Jane Clark, a director at Gradconsult who is researching talent management and graduate programmes for her doctorate.
Many grads perceive this sense of purpose as more readily available in the growing SME and start-up scene. Student money advice website Save the Student’s operations director Jake Butler believes start-ups tend to be more aligned with young people’s ethical sensibilities. But this isn’t the only draw.
“For me and many others the main reason to choose a job there is the ability to have a say in big decisions. There’s less of a hierarchy and you have more opportunity to make a big difference to the business,” he says.
There’s also greater mobility around the organisation. “You can join in one job then be doing something else a month later – it’s far less formal and you don’t have to jump through hoops like you do at a large company,” he adds.
“It’s the choice between joining a graduate scheme at the same time as hundreds of others and being part of the herd for three years, or joining a smaller business where you have greater control of your career,” agrees Gradconsult’s project consultant Kylie Cook.
“We hear from a lot of graduates who say ‘I want to work somewhere where the MD knows my name and the impact of what I do is recognised’.”
Technology and digital graduate roles are becoming particularly difficult to fill because of the lure of tech start-ups, finds founder and CEO of recruitment service provider WCN Charlie Hipps. He gives the example of investment banks looking for technology analysts, but missing out on grads who want to be part of creating the next iPod or launching the next Facebook at a start-up.
Shiny new opportunities
The allure of start-up culture is just one part of the picture though; securing a place on a milkround programme is just one of many options available to graduates today. According to new research from Solopress, more than half of students (56%) are considering setting up their own business and becoming entrepreneurs instead of stepping onto the corporate ladder.
Then there’s the lure of a portfolio career. “Lots of people are arguing that graduates could have five jobs at the same time in the not too distant future. It’s a crazy idea but I wouldn’t bet against it,” says Butler.
“Young people want a job that fits around their lives, not the other way around,” agrees the REC’s head of policy Sophie Wingfield. “They don’t want a nine to five, they want to work in a flexible, project-based way – whether that’s through agency work, freelancing or running their own business.”
So is the traditional graduate scheme dead? According to Debut’s Taylor: yes. “There are three things that are outdated about graduate schemes: the application process, the selection process, and the jobs themselves,” he says.
At the more extreme end of responses to this stand the companies who have taken a step back from offering graduate schemes altogether. Take Penguin Random House. In 2016 the publisher took the bold step to scrap graduate schemes altogether and removed the need to have a degree from all its UK jobs. With research published in the Journal of European Industrial Training finding that graduates in organisations with no grad programmes are more satisfied than their counterparts at firms with dedicated programmes, it’s easy to see why some employers have gone down this route.
Other businesses have reacted by adapting and evolving their graduate offering to better compete with start-ups and portfolio careers.
Fielding argues that the rigidity of traditional schemes risks stifling creativity. After all, does a three-year scheme compartmentalised into a series of prescriptive rotations really lend itself to the flexibility and freedom that graduates now demand?
“Graduates worry about the commitment of working in a job for three years,” says Butler. “They have to be sure they want to stay in that company to take it. But many don’t have any idea what they want to do when they leave university.”
The challenge for many traditional graduate recruiters, explains EY’s managing partner for talent Maggie Stilwell, is that the length of the programme often aligns with the time it takes to complete the accompanying professional qualification.
“At EY we are training professionals in specialised areas where it takes time to learn and develop new skills, so it wouldn’t be commercially viable to do this in a shorter course,” she says.
That said, there are other ways to align schemes to the entrepreneurial spirit of the modern graduate. EY is paying particular attention to how it can attract and suit the needs of what Stilwell terms “the side hustler”.
“These are the individuals who want a stable job that pays the bills but also have something they want to develop on the side,” she says. “For example, we had a graduate join us who wanted to start his own business but decided he needed to work full time for EY so he had that stability. He now works three days a week at EY and two on his own business – and it was his role at EY that helped him develop the skills and network to be able to launch his business.”
At some other top graduate recruiters the relevance of rotations has been called into question. As Clark says: “Job rotation first came out in the ‘60s and is still being used today. The rest of the world of work has shifted. So do graduates need to be told where to move next? Or should the onus be on them to find the next role that works for them?”
Hipps reports much less focus now on a conventional cycle of six-month rotations in different departments, before the grad decides at the end of three years which part of the business to move into.
“Schemes have evolved from graduates feeling like they are in a classroom environment to feeling like they are part of the company from day dot. It’s giving that sense of belonging and an opportunity to flourish,” he says.
“Many now offer on-the-job training in just one or two areas, so graduates build their experience and progress to proper role status much quicker… If the matching process is done properly at the start then there is less need for rotations anyway,” he adds.
This is an approach very much on Deloitte’s radar, according to its head of student recruitment Georgia Greer. “We don’t offer rotations across all of our schemes; we have some standalone schemes,” she reports, adding though that the rotation does still have a place at Deloitte.
“In the schemes where we do have rotations we’ve been assessing carefully whether to retain them or not. And for now we’re going to, as students benefit from the rich experiences they get, which gives them greater flexibility in their careers in the future.”
But it’s not just the structure of the graduate scheme that’s ripe for reform. Some of the biggest recruiters still receive 30,000 to 60,000 applications each year, according to WCN and Universum research. So a decline in hires can’t be attributed solely to large corporates and grad schemes becoming fundamentally unappealing to today’s youth.
A telling finding from the research is that the rates of candidates withdrawing, declining and reneging on offers are consistently high, suggesting the application process is also out of step with graduates’ demands.
“Where organisations are struggling is that the application process is too slow so the best candidates get other offers and drop out during the application stage,” Hipps explains, advising firms to shorten the time between application and offer.
EY has already started focusing efforts on this. Stilwell admits that being slow off the mark meant the firm lost out on talent in the past. “We’ve shortened our process to 11 weeks now and we’re trying to bring that down even further,” she reports.
For young people who have grown up with the immediacy of social media, applying for a graduate scheme in September to commence the following year can seem an odd concept.
To limit the risk of high drop-out rates, Debut’s Taylor recommends the use of apps that connect graduates and employers in real time. Graduates complete one set of assessments that are stored on the app and used to match them with suitable graduate roles. The application process, he says, can be reduced to a matter of days.
“It’s obvious – are they going to want to trawl through every individual website and complete multiple application forms or are they going to want to scroll through an app?” he points out.
So the candidate experience is critical. “When companies are doing everything in an innovative way but their recruitment process is outdated it sends a strange signal,” says Taylor. “The first touchpoints you have with the graduate are vital as it gives them an impression of what it’s like to work there.”
It’s a sentiment shared by Candida Mottershead, HRD of Accenture UK and Ireland: “As a technology company we need to attract graduates by showcasing the work we do.
“Our recruitment process had been quite long-winded and caused graduates frustration. So as part of addressing that we are looking to introduce a more immersive process that uses artificial intelligence and virtual reality. It’ll shorten the process but, even more importantly, it reflects us as a company much more than the old way did.”
Director of resourcing at Deloitte, Victoria Lawes agrees that the applicant experience is crucial, perhaps even more so than how long it takes to apply. Again the solution is technology.
“Students were telling us they wanted more insight into the culture of the organisation and wanted to do it in their own time,” says Lawes. “So we introduced gamification into the process, and job simulations so that students experience almost a day in the life of a graduate working here.
“We’ve also created new online assessments so rather than having to come into our offices or an assessment centre they can do it on their mobiles in their own time. It’s about giving the digital natives what they want.”
But talent strategy and leadership development principal at Mercer Anna Seely warns that, while a shift to digital tools brings a host of benefits – from speeding up the process to reducing bias – organisations need to ensure they still “make human connections in other ways”.
Hipps agrees. With organisational culture playing such a big part in graduate career choices, the differentiator will lie in keeping students engaged in the period between offer acceptance and start date, he says. He advises that companies should “send invites to events, maintain a dialogue, and have WhatsApp groups to keep the student engaged”.
“If there’s no personal element or if the contact goes cold they may begin to question if the company is right for them,” he adds.
But are changes to the graduate market solely down to the top graduate recruiters adjusting to ‘youthquake’? Or are businesses also driving changes of their own?
Take Deloitte. It did recruit slightly fewer graduates in 2017. But this was down to “business demand”, not the demands of young people, reports Greer. “We actually saw an increase in applicants; we normally get about 40,000 applications but now we are getting about 50,000,” she says.
This altered “business demand” is, for professor of economics at Lancaster University’s Management School Geraint Johnes, a fallout of the ‘B’ word. “There’s a lot of uncertainty around because of Brexit and this may have caused some caution on the part of employers in the last recruitment round,” he explains.
CEO of the Institute of Student Employers (ISE) Stephen Isherwood agrees, reporting that Brexit has intensified existing employer dissatisfaction with graduate skillsets. “There’s an increasing focus on the skills gap in the UK because of Brexit and the need to be more productive,” he says, citing ISE research that just 48% of employers think graduates have the soft skills they expect at the point of hiring.
So it seems we could be witnessing something of a stand-off, with graduates turning to other forms of employment, and businesses also turning away from graduates because they no longer have the right skills.
“There’s always been an issue in graduates transitioning from university to work and there’s always been a skills gap in the UK. But there is the argument that graduates are now less work-ready than in the past as they are less likely to have had paper rounds or work experience from a young age,” Isherwood adds, citing further ISE research that while in 1997 42% of 16- to 17-year-olds were employed in some way while at school, today just 21% are (according to 2017 figures).
Work experience aside, the types of skills businesses need for the future world of work are also changing, meaning graduate recruiters are now looking for different capabilities.
Mercer’s Seely explains that the half-life of a skill is reducing, meaning that the speed at which its value or relevance in the workplace decays is increasing. For example, if a half-life of a skill is five years this means half of what an employee learned five years ago is now irrelevant. As this shrinks, say to three years, this means half of what they learned becomes irrelevant in just three years. “People will need many different skills at different points in their careers so we are looking for graduates who can learn quickly and adapt to different situations,” she says. “The nature of work is changing so it’s less about qualifications and more about a need for soft skills.”
“Businesses need to ask themselves: do they want a conformist or an innovator? In the past graduate programmes leant themselves more to conformity but, given the pace of change in business, we need that innovative thinking more today,” says KP Snacks’ learning and development manager Jane Pearce.
Deloitte’s Greer points to a particularly acute gap between a rise in demand for digital skills and a shortage in digital and STEM grads. “Yes there are some students out there with the tech skills we need, but certainly not enough to fill the number of vacancies we have each year,” she reports.
One way of tackling these gaps is for employers to widen the pool of graduates they consider. In 2013 Grant Thornton became the first professional services firm to remove academic qualifications from the entry requirements of its graduate scheme. Waite explains that the firm was missing out on talent by requiring applicants to hold a 2:1 degree or above – a standard mirrored by many graduate recruiters.
“I’d often find myself speaking to a student at a university careers fair and be thinking ‘this person would do great at Grant Thornton’, and then I’d find out they were on track for a 2:2 so wouldn’t be able to apply to our scheme,” says Waite. “It made me question our cut-offs. So we started gathering data to see whether academic qualifications were indicative of future success at the firm, and we found there was little to no correlation between the two.”
Diverse entry routes
Another more radical way of plugging the graduate skills gap is businesses turning, to some extent at least, away from graduates altogether. It seems it’s not just graduates who are casting their nets further afield.
“The biggest change in graduate recruitment for us has been our shift to the school-leaver market,” reports EY’s Stilwell. “Five years ago we weren’t really in the market at all but now in the current recruitment year we’re taking around 200 school-leavers onto our scheme.”
It’s a shift – from an elite to a diverse talent pool – seen among other top graduate recruiters, including Deloitte, Grant Thornton, and Accenture.
Stilwell says she’s been “pleasantly surprised” by the school-leavers the company has recruited so far. “I did worry they might be too young or not mature enough to put in front of our clients, but I’ve been proven wrong,” she admits. “I think it goes back to the fact that these young people aren’t following the crowd to university or doing the same as their friends. So we’re perhaps catching a more unique type of person.”
Employers are, then, keen to access a potentially more vocationally switched-on pool of young talent than that available in the graduate market, and to train them in the required skills right from the off. This is also being driven by organisations’ increased awareness and sense of responsibility around social mobility – with doing ‘the right thing’ on social mobility in turn attracting those graduates now demanding a social purpose from employers.
An element of this shift to school-leavers is also no doubt being driven again by the changing demands of young people themselves. The impact of tuition fee increases, and its role in shaping young people’s decisions around university, shouldn’t be underestimated.
“There are great people who don’t want to go to university or can’t afford to because they’re from low socio-economic backgrounds. It would be crazy to not tap into this group of talent,” says Waite.
“Our [school-leaver] scheme offers the same opportunities as the graduate scheme, it’s just longer. But by skipping university the school-leavers don’t get into debt and they also end up achieving their professional qualifications at a younger age than their graduate counterparts,” points out Stilwell.
“As large organisations we need to think about the value we bring to graduates – with high fees some people won’t want to get into that debt,” adds Grant Thornton’s UK people and client experience leader Stephanie Hasenbos-Case.
Another key factor in this heady mix of graduate recruitment change is undoubtedly the apprenticeship levy’s rollout last year. The levy came into force in 2017 to support the government’s target to deliver three million new apprenticeship starts by 2020. The aim is to encourage those who would previously have gone to university to be more open to school-leaver programmes, with many professional apprenticeships – in law and management for example – being launched over the past year.
To say the reception has been mixed is putting it mildly. But there’s no doubt it is opening up another route, particularly for young people.
While it’s perhaps too early to tell whether the levy will have a significant impact on graduate hiring, it’s interesting to note that a shift away from graduates and towards school-leavers has been happening, in some quarters, long before the levy’s introduction.
“We were taking on school-leavers before the levy but weren’t classing them as apprentices,” reports Stilwell, explaining that now EY’s school-leaver programme has been rebranded as an apprenticeship scheme. Stilwell says it’s a route more and more young people are considering.
Mottershead advises that graduates and school-leavers will, however, need to be supported in different ways. “Apprentices generally need more pastoral care from the business as they haven’t experienced being away at university,” she warns.
Beyond the grad
With the formalisation of apprenticeship schemes in light of the levy, the general consensus is that school-leaver entry routes will continue to expand. It remains to be seen whether this will be at the expense of the graduate scheme. In some organisations it is also unclear whether apprenticeship scheme hires are included in figures of overall graduate scheme hires; if so this could be skewing the overall picture.
But one thing is for sure: it’s no longer all about the grad. Rethinking once elitist entry routes, by either removing academic requirements or offering apprenticeship routes, is one way for HR teams to ensure the business continues to attract the brightest and best young talent.
But disruption in this area is far from over. At the start of 2018 students demanded tuition fee compensation for missed lectures because of strike action from tutors. Couple this with the fact that interest rates on loans are predicted to rise in 2018 and it seems the cracks – started by £9,000-a-year tuition fees – are widening in young people’s perceptions of the value of university education.
Then there’s disruption in the wider world of work, which Gradconsult’s Fielding says will affect traditional graduate markets the most: “The industries expected to face most disruption in the future are the likes of law, accountancy and fintech,” she says. “These are the destinations that typically soak up huge volumes of graduates and also the ones technology is expected to hit the hardest.”
“There are challenges on the horizon,” says WCN’s Hipps. But he maintains that we’re by no means at the brink of the graduate scheme’s terminal demise.
“The graduate scheme won’t die. It has its place, so long as companies adapt,” he says. “In terms of getting fresh and emerging talent into the business and moulding it into future leaders, the graduate scheme is still very much the bread and butter.”
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