An in-depth view into issues facing graduate recruitment in the SME sector

Our director, Fraser, gives us an in-depth view of some of the issues facing graduate recruitment in the SME sector and how these problems can be helped by technology. This is the first in our Insights series, periodic posts which give a more in-depth view of what’s going on in the sector.

The background

When you think of graduate recruitment the immediate thought is often of large global firms targeting, assessing and recruiting graduates with 2.1 or firsts from high-ranking universities. While this certainly has its place, the largest employment market for graduates is actually the thriving small and medium-sized business sector (SMEs). SMEs are categorised as businesses who have between 1 and 249 employees. These smaller, typically well-established, organisations tend to recruit for one-off jobs rather than graduate programmes. Nevertheless, they are where a lot of the action is and, increasingly, they’re where talented graduates are looking for their first role.

SMEs and graduate recruitment

Each year, more than 500,000 graduates arrive on the UK job market. The task of hunting down that first job can be painstaking: applications, more applications and countless rejections. In the corporate market, roughly 85 applications are made for each job offer received, which is evidence that while the existing approaches work for some, they are highly inefficient for all parties. One of the main reasons for these inefficiencies is a lack of data. Employers simply don’t have enough advance information about potential candidates, so they approach broader groups for their campaigns. They must subsequently cut high volumes of applicants down by applying crude filters: degree classification, university, UCAS points, work permits and so on. This process results in some of the best applicants, those capable of becoming the stars of the future, being prematurely removed from the application process, often without feedback or consultation. This leads to many graduate jobseekers becoming frustrated and disillusioned. I spoke recently to a very capable graduate who had been rejected for all of the jobs she had applied for. She received little or misinformed feedback and her view was that she was being discriminated against based on her university and her final grade – a 2.2. The fact that she speaks three languages, has outstanding interpersonal skills, and was awarded some of the highest scores ever recorded in two of her third year modules, was never visible to those who discounted her.

SMEs are a massive part of the UK economy with more than 5 million business in operation, that’s 99% of the total. So there’s no doubt about it, we are a nation of small diverse businesses operating in virtually every sector. It will also surprise many to hear that the SME sector employs significantly more staff than the large UK firms who dominate most of the headlines related to graduate employment. In terms of graduate recruitment, the SME sector is a vital part of the mix and in our view, it’s not well served by current approaches to attraction and recruitment. The cost of this is massive with many smaller business being held back as they can’t access the right talent.

For SMEs, traditional graduate recruitment approaches don’t work. Attending campus recruitment fairs, running internships and placements, and promoting programmes through universities are far too time-consuming and costly, especially when you consider that the average SME only needs to recruit a single graduate for a single job. To put this into perspective, the UK’s large recruiters of graduates spend about £900 million per year trying to attract the best and brightest graduates. By contrast many SMEs are attempting to find their perfect graduate quickly and for as little as possible, often with a recruitment budget of less than £1000.

Finding the right candidate

SME jobs are varied and tend not to follow the rigid structure of traditional graduate programmes. Identifying the right candidate is critical, as the new recruit will become an active part of a small team, with real responsibilities, within weeks. Each job has its own characteristics and therefore employers are less concerned about exact university programme the candidate has studied. In most of the work we’ve done with SMEs, the academic programme studied is far less important than it is for those in the corporate sector.

These smaller businesses tend to be more interested in whether the candidate can do the job and if they have the potential to add tangible value to the organisation. There are few SMEs who rule out candidates for not having a 1st or a 2.1, and they tend to be much more flexible about the match between the role and the academic programme studied. Our own business bears testament to this, with 50% of our graduates in roles only tangentially related to their university degree.

Where do universities fit in?

In our discussions with UK universities, a recurring theme is the challenge they face in developing relationships with smaller employers. It is often easier to focus on the traditional graduate recruiters, the big-name corporates who require higher volumes and understand the university landscape better. However, universities are becoming increasingly focused on the SME market, in the knowledge that this is where many of their graduates will find their first job. Most universities have initiatives focused on developing better connections with this sector. A good example of this is the Santander Universities SME Internship Programme which provides financial support for smaller businesses who want to take students on for internships, often with a view to offering a full-time role on graduation. Elsewhere, universities are working hard to engage with this challenging sector by hosting SME-centred careers events and offering job boards where vacancies can be posted free of charge.

For many SMEs, interacting with universities is time-consuming and an unfamiliar challenge. Many simply don’t understand the Higher Education sector lingo, and the process of engaging with students and graduates seems complex for companies recruiting only one or two new staff. Existing processes have been designed for large recruiters and this leaves some smaller firms feeling like they are looking in the wrong place. Inevitably, most small employers who make contact with their local university are directed towards the university job board, usually an online service which is free but with chargeable options for enhanced features. The employer posts their job in the hope that students spot the opportunity and make an application. Often, jobs are posted and it’s then a waiting game. Many SME employers that we’ve spoken to receive no applications from their posts, and little or no feedback. On the other side of the fence, the best-suited candidates may be totally unaware that a job has been posted and therefore miss it. Those who spot the opportunity then have to produce a CV or application to explain their suitability. At no stage is the university asset, that of verified student achievement data used to support the process.

As a Director of two SMEs, I know that the common graduate recruitment challenge is one of employers desperately wanting to find the ideal graduate for their role but being restricted by a lack of access to talent. Graduates have so much to offer small businesses – enthusiasm, fresh ideas and up-to-date knowledge. SMEs simply don’t have established university relationships, and where they do, they tend to be with local institutions that may or may not be the best source of acquiring the candidates needed. As one of our SME customers said to me, “we spend our time looking for the ideal graduates and when we eventually find them we hear that they spend their time looking for a firm like ours – there has to be a better way of doing things?”

Market misinformation puts many SMEs off

Here in the UK, there is plenty of media coverage about universities, graduates and employability matters. However, most of what’s written about employability challenges comes from feedback from the top graduate recruiters who tend to be London-based and recruiting large volumes of graduates. As a result, the headlines such as “Aldi offers graduates a £42,000 starting salary” seem far removed from the typical smaller firm who is looking at a fair starting salary, typically in the £18,000- £22,000 range. Much of this media coverage is not representative of the total UK graduate market and as a result leaves many SMEs feeling that they are either not right for university graduates or that they should only expect those with lower skill levels. Salary and the perception of affordability can become a major barrier to smaller organisations considering graduates for an entry-level position. But is this salary disparity really as much of an issue for those graduating from university? I spoke with some of the graduates here in our home city of York and it’s clear that many talented young people would prefer to work in smaller companies where they believe their opinions would count and they could make a difference. For many graduates their primary motivation to work in an SME was not driven by salary. A recent study by the CEB found that the most important motivators for graduates were ranked as follows:

Source: 10MinutesWith.com

Source: 10MinutesWith.com

Working in an SME and being responsible for our own graduate intake, I totally concur with the statistics above. Graduates arrive in the workplace wanting to deliver, achieve, contribute and continue their learning. Smaller businesses provide a fast-track opportunity to realise these goals.

What SMEs are looking for, what graduates can deliver

We’re a typical SME, we know our market but we are certainly not HR professionals and we don’t have a structured graduate programme. But we understand the great value a graduate can bring to our business, particularly in these areas:

Innovation – the introduction of new ways of doing things, and approaches outside of our current thinking.

Productivity – we’ve found that university graduates have top tips on the very latest productivity approaches and technologies.

Growth – graduates arrive wanting to make a difference and understand that growth is a key metric.

Skills – as a software business we really value new staff who have the very latest technology skills and knowledge.

Another major difference in what’s needed by smaller organisations is timing. For the leading graduate employers, the process of attracting and hiring their graduate intake often starts 2-3 years ahead of their start date. Even when these larger employers have not met their intake level and are going for a second round of recruitment, this takes place 3-6 months ahead of job start dates. By comparison most SMEs are looking for someone to start immediately, and this often doesn’t correlate with the traditional university recruitment calendar. The SME graduate recruitment season operates 12 months of the year. As a result, the typical university job board approach is not always the best option for an SME, as only a small percentage of students will be available to start within the timescale needed.

How technology blended with university data is providing the solution

As of May this year, Gradintelligence has released a new talent matching service, available to small and medium organisations anywhere in the UK. The service currently connects with 40 UK universities and this is growing rapidly. There are over 350,000 registered students and recent graduates and 90% of their profile data is verified by their university. So at the heart of this new technology is a massive and rapidly growing talent pool with a combination of academic and non-academic data. Students use their Gradintelligence account while at university to track their progress and improve their employability. They can supplement university-verified data by providing details of additional skills such as in languages or IT. They can also take a number of psychometric assessments and questionnaires, such as the Personality Questionnaire, so that employers can identify not just the academic achievement of candidates but also the likelihood of someone fitting in with their team and culture.

SMEs using the service are taken through an easy process where they can build their company profile, and describe their vacancy. There are then a number of filters which help reduce the 350,000 candidates down to a small number which are highly suitable and available. Once the matching process has been completed, the system then gets busy and targets the students and recent graduates via email and SMS. Those interested then go on to apply but instead of completing a lengthy application process they simply agree to share their Gradintelligence data and this is provided to the employer in the form of an e-CV. This new service guarantees SMEs a minimum number of applicants or they will receive their money back. Prices start at just £249 plus VAT.

In my experience, many SME owners would be delighted to consider graduates for their vacancies but this is made difficult due to poor access to available graduates on a national basis, difficulty connecting with universities, and a sense that graduates want roles in large national or international corporations. With this new approach, SMEs can overcome these barriers.

For more information on this new graduate matching service please visit our website or feel free to connect with me on LinkedIn.

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