Graduate Recruitment and Development: Identifying New Challenges within a
Weaker Economic Environment
Martin McCracken, Denise Currie and Jeanette Harrison
Department of Management and Leadership
Ulster Business School
University of Ulster
Address for Correspondence:
Dr. Martin McCracken
Department of Management and Leadership
University of Ulster
Newtownabbey
BT37 0QB
T: 028 903 68346
E: m.mccracken@ulster.ac.uk
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Graduate Recruitment and Development: Identifying New Challenges within a
Weaker Economic Environment
Introduction
Given the recent downturn in the UK economy it is not surprising that there has been
much debate about the fundamental role which key stakeholders such as universities
and employers can play in solving the challenging issue of graduate employment
(CIPD, 2010; Vass, 2011). The purpose of this research study is to investigate
graduate recruitment and development against the backdrop of a weaker economic
environment.
More specifically we are seeking to explore the issues faced by
employers within several key sectors in Northern Ireland (NI) in terms of attracting
and developing graduates with relevant skills and competencies.
The research builds upon earlier work carried out by the current authors, which
investigated the strategies employers use to attract and retain graduates. In that study
it was highlighted that even though many of the employers who participated adopted
traditional strategies relating to recruitment, employability, remuneration, succession
planning and mentoring of graduates, those who seemed to develop and retain the best
candidates refrained from blindly following universal trends and fads, opting instead
to develop innovative strategies for graduate recruitment and development contingent
to their own environmental context. It should be noted that the previous study
mentioned above was conducted at a time of relative economic prosperity. Hence, a
key objective of the present study is to establish how the different contextual
circumstances, given that the UK is currently experiencing a time of economic
downturn, have impacted upon the strategies that employers take towards graduate
recruitment and development.
Literature Review
To allow us to fully explore the most important issues relating to graduate recruitment
and development, a number of overarching themes have been identified in the
literature, including: the changing context of the graduate labour market; the issue of
over-education and underemployment; and graduate employability issues.
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The Context of the Graduate Labour Market
The context of the graduate labour market has changed significantly in recent years
with many European countries attempting to increase participation in higher
education. For example, in the UK, the Labour administration under Tony Blair
controversially set a target of 50% of all 18 – 30 year olds to participate in higher
education by 2010. The prevailing rationale for such expansion in Higher Education
provision was based upon the premise that in order to further the shift away from a
traditional industrialised economy towards one characterised by knowledge based
industries, many more graduates would be required in the labour market (DfES,
2003).
However, the reality of the current economic situation has raised questions
about the suitability of the government’s efforts to continue to expand enrolment in
Higher Education, particularly when most skill gaps in the UK are at an intermediate
and not degree level (Leitch, 2006) and when employment opportunities have
contracted sharply (BBC, 2011). For example, Highfliers (2009) found that during the
recession of 2008 – 2009, many top employers in the UK had significantly reduced
their graduate recruitment activity. Job opportunities for university leavers had
dropped by 6.7% in 2008 and 17.8% in 2009 and many of those opportunities
available to graduates were often deferred, left unfilled or completely cut from
recruitment targets.
Nevertheless, Highfliers (2010, 2011) has also shown that a more promising picture
has emerged since 2009, with most employers increasing their graduate recruitment
targets for 2010 and 2011. Although such research points to a more positive position
for the graduate labour market, it is tempered by the fact that many of the most recent
graduates face being sidelined in favour of those graduates who have received
deferred graduate offers or who have gained some valuable work experience. This
problem could also be compounded by the increasing tendency for employers to
recruit more-experienced and potentially better skilled employees who have reentered the labour market as a result of redundancy, instead of recruiting ‘raw’
graduates that require much more investment in training and development.
This more pessimistic picture is underlined by recent unemployment figures from
ONS (2011) which reveal that graduate unemployment had risen faster (from 10.6%
in first quarter of 2008 to 20% by the last quarter in 2010) in comparison to general
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UK unemployment (from 5.2% in the first quarter of 2008, to a high of 7.9% by the
last quarter of 2010). Hence it is evident that the picture is bleak for recent graduates
across the UK. However, questions arise about whether the same trend is apparent in a
localised economy such as Northern Ireland. The report from Highfliers is a snapshot
of the top one hundred graduate recruiters in the UK, however the Northern Irish
economy is mostly made up of SMEs and the public sector, thus a key objective of
this study is to explore what the priorities are for graduate recruitment and
development for Northern Irish employers during times of economic hardship. This
study aims to explore the reality of the situation for graduate employers in Northern
Ireland and if the above trends from the UK as a whole are reflected in the graduate
labour market in Northern Ireland.
Employability of Graduates
A key issue of concern for the present study is related to the suitability of graduate
skills and competencies for available opportunities in a contracting labour market.
Interestingly, commentators such as CIPD (2010) have publically described the
government’s target of educating more people to degree level as ‘counterproductive
and [something that] should be urgently reviewed’. To underline their concerns it has
been revealed that in the UK, up to 58% of those who graduated from 2008 to 2010
have been unable to find a job related to their field of study, whilst 28% of graduates
surveyed indicated that their degree did not equip them with the skills they needed for
the workplace (CIPD, 2010). Such survey findings corroborate the arguments put
forward by various authors that for too long there has been a discrepancy between the
skills and competencies employers expect from potential graduate recruits compared
to those that graduates actually possess (Crebert et al, 2004, Raybould and Sheedy,
2005, Eisner, 2010).
Several authors (De la Harpe et al, 2000, Medhat, 2003) have argued that employers
increasingly perceive that higher education institutions are not producing ‘work
ready’ graduates (Harvey and contributors, 2003, p. 1) and that, although graduates
may have degree specific knowledge, they do not have the soft skills needed for the
work environment. Even in most recent research soft skills such as team working,
communication, adaptability and problems solving were found to be key skills sought
by EU employers (European Commission, 2010, Eisner, 2010). As a result, employers
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have become much more focused on transferable skills and personality as opposed to
job-oriented skills and knowledge, and hence their recruitment and selection practices
now focus heavily on establishing if such skills are present in graduates (Branine,
2008). For example, although interviews are still a popular selection mechanism,
recruiters are increasingly relying on personality and aptitude tests to determine
whether the graduate is likely to be the right ‘fit’ for the company.
Yet, the issue of employability is not only confined to the recruitment and selection
stages of graduate employment. Authors such as King (2003) have noted that one of
the main reasons why graduates choose to move to another company is related to the
lack of opportunities they receive for training, development and career progression.
On the other side of the coin, retention of graduates has been identified as a key
concern for employers.
This is unsurprising when one considers research from
authors such as Beddingfield (2005) which shows that on average employers do not
recoup the investment made in graduate level employees until the graduate spends a
year in a senior strategic role, which is often not until their fifth year of employment.
Scholarios et al, (2003) also contend that turnover and retention issues arise when
expectations developed at the beginning of employment are not fulfilled in reality.
Such tensions have been compounded recently by the emergence of what are
described as ‘Generation Y’ graduates who share the expectations of having good
training and development opportunities as well as other factors, such as long term
career progression, variety in work, and a dynamic and forward-looking approach to
business (Terjesen et al., 2007). However, issues arise as employers find it
increasingly difficult to meet such expectations, especially at a time when HRD
resources for all employees, including new graduates, may need to be reduced.
Ultimately, Beddingfield (2005) argues that it is this mismatch of expectations and a
lack of preparation for the reality of working life that is most likely to cause a high
churn rate in the graduate population.
Given the more competitive graduate labour market, this research aims to establish if
the expectations of graduates have changed, and also whether the skills and
competences most sought by graduate employers have changed in response to
operating in a more challenging economic environment.
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Over-education and Underemployment
The expansion of higher education and oversupply of graduates, compounded with
employability issues relating to graduate recruitment, as well as the skill gaps
identified in the economy, have contributed to a scenario where graduates are unable
to find appropriate graduate positions (Mason, 2002, Nabi, 2003). Increasingly
graduates are being labelled as overeducated or underemployed, that is, graduates find
themselves over qualified for the opportunities that are available, or they are
perceived to be employed in non-graduate positions. For example, Blenkinsopp and
Scurry (2007) have noted how such graduates (who they neatly describe as
GRINGOS [Graduates in Non Graduate Occupations]) are becoming increasingly
prevalent in the UK workforce. Perhaps unsurprisingly, Blenkinsopp and Scurry’s
(2007) research established that 50% of graduates are GRINGOS immediately
following graduation, however, what may be more worrying is that 25% are still in
such positions after 18 months, but of most concern is that 15% are still not in
graduate positions 5 years post-graduation. Given the increasingly bleak employment
market, it could be argued that the prevalence of GRINGOS is likely to increase
significantly in the current environment and that graduates may be left with little
option but to accept ‘intermediate level skilled’ jobs.
Of most interest in the current study are the HR challenges which may emerge as a
result of the increasing prevalence of GRINGOS in an organisation’s internal labour
market. It has long been acknowledged that graduates take non-graduate jobs as a
stop-gap with the intention to develop their career once they have attained more
experience and have a clearer idea of their career aspirations. Employers also have
been shown to take a pragmatic approach and often treat GRINGOS as an outcrop of
their student workforce, and as a result have utilised passive HR strategies that are
characterised by a lack of investment in their development. However, with their
growing prevalence, it has been suggested that such an approach may become
untenable in the future because employers will need to exploit such graduates’ skills
and proffer better career options to help engage, develop and retain this valuable
source of talent (Blenkinsopp and Scurry, 2007). Given the current environment and
the lack of available opportunities, it is felt that graduates may be more receptive to
such strategies (from employers who may traditionally have been seen to be less
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attractive) than in the past. However, if strategies are not put in place to engage such
graduates, employers may find themselves with a large proportion of unmotivated and
disengaged individuals. With this in mind another key aim of this research is to
establish if companies are experiencing an increased prevalence of GRINGOS, and if
so, to identify challenges associated with managing this group of employees.
Research Questions
In relation to the economic context, it is evident that key questions have emerged
from the literature on graduate recruitment and development. Many studies have been
completed on the graduate employment market in response to the economic downturn,
however many of these studies have been UK and European focussed (e.g. Highfliers,
2010, European Commission, 2010). The aim of this research is to establish how the
issues identified in the literature on graduate recruitment and development, have
transpired in a localised context such as Northern Ireland. More specifically, the key
research questions which have emerged are:
1) What priorities do Northern Irish employers have for graduate recruitment and
development during times of economic hardship? For example, are they likely
to recruit more skilled and experienced graduates as opposed to the most
recent graduates?
2) With an increasing number of applicants for graduate positions, and with a
more diverse and skilled labour pool to select from, how have graduate
employers developed recruitment and selection strategies to ensure they
employ the right graduate for the needs of their company?
3) Given the challenges of operating in a more competitive and demanding
economy, what skills and competences are most sought by graduate employers
and do recent graduates possess these skills?
4) Given the competitiveness of the graduate labour market, have the
expectations of graduates changed and are employers more likely to retain
their graduates for longer?
5) Given the increasing prevalence of GRINGOS, what are the challenges
associated with this employee group, and what strategies are in place to
overcome these challenges.
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Methodology and Research Design
Field research is to be carried out with a selection of employers in the public and
private sectors in NI. Seven large international organisations in the financial services,
healthcare, manufacturing, engineering, IT and voluntary sectors plus eight small and
medium-sized enterprises (SMEs), in the hospitality, construction, legal, accountancy
and IT sectors, have been identified as participants. For each participating
organisation, a series of semi-structured and in-depth qualitative interviews will be
held with HR Managers, line managers from the various functional areas who directly
supervise graduates, and at least one graduate who is working in a graduate position.
Where appropriate, graduates that are working in non-graduate positions will also be
interviewed.
Although these interviews have yet to fully take place, in our preliminary discussions
with employers (whilst arranging access to participants), a number of tentative
findings have emerged.
Initial Findings
The Graduate Labour Market
Early findings suggest that the weaker economic environment together with the higher
numbers of graduates entering the labour market has compounded the problem of
competition in the graduate labour market. Indeed, the HR manager from the
construction company within our sample revealed that they are now inundated with
speculative applications from graduates and rarely need to advertise for specific
positions in the current climate.
Initial discussions with other graduate recruiters
have shown that whilst there may be fewer formal graduate programmes on offer,
other informal opportunities for graduates have emerged.
For example, one
organisation in the financial service sector now places greater emphasis upon graduate
placements and internships which it views as the start of a career development
process. This example together with other initial evidence from our sample contests
the argument that employers would prefer to recruit experienced workers over
recruiting graduates (Kimberley, 2010).
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Employability
Matching graduates’ skills with employers’ expectations and needs has been a
dominant theme in the literature on graduate employability (Harvey and Contributors,
2003). From initial evidence from our sample, it has emerged that this is still a key
concern. For example, a company experiencing growth in the business sector reported
that they changed their graduate recruitment strategies. Where once they relied
heavily on recruiting from the two local universities, they have now had to look
towards other international sources to meet their resourcing requirements. While this
is a positive picture for the Northern Ireland economy, it raises the question of
whether NI graduates have the appropriate knowledge, skills, and attributes to
succeed in a dynamic growing organisation.
Over-educated and Under-employed
Whilst graduates are being recruited locally, a considerable number of these are into
‘non-graduate’ jobs. There is evidence of GRINGOS (graduates in non-graduate
occupations) across our sample filling the intermediate level jobs in an effort to gain
work experience, earn some money and get a foot on the career ladder. Evidence from
a construction company in our sample indicates that not only are graduates willing to
undertake intermediate level positions, but also are open to non-skilled and non-paid
jobs. Such evidence illustrates that there has been an erosion of graduate expectations
surrounding employment as a result of the economic downturn in this regional
economy.
It is argued that the increased prevalence of GRINGOS may create a ‘disillusioned
generation’. However, our initial findings would concur with CIPD (2010) who have
attempted to put a positive spin on the GRINGO phenomenon arguing that graduates
are, by necessity, having to become more flexible and resilient. Initial evidence from
the construction company in this study would also suggest that despite operating in a
declining sector, this company acknowledges the talents of graduates and continues to
invest in their development which may in some way compensate for the GRINGO
situation.
Also anecdotal evidence from the student base suggests that Generation Y graduates
are less risk adverse and are more willing to explore other opportunities such as a gap
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year. Also, new graduates appear to be more open minded about the type of company
within which they seek employment. This is a largely positive scenario for the NI
economy, given that in the past SMEs have found it challenging to recruit high calibre
graduates whilst competing with more formalised graduate programmes available in
larger organisations. Ultimately, graduates appear to be more pragmatic and therefore
may actively seek employment with SMEs.
Future Plans for the Study
Although there is limited data thus far, this research has the potential to highlight
some interesting and relevant debates around HRD strategies with particular reference
to the graduate labour market and the changing economic environment. It is the
intention that the data will be collected and findings analysed in Spring 2012. We
hope to be in a position to present initial findings at the UFHRD conference in May.
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