The AGR Graduate Recruitment Survey 2013

The AGR Graduate Recruitment Survey 2013 Winter Review Produced for AGR by The AGR Graduate Recruitment Survey 2013 Winter Review Graduate Recruitment Survey 2013 Winter Review Association of Graduate Recruiters The Innovation Centre Warwick Technology Park Gallows Hill Warwick CV34 6UW Survey produced for AGR by CFE Phoenix Yard Upper Brown Street Leicester LE1 5TE For more information please contact Lindsey Bowes on 0116 229 3300 or lindsey.bowes@cfe.org.uk Website: www.cfe.org.uk All information contained in this report is believed to be correct and unbiased, but the publisher does not accept responsibility for any loss arising from decisions made upon this information. © CFE and the Association of Graduate Recruiters All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying or otherwise, without prior permission of the publisher. Graduate Recruitment Survey 2013 Winter Review Contents Foreword ................................................................................................................................... 2 Executive summary .................................................................................................................... 3 Introduction .............................................................................................................................. 6 Graduate vacancies.................................................................................................................. 14 Graduate vacancies in 2011-2012 and 2012-2013 ....................................................................................................... 14 Expected changes in vacancies by sector ..................................................................................................................... 20 Vacancies in 2011-2012 by business sector .................................................................................................................. 22 Vacancies in 2011-2012 by region ................................................................................................................................ 23 Vacancies in 2011-2012 by career area ........................................................................................................................ 24 Achievement of 2011-2012 recruitment targets .......................................................................................................... 25 Challenges anticipated in filling vacancies in 2012-2013 ............................................................................................. 26 Graduate salaries ..................................................................................................................... 31 Graduate salaries in 2011-2012 and 2012-2013........................................................................................................... 31 Expected changes in salaries by business sector .......................................................................................................... 33 Graduate salaries in 2011-2012 by business sector ..................................................................................................... 36 Graduate salaries in 2011-2012 by region .................................................................................................................... 37 Graduate salaries in 2011-2012 by career area ............................................................................................................ 37 Education premiums for graduates in 2012-2013 ........................................................................................................ 39 Graduate recruitment marketing ............................................................................................. 43 Total marketing spend in 2011-2012 and 2012-2013................................................................................................... 43 Graduate recruitment marketing activities in 2012-2013 ............................................................................................ 45 Mean spend on key activities in 2011-2012 and 2012-2013 ........................................................................................ 46 Marketing spend per vacancy ....................................................................................................................................... 47 Targeting universities in 2011-2012 and 2012-2013 .................................................................................................... 48 Hot topics in graduate recruitment .......................................................................................... 51 Higher Education Achievement Report ........................................................................................................................ 51 1 Graduate Recruitment Survey 2013 Winter Review Foreword I always look forward to discovering which direction the graduate market is taking when the AGR graduate recruitment survey is published. This winter my interest was heightened by operating against a backcloth of considerable changes in higher education with a growing emphasis on employability and employment prospects (not the same thing in my view). In this report you will find out what actually happened to vacancies in 2012 and predictions for 2013. I am struck by how much variation there is sector by sector. How well is your sector faring? For the first time we explore dropout rates and again you can benchmark your track record against the market as a whole and your sector. There was good news on the salaries front for those graduates lucky enough to land a graduate job in 2012 but how will 2013 starting salaries compare? The Winter Review traditionally explores marketing activities and spend. I suspect in the current climate where many AGR members are having to manage more with less there will be added interest in comparing your marketing spend with your competitors. I was fascinated by the chart showing the degree of targeting that takes place in graduate attraction especially as Government has been critical of the selective practices of some employers. Which leads nicely to the Hot Topics section of the report which sets out to identify awareness and use of the Higher Education Achievement Report. All this and more can be found in the report which comes to you free of charge if you are an AGR member. Non-members can purchase the report for £300. Enjoy reading the report and put it to good use! Carl Gilleard Chief Executive AGR 2 Graduate Recruitment Survey 2013 Winter Review Executive summary Graduate vacancies Overall, graduate vacancies decreased during the 2011-2012 recruitment season by 8.2%. However, there is positive news for the 2012-2013 recruitment season; employers are predicting an 8.8% rise in the number of vacancies which is set to rise from 19,350 to 21,061 next year. Across the majority of sectors there is a predicted increase in the number of vacancies expected for 20122013 when compared to the number of vacancies in 2011-2012. The construction company or consultancy sector is predicting the largest increase in vacancies at 77.8%, followed by the transport or logistics company sector at 41.4%, and the energy, water or utility company sector at 29.6%. The highest proportion of graduate vacancies continues to be found in the accountancy or professional services firm sector. A total of 18.0% of all vacancies were in this sector this year. In second place is the public sector with 13.8% of all graduate vacancies followed by the retail, and banking and financial services sectors in joint third place at 9.9%. Nearly one-third of AGR members had not met their recruitment targets for 2011-2012. In 2012-2013 candidate drop-out is regarded to be the biggest challenge that AGR employers are likely face. The reason for this shortfall was further explored through the survey; of the total number of graduates who were offered a job across all AGR employers, 87.1% went on to start at the company. Of the graduates who accepted a position, overall 95.5% went on to start at the company. Graduate starting salaries As predicted in the Winter 2012 Review, there has been a 4.0% increase in graduate starting salaries following three years of salary stagnation; the median graduate starting salary in 2011-2012 was £26,000. A further increase is expected in the 2012-2013 recruitment season, when graduate starting salaries are predicted to rise by 1.9% to £26,500. The highest increase in graduate starting salaries is likely to be found in the public sector with a rise of 7.5% predicted for this recruitment season. This is followed by the accountancy or professional services firm sector with a predicted increase of 5.8% and the construction company or consultancy sector at 4.3%. The sectors with the highest median graduate starting salaries remain the same as in previous years with the investment bank or fund managers sector taking the top spot at £38,250 followed in second place by law firms at £37,000. 3 Graduate Recruitment Survey 2013 Winter Review Over three-quarters of AGR members did not pay any wage premiums to graduates with specific qualifications or work experience in 2011-2012. However, a high proportion of AGR employers do offer financial incentives to graduate recruits. A relocation allowance was most commonly used by 27.7% of AGR members, closely followed by a signing on bonus (27.2%). Graduate recruitment marketing The mean marketing spend for 2011-2012 by AGR employers was £88,750. This is predicted to decrease slightly in 2012-2013 to £87,000. There is also a small corresponding decrease expected in the mean marketing spend per vacancy from £2,009 in 2011-2012 to £1,922 in 2012-2013. Online promotion continues to be the most popular marketing activity with 96.3% of AGR employers engaging in this, followed by on-campus activities (87.8%). The majority of AGR employers continue to target UK universities for campus events or local advertising with nearly nine out of ten (89.3%) reporting they targeted universities in 2011-2012. Hot topics in graduate recruitment Degree classification is used as a screening tool by a high proportion of AGR employers (82.1%) when recruiting graduates. The majority (81.3%) use the 2:1 as a cut off for most of their positions, 15.0% use a 2:2 and a small minority (3.8%) state that it varies according to the role. Following a successful trial 2008, the Higher Education Achievement Report (HEAR) is currently being rolled out by a range of universities. The six page electronic document is designed to complement the degree classification system, providing information about a student’s academic achievements, any additional awards or university prizes gained, and any other recognised activities undertaken (such as volunteering, student union roles or national sports representation). AGR members were asked if they had heard of the HEAR; just under half reported that they had. Just over half of those who had heard of the HEAR (57.5%) did not plan to use it, 19.5% stated that they would use it as a recruitment tool and 17.2% as a development tool. Of those AGR members who had heard of the HEAR but did not plan to use it, almost half reported that this was because they were happy with the recruitment tools they already had (46.9%). Just over a fifth (22.4%) stated they did not intend to use it because it was new and untried whilst 16.3% thought it contained too much information. 4 Graduate Recruitment Survey 2013 Winter Review Introduction 5 Graduate Recruitment Survey 2013 Winter Review Introduction Welcome to the AGR Graduate Recruitment Survey 2013 – Winter Review. The AGR Graduate Recruitment Survey is the definitive study of AGR employer members and their recruitment practices, providing up-to-the-minute insights into conditions and trends in the graduate recruitment market. It provides regular benchmarking of key market indicators including vacancy and salary levels. As the leading survey of graduate recruitment practices, spanning the longest continuous series of recruitment seasons, the survey is the primary source of information on graduate recruitment levels, methods and practices amongst AGR members. This means that it is an invaluable tool for assessing, organising and optimising graduate recruitment and development activities. The Graduate Recruitment Survey is conducted twice a year. Undertaken on behalf of AGR by CFE, the Winter Review explores AGR employers in relation to:  Graduate vacancy and starting salary levels for the 2011-2012 recruitment season by business sector, region and career area  Predicted vacancy and salary levels for the 2012-2013 recruitment season  Graduate recruitment and marketing practices  Recruiters’ understanding of the Higher Education Achievement Report The findings of the survey are presented in four chapters structured to reflect the areas outlined above. Chapter 1 focuses on vacancy levels while Chapter 2 looks at graduate starting salaries. AGR employers’ spend on activities to attract graduate talent are explored in Chapter 3 and Chapter 4 examines the Higher Education Achievement Report. In addition to the main survey findings, the Winter 2013 Review features comparative data from national data sources to position AGR members and their recruitment practices in the broader political and economic context. 6 Graduate Recruitment Survey 2013 Winter Review Method Data was collected via an online survey hosted on the CFE website for a four-week period in November 2012. An electronic invitation containing a link to the survey and a personal password was sent to all AGR employer members. A series of semi-structured telephone interviews were also undertaken with respondents to explore further themes emerging from the survey data. The survey The online survey included different types of questions to capture a variety of quantitative and qualitative information. Some key questions were mandatory to ensure that all respondents’ views were captured. AGR employers were routed through the survey on the basis of their responses to questions to ensure they only responded to those relevant to their recruitment practices. The analysis The results were analysed using statistical software. The Review reports a variety of statistics including frequencies, means and medians1. The number of organisations that responded to each question is presented for each chart or table as the base. Bases vary throughout the report to reflect that not all participants responded to the same questions due to the routing applied. Where bases are too low to ensure the reliability of findings or maintain the anonymity of respondents, figures are not reported. References to data for the 2011-2012 recruitment season relate to the actual year-end figures captured in November 2012. By contrast, information for the 2012-2013 recruitment season represents AGR members’ predictions or expectations for the current recruitment season and should therefore be seen as a forecast; the Summer 2013 Review will provide an update on these predictions in May. It is also important to understand that the graduate recruitment practices of AGR members vary widely from sector to sector. Law firms provide a case in point – recruitment lead times of two years are standard as graduates are often sponsored to complete post-graduate law courses prior to the commencement of their Training Contract. The vacancy levels reported for the 2011-2012 recruitment season therefore relate to vacancies for which law firms have recruited, although graduates will not typically commence employment until 2014. 1 A frequency reports the proportion of respondents giving a specific answer. A mean (average) is calculated by adding together all of the results and then dividing the total by the number of responses. A median is the number we obtain by placing all of the responses to a given question in order of their value and selecting the middle value. Where there is no single middle value the two middle values are added together and divided by two. 7 Graduate Recruitment Survey 2013 Winter Review Profile of respondents A total of 197 AGR members took part in the survey representing a response rate of 63.5%. Collectively, these are estimated to have offered a total of 19,350 vacancies during the 2011-2012 recruitment season. A high proportion of employers (60.9%) have just one graduate intake per year. Just over one-quarter (25.4%) recruit more than one intake of graduates per year with one in ten (10.2%) using a rolling programme of recruitment (Figure I). Ad hoc Other recruitment 1.5% 2.0% Rolling programme of recruitment 10.2% More than one intake of graduates per year 25.4% One intake of graduates per year 60.9% Figure I: Recruitment methods of respondents – Base = 197 A wide variety of employers responded to the AGR survey, thereby reflecting the AGR membership base and ensuring the findings are representative (Figure II). Law firms provided the largest proportion of responses to the survey (17.8%), followed by engineering or industrial companies (11.2%) and the public sector (8.1%). The full list of responding organisations is provided on pages 10-12. 8 Graduate Recruitment Survey 2013 Winter Review Law firm 17.8% Engineering or industrial company 11.2% Public sector 8.1% Retail 7.6% Consulting or business services firm 7.1% Banking or financial services 7.1% Investment bank or fund managers 5.6% Energy, water or utility company 5.6% Accountancy or professional services firm 5.1% Construction company or consultancy 4.6% IT/Telecommunications 4.6% FMCG company 4.1% Transport or logistics company Chemical or pharmaceutical company 3.0% 1.5% Oil company 1.0% Insurance company 1.0% Motor manufacturer 1.0% Manufacturing 1.0% Hospitality and leisure 1.0% Other 2.0% Figure II: Sector of respondents – Base = 197 9 Graduate Recruitment Survey 2013 Winter Review The following AGR members took part in the survey 3M A Accenture Accenture (UK) Ltd (formerly Accenture Technology Solutions) Addleshaw Goddard AECOM AkzoNobel Allen & Overy LLP American Express Amey Anglian Water Aon Arcadia Group Arriva Asda Ashurst AstraZeneca Atkins Aviva Plc AXA UK B B&M B&Q plc Babcock International Group, Nuclear Business Unit BAE Systems BAE Systems Detica Baillie Gifford Balfour Beatty BAM Nuttall Ltd Bank of America Merrill Lynch Bank of England Barclays Bentley Motors Limited BG Group Bircham Dyson Bell BlackRock Bloomberg BNP Paribas BNP Paribas Real Estate 10 Bond Pearce LLP Boots BP Brewin Dolphin Bristows British Airways British Sugar BT Burges Salmon LLP C Cancer Research UK Centrica CFE (Research and Consulting) Ltd Civil Service Fast Stream Clifford Chance Co-operative Commerzbank CSC Cummins D Danone Ltd Dechert LLP Deloitte DENSO DHL Dixon Wilson DLA Piper Doosan Power Systems Ltd DTZ dunnhumby Limited DWF LLP Dyson E E.ON UK EC Harris LLP ECA International Enterprise Rent-A-Car Environment Agency European Personnel Selection Office (EU Careers) Explore Learning Graduate Recruitment Survey 2013 Winter Review F L FDM Group Field Fisher Waterhouse Filtrona plc Freshfields Bruckhaus Deringer LLP FSA Fujitsu L'Oreal Lloyd's Register Lloyds Banking Group Lockheed Martin UK Logica G Gazprom Marketing & Trading GKN plc GL Noble Denton GlaxoSmithKline Grant Thornton UK LLP H Hampshire Constabulary Hitachi Data Systems HJ Heinz HM Revenue and Customs Hogan Lovells International LLP Home Retail Group HP Hymans Robertson Services Limited I IBM UK Limited ICAP IMI plc International Financial Data Services IPG Mediabrands Irwin Mitchell J Jaguar Land Rover John Lewis Johnson Matthey plc K Kent County Council Kirkland & Ellis International LLP KPMG M Mace Limited Macfarlanes LLP Macquarie Group Majestic Wine Marks & Spencer Mars UK Mayer Brown Mazars LLP MBDA Mercer Merlin Entertainments Group Metaswitch Networks Mills & Reeve LLP Mitchells & Butlers Mitsubishi UFJ Securities International Moore Stephens LLP Morgan Crucible Morgan Stanley Mott MacDonald N Nabarro LLP National Leadership and Innovation Agency for Healthcare (NHS Wales) National Offender Management Service Nestlé Network Rail NHS Leadership Academy Nomura International NSG/Pilkington Group nucleargraduates O Ocado Osborne Clarke 11 Graduate Recruitment Survey 2013 Winter Review P T PA Consulting Group Pinsent Masons LLP Procter & Gamble PwC Taylor Wessing Teach First Technip UK Ltd Tesco Thales Thames Water Utilities Limited The National Audit Office TLT Towers Watson Transport for London TRW Tube Lines Q Qinetiq R Rabobank International Reed Smith RM Education Rolls-Royce Royal Bank of Scotland Group Royal Borough of Kingston upon Thames Royal Mail RPC RSM Tenon S Sainsbury's Sanctuary Housing Association Santander UK Scottish Power Scottish Prison Service Scottish Water Severn Trent Water Shearman & Sterling Shoosmiths Siemens SIG plc Simmons & Simmons SJ Berwin SNR Denton SSE Standard Bank Plc Standard Chartered Standard Life Stephenson Harwood LLP SunGard Financial Systems 12 U UBS UK Power Networks Unilever Unipart Group United Biscuits W Waitrose Wates Watson, Farley & Williams LLP Weil, Gotshal & Manges Whitbread Graduate Recruitment Survey 2013 Winter Review Chapter 1 Graduate vacancies 13 Graduate Recruitment Survey 2013 Winter Review Graduate vacancies This chapter examines actual year-end vacancy levels for the 2011-2012 recruitment season and presents AGR members’ predictions or expectations for the current recruitment season (2012-2013). Vacancy levels are explored at the sectoral, regional and career area level. Graduate vacancies in 2011-2012 and 2012-2013 When comparing the total number of vacancies that are estimated to have been offered in 2011-2012 with the total number reported in the 2010-2011 recruitment season, there was an 8.2% decrease in vacancies amongst those AGR employers who responded to both surveys (Figure 1.1). In total, AGR members are estimated to have offered 19,350 vacancies in 2011-2012. Although there was a decrease in vacancies last year, there is positive news for the current recruitment season; the number of vacancies is predicted increase to 21,061 vacancies for 2012-2013, a rise of 8.8%. 2000 14.7% 2001 14.6% 2002 -6.5% 2003 -3.4% 2004 15.5% 2005 5.1% 2006 5.1% 2007 12.7% 2008 2009 0.6% -8.9% 2010 8.9% 2011 2012 2013 (predicted) 1.7% -8.2% 8.8% Figure 1.1: Graduate vacancy changes at AGR employers 2000 to 2013 (predicted) – Percentage increase or decrease on previous year (varying bases) Although there has been an overall drop in the total number of vacancies offered by the AGR employers who responded to the survey, the mean number of vacancies per employer has remained relatively stable since 2008-2009, fluctuating by less than 2 vacancies per employer on average over the four year period (Figure 1.2). The mean number of vacancies per employer has decreased by 1.4 between 2011 and 2012. Recruiters are, however, predicting a substantial increase in the mean number of vacancies per employer for the first time since 2008-2009 from 98 in 2011-2012 to a predicted 109 in 2012-2013. 14 Graduate Recruitment Survey 2013 Winter Review 2009 98.7 2010 99.4 2011 99.6 2012 2013 (predicted) 98.2 108.6 Figure 1.2: Mean number of vacancies per AGR employer 2009 to 2013 (predicted) – Varying bases In-depth interviews with AGR members suggested that the overall decline in graduate vacancies between 2010-2011 and 2011-2012 was attributable to a lack of business confidence arising from the weak economic climate. When exploring the predicted increase in vacancies for 2012-2013, AGR members highlighted that signs of improved market conditions and business confidence were the primary reasons, with firms implementing growth strategies to expand their business. As stated by one employer from the transport sector: “Personally, I think there are some green shoots of recovery. I think we are starting to see a little bit more confidence, certainly in the recruitment market. We are seeing a lot of growth now in mainland Europe operations. In fact, we have a strategy to double in size over five years, which is a really aggressive growth strategy.” An employer from the accountancy and professional service sector suggested that the increase in vacancies was as a result of firms not being able to meet recruitment targets from the previous season and hence the need to subsequently increase this year’s target to offset the shortfall. Meanwhile, an employer from the energy sector felt that the rising demand for certain skills from businesses, such as those found in STEM (Science, Technology, Engineering and Maths) disciplines, was another factor behind the predicted increase: “There’s really a shortage of talent in the sector, plus a large volume of the current workforce is approaching retirement therefore businesses need to meet that shortfall over the next five to ten years.” 15 Graduate Recruitment Survey 2013 Winter Review Figure 1.3 shows that for a high proportion of AGR members, the number of graduates they plan to recruit in 2012-2013 remains relatively unchanged from the actual numbers reported in 2011-2012. The category with the biggest predicted change is 1-25 graduates, with a predicted decrease of 3.1 percentage points from 39.1% to 36.0%. There is also a predicted decrease in the proportion of employers who plan to recruit between 51-75 graduates, dropping from 10.7% to 8.1%. There are predicted increases in the categories 26-50 and 76-100 rising from 18.3% to 20.8% and 6.1% to 7.6% respectively. No new vacancies 2.0% 2.5% 36.0% 1-25 39.1% 20.8% 18.3% 26-50 8.1% 51-75 10.7% 7.6% 6.1% 76-100 13.7% 12.7% 101-250 5.6% 7.6% 251-500 501-750 More than 750 Don't know 2.5% 1.5% 2.0% 1.5% 1.5% 0.0% 2012-2013 (predicted) 2011-2012 Figure 1.3: Number of graduate vacancies offered by AGR employers in 2011-2012 and 2012-2013 (predicted) – 2011-2012 Base = 197; 2012-2013 Base = 197 Comparative data: Increasing vacancy levels The Office for National Statistics estimates that there were 489,000 job vacancies in the UK during September to November 2012. Compared to the same period in 2011, when the total number stood at 459,000 vacancies, ONS predicts a 6.5% increase in vacancies. This mirrors AGR employers’ predicted increase in vacancies for the 2012-2013 recruitment season, suggesting this is indicative of wider trends. 16 Graduate Recruitment Survey 2013 Winter Review Those AGR employers who predicted an increase in their graduate vacancies were asked to indicate how important several factors were in their predictions on a scale from one to six, where one was ‘not important at all’ and six was ‘very important’. Figure 1.4 shows that an increased strategic focus on graduate recruitment is the most important reason why employers plan to recruit more graduates, with a mean score of 4.44. Actual growth in business was rated the second most important factor at 4.14, closely followed by an anticipated growth in business at 4.07. A further reason for the predicted increase highlighted by a minority of employers through the survey was succession planning for the years ahead. As an employer in the engineering or industrial company sector observed, succession planning is important “to ensure we have the talent in the business both in the short and long term.” Increased strategic focus on graduate recruitment 4.44 Actual growth in business 4.14 Anticipated growth in business Higher recent turnover of staff Increase in the number of applicants 4.07 2.37 2.05 Figure 1.4: Importance of reasons for expected increase in vacancies during 2012-2013; mean ratings on a scale from 1 (not important at all) to 6 (very important) – Base =67 (this question is answered only by those who reported an increase in vacancies) Those employers who predicted a decrease in vacancy levels for 2012-2013 were also asked to state how important several factors were in their predictions to recruit fewer graduates. This was again on a scale from one to six, where one was ‘not important at all’ and six was ‘very important’. The most important reason reported was as a direct result of the current economic climate with a mean of 3.97, followed by an indirect result of the current economic climate at 3.46 (Figure 1.5). Through the survey, AGR employers were asked to report any other reasons to explain the predicted decrease in vacancies. A minority reported that the decrease was due to an increase in school leaver programmes and apprenticeships as illustrated by one employer in the legal firm sector: “The business model of most law firms is having to change and this means fewer positions for trainee solicitors and newly qualified lawyers but an increase in opportunities for other support roles, including school leavers.” Changes in organisational structure were also reported by a minority of AGR members as a reason for the decrease in vacancies. 17 Graduate Recruitment Survey 2013 Winter Review Direct result of the current economic climate 3.97 Indirect result of the current economic climate (cautionary measure) 3.46 Improved retention rates Lower strategic focus on graduate recruitment 2.81 2.16 Figure 1.5: Importance of reasons for expected decrease in vacancies during 2012-2013; mean ratings on a scale from 1 (not important at all) to 6 (very important) – Base = 34 (this question is answered only by those who reported a decrease in vacancies) The impact that school leaver and apprenticeship programmes were having on employers’ graduate vacancies was further explored during the in-depth interviews. The majority of employers consulted reported that they already had an established apprenticeship and/or school leaver programme. However, the majority commented that these programmes were for different job roles within the business rather than as a substitute for their existing graduate vacancies. This would not therefore affect the number of graduates they were recruiting. As stated by an employer from the transport sector: “It doesn’t have an impact on our graduate numbers. They try to achieve two very different aims. The graduate programme for us has a very clear aim in that we want the graduate programme to produce the future leaders and managers of the business. The apprenticeship programme is typically longer term and comes very much with a lower level. The aim is much more engineering focused, whilst the graduate programme is more operational management focused. There are two very different approaches there.” Employers offered several reasons for introducing alternative talent programmes to their business. Many reported that increased competition from other employers seeking to recruit talented school leavers as a reason for implementing these schemes. A further reason was that increased tuition fees could be deterring individuals from going into Higher Education and therefore not joining graduate programmes. As indicated by one employer from the banking sector: “We’re doing this because the shift in political landscape is going to cause a lot of individuals to decide not to go to university and will impact where the talent goes in the marketplace. Most big employers are waking up to this and have developed their own apprenticeship programmes. The programme is on the same level as graduate programme with the same priorities for the business and professional studies, but we do see it as a separate pipeline for the future.” One employer in the construction sector suggested that their senior management team was interested in diversifying the type of individuals they recruited into the business, meanwhile an employer from the retail sector saw these programmes as an opportunity to provide both work opportunities to school leavers, and to develop the technical competence of staff from an earlier age: “We recognised that we have a responsibility to provide work experience opportunities and give exposure and build skills early on for the business. Retail is about technical skills which take time, and it is valuable to getting the right skills in.” 18 Graduate Recruitment Survey 2013 Winter Review A minority of employers, whose school leaver programmes were in their infancy, were unsure as to whether apprenticeship programmes would impact on their graduate vacancy numbers. As outlined by an employer from the retail sector: “We are just beginning to understand how the programmes are working so we still need to work out how many we plan to retain and what level they will move into. The schemes are run within the business discretely but may become more linked in the future. It does not affect the numbers, but it will take a few years to recognise the impact.” An employer from the accountancy sector who was considering launching a school leaver programme stated that, if implemented, this would reduce the overall number of graduates recruited onto their existing programme. Policy insight The government continues to place a significant focus on the role and growth of Apprenticeships. The Richard Review of Apprenticeships was submitted to government in November 2012 and the government will formally respond in spring 2013. Ten key recommendations were made in the report including redefining and better articulation of Apprenticeships, greater focus on outcomes and quality, and creating the right incentives for Apprenticeship training. 19 Graduate Recruitment Survey 2013 Winter Review Expected changes in vacancies by sector Table 1.6 presents the expected percentage change in vacancies from 2011-2012 to 2012-2013 by sector2. Table 1.6: Expected percentage change in vacancies from 20112012 to 2012-2013 by sector Construction company or consultancy 77.8% Transport or logistics company 41.4% Energy, water or utility company 29.6% Consulting or business services firm 28.6% IT/Telecommunications company 26.6% Engineering or industrial company 18.2% Retail 14.9% Investment bank or fund managers 7.5% FMCG company 4.4% Public sector 1.3% Accountancy or professional services firm -2.4% Law firm -2.7% Banking or financial services -27.9% Overall, the majority of sectors are predicting an increase in the number of vacancies for 2012-2013 compared to the number of vacancies they had in 2011-2012. The construction company or consultancy sector is planning the largest increase in vacancies at 77.8%; this follows the 29.4% increase predicted for the previous recruitment season in the Winter 2012 Review. The sector with the second largest predicted increase in vacancies is the transport or logistics company sector at 41.4%; this follows a predicted decrease of 4.9% in the Winter 2012 Review for the previous recruitment season. The third biggest increase for 2012-2013 is in the energy, water or utility company sector at 29.6% followed by consulting or business services firms at 28.6%. An employer from the construction sector revealed that their business was growing and had advertised the largest number of vacancies ever, with plans for further increases next year. This employer also recognised that current cohorts of graduates were performing well, resulting in an appetite from the business to recruit more. An employer from the transport sector highlighted that their business was going through a period of expansion, suggesting that increasing fuel prices may have helped to stimulate an increase in the use of public transport. 2 The following sectors are not reported in our analysis as the small number of respondents within the sector may jeopardise their anonymity: oil company, chemical or pharmaceutical company, insurance company and motor manufacturers. 20 Graduate Recruitment Survey 2013 Winter Review Likewise in the energy sector it was reported that the demand for non-carbon energy (i.e. nuclear and renewable energy) had resulted in a large rise in the number of graduates required to meet the demands of the sector. The employer also explained that recruitment levels had been static for a number of years, however this change in demand had led to an increase in graduate recruitment: “You can’t just recruit qualified engineers, you have to grow your own and apprentices, grads in particular. I keep hearing we can get more work if only we get more people to drive it. More people, more skilled people, means more business.” The largest predicted decrease in vacancies is in the banking or financial services sector at 27.9%; this follows a small predicted increase of 0.4% in the previous Winter 2012 Review. Small predicted decreases are also expected in the law firm sector (2.7%) and the accountancy or professional services firm sector (2.4%). The reason for the decreases in vacancies for the law sector was outlined by one depth interviewee who identified a decline in work, especially that which can be undertaken at the trainee level. Another employer from the law sector suggested that firms in that sector were being more cautious as law firm fees were being reduced. Policy insight The UCAS end of cycle report for 2012 showed a drop of 6.6% in applications across the UK following the first year of tuition fees of up to £9,000 per year for full-time home & EU undergraduate students. There were 53,900 fewer students starting in 2012 compared to 2011. There were 51,000 fewer acceptances In English universities which accounts for a drop of 13%. However the proportion of disadvantaged 18 year olds progressing to higher education in 2012 actually increased across the UK, although entry rates in advantaged areas remain 4 times greater than those in disadvantaged areas. Amongst 18 year old UK students, women are now one third more likely to progress to higher education compared to their male counterparts. Although there was a fall in entry rates for both men and women in 2012, the fall amongst male students was four times greater than that of female students. 21 Graduate Recruitment Survey 2013 Winter Review Vacancies in 2011-2012 by business sector Table 1.7 presents the proportion of total graduate vacancies by sector.3 The accountancy or professional services firm sector continues to have the highest proportion of graduate vacancies at 18.0%. This has, however, dropped by 3.4 percentage points from the proportion reported in the Winter 2012 Review (21.4%) and currently stands at a level similar to that found in the Winter 2011 Review (18.4%). In second place is the public sector with 13.8% of all graduate vacancies. This sector has seen an increase from 9.6% in the Winter 2012 Review and from 7.9% in the Winter 2011 Review. The retail, and banking and financial services sectors are in joint third place at 9.9%. Although only making up 4.2% of all vacancies, the construction company or consultancy sector has more than doubled the proportion of vacancies they hold from 1.9% in the Winter 2012 Review to 4.2%. Table 1.7: Vacancies at AGR employers by sector in 2011-2012 % of 19,350 vacancies 3 Accountancy or professional services firm 18.0% Public sector 13.8% Retail 9.9% Banking or financial services 9.9% Engineering or industrial company 8.2% Consulting or business services firm 8.2% Investment bank or fund managers 7.9% Law firm 5.9% IT/Telecommunications company 5.5% Construction company or consultancy 4.2% FMCG company 1.6% Transport or logistics company 1.5% Energy, water or utility company 1.3% Other 1.4% The following sectors are not reported in our analysis as the small number of respondents may jeopardise their anonymity: oil company, chemical or pharmaceutical company, insurance company and motor manufacturers. 22 Graduate Recruitment Survey 2013 Winter Review Vacancies in 2011-2012 by region London continues to have the highest proportion of graduate vacancies at 42.4% followed by the South East at 10.1% (Table 1.8). The North West has moved up from third to fourth place, increasing its share of total graduate vacancies from 5.9% to 6.5% and overtaking the West Midlands which has dropped from 6.6% to 6.0%. Table 1.8: Vacancies at AGR employers by region in 2011-2012 % of 19,218 vacancies London 42.4% South East 10.1% North West 6.5% West Midlands 6.0% South West 5.0% Scotland 4.8% East Midlands 4.5% Yorkshire and Humberside 4.1% North East 2.7% East of England 1.8% Wales 1.3% Northern Ireland 1.1% Europe 4.0% Asia 2.3% Rest OW 2.3% USA 1.2% *The base appears as 19,218 instead of 19,350 because some responding organisations failed to provide information about the regions where they recruit. Please note recruiters may be offering vacancies in more than one region simultaneously. 23 Graduate Recruitment Survey 2013 Winter Review Vacancies in 2011-2012 by career area Table 1.9 shows the proportion of graduate vacancies by career area4. Accountancy continues to occupy the top spot with the highest proportion of vacancies at 16.1%, however this proportion has reduced in size when compared to the Winter 2012 Review where it stood at 19.3%. Consulting has moved up from third place in the Winter 2012 Review (10.5%) to second place at 11.7%, followed by IT at 10.1%. General management has also moved up a place this year from fifth to fourth with an increase of 1.4 percentage points compared with the Winter 2012 Review, whilst legal work has dropped from 8.5% to 6.2%. Table 1.9: Vacancies at AGR employers by career area in 20112012 % of 18,758 vacancies Accountancy 16.1% Consulting 11.7% IT 10.1% General management 9.5% Legal work 6.2% Investment banking 6.0% Retail management 4.1% Sales/customer management/business development 3.9% Financial management 2.8% Marketing 2.6% Mechanical engineering 2.5% Human resources 2.1% Electrical/electronic engineering 2.0% Civil engineering 1.6% Purchasing 1.4% Manufacturing engineering 1.4% Research and development 1.2% Actuarial work 1.2% Science 1.0% Logistics 1.0% Other 5.1% *The vacancies base appears as 18,758 instead of 19,350 because some responding organisations failed to provide information about the career areas in which they recruit. Recruiters may be offering vacancies in more than one career area simultaneously. 4 The following career areas are not reported in our analysis as the small number of respondents within the career area may jeopardise their anonymity: health and education. 24 Graduate Recruitment Survey 2013 Winter Review Achievement of 2011-2012 recruitment targets AGR employers were asked to state whether or not they had achieved their recruitment targets for 20112012. Just over two-thirds of employers (68.2%) reported that they had achieved their recruitment targets for 2011-2012, however this means that nearly one-third (30.7%) had not (Figure 1.10). The transport or logistics company sector reported the highest shortfall with 66.7% of recruiters reporting that they had not met their recruitment targets, followed by IT/telecommunications (44.4%), retail (40.0%) and consulting or business services firms (35.7%). Don't know 1.0% No 30.7% Yes 68.2% Figure 1.10: Whether graduate vacancies were filled in 2011-2012 recruitment season – Base = 192 Those AGR members who had not met their recruitment targets were asked what proportion of their graduate vacancies they had not filled. Just over two-fifths reported not filling between 1% and 5% of their vacancies. One-quarter reported not filling between 6 to 10% of their vacancies and just over one-quarter reported not filling between 11 to 25% of their vacancies. On a positive note, and unlike in the Winter 2012 Review, none of the AGR members who responded to the Winter 2013 Review reported that they had not filled over 50% of their vacancies. 42.1% 24.6% 26.3% 7.0% 1 to 5% of vacancies 6 to 10% of vacancies 11 to 25% of vacancies 26 to 50% of vacancies Figure 1.11: Extent of shortfall of graduate recruits in 2011-2012 – Base = 57 (this question is answered only by those who reported not meeting their recruitment targets) 25 Graduate Recruitment Survey 2013 Winter Review Challenges anticipated in filling vacancies in 2012-2013 AGR employers were asked to rate the likelihood of them facing a variety of challenges in relation to meeting their recruitment targets for 2012-2013 on a scale from one to six, where one was ‘not at all likely’ and six was ‘very likely’. Candidate drop-out continues to be the most likely challenge, rated the highest on average by AGR employers at 3.80, followed by graduates’ perceptions of the industry at 3.62. The likelihood that employers will face late changes in the business’ requirements has increased from 3.19 in the Winter 2012 Review to 3.50 (Figure 1.12). Those organisations who did not fill all of their graduate vacancies in 2011-2012 rated some of the challenges more highly than those who had met their targets. Candidate drop-out due to graduates applying to a large number of organisations is more likely to be a challenge for those who had not met their targets (4.24), compared to those who did (3.54). They also rated the likelihood of a shortage of applicants in specific geographical areas higher at 3.72 (compared to 2.83) along with not having enough applicants with the right skills (3.86 compared to 3.10). Candidate drop-out because graduates are applying to a large number of organisations 3.80 Graduates’ perceptions of the industry sector 3.62 Late changes in the business’ requirements 3.50 Not enough applicants with the right skills 3.35 Shortage of applicants in specific geographical areas 3.13 Limited resources to market graduate vacancies properly 3.11 Not enough applicants with the right qualifications 2.87 Offering a competitive starting salary 2.80 Candidate drop-out because selection and assessment process is too slow Offering a competitive graduate training and development programme 2.74 2.25 Figure 1.12: Likelihood to face various challenges in meeting 2012-2013 recruitment targets; mean ratings on a scale from 1 (not likely at all) to 6 (very likely) – Base = 186 26 Graduate Recruitment Survey 2013 Winter Review As highlighted above, candidate drop-out is the biggest challenge affecting recruiters. In order to enable us to explore drop out further, survey respondents were asked to state how many graduates they had made job offers to, how many offers had been accepted and the number of graduates that started at their organisation for the first time this year. Of those graduates who were offered a job, 87.1% overall went on to start at the company, however, analysis by sector shows that the ratio of offers to starts ranges from 45.5% to 100% at individual organisations. Of all the graduates who accepted a position, 95.5% went on to start at the company; once again the proportion ranged from 55.6% to 100% at individual organisations. When examining this data by AGR member, the findings show that all of the graduates who accept a job start at the company in 60.8% of cases; a further 23.1% of employers report that between 90-99% of graduates who accept an offer start at the company. Figure 1.13 shows the proportion of graduates who are offered a job that start by sector. The investment bank or fund managers sector has the highest proportion of starts at 92.7%, followed by the engineering or industrial company sector (90.6%) and accountancy or professional services firms (89.4%). Law firms have the lowest start rate with only 76.1% of graduates starting who were offered a position. All 87.1% Investment bank or fund managers 92.7% Engineering or industrial company 90.6% Accountancy or professional services firm 89.4% Construction company or consultancy 89.1% Banking or financial services 88.1% Retail 87.9% Consulting or business services firm 85.5% FMCG company 85.2% Public sector 82.4% Energy, water or utility company 82.2% Law firm Other 76.1% 90.1% Figure 1.13: Proportion of graduates who are offered a job and start by sector; – Base = 132 Figure 1.14 goes on to explore the proportion of starts by those who accept a job, again by sector. The accountancy or professional services firm sector reported that 100% of graduates who accepted an offer started their job; this is closely followed by the construction company or consultancy sector (99.2%) and investment bank or fund managers (98.8%). Again law firms are near the bottom at 89.1%, however the lowest proportion this time can be found in the public sector at 83.4%. 27 Graduate Recruitment Survey 2013 Winter Review All 95.5% Accountancy or professional services firm 100.0% Construction company or consultancy 99.2% Investment bank or fund managers 98.8% Banking or financial services 98.4% Engineering or industrial company 96.9% Retail 96.1% FMCG company 95.1% Energy, water or utility company 92.7% Consulting or business services firm 89.6% Law firm 89.1% Public sector 83.4% Other 100.0% Figure 1.14: Proportion of graduates who accept a job and start by sector; – Base = 131 Consultations with AGR members investigated why candidates drop out at key stages in the recruitment process. Members suggest that graduates are submitting a higher volume of applications to graduate recruiters to ensure they get offered a role because of increased competition for jobs. One employer from the transport sector noted there had been an increase in the number of applications per advertised vacancy over the past three years: “We are seeing some vacancies this year which have over 400 applications per vacancy. It’s the law of averages. Students know they are in a competitive environment and will therefore make more applications and will follow through with more recruitment processes until the very end. The lucky ones will choose the one that’s best for them.” The majority of members suggested that both starting salaries and the perception of working for a better company (suggesting in the main a bigger company that has better brand recognition) were often the reasons why graduates decided not to accept an offer, or failed to start a post after accepting an offer. As highlighted by an employer from the engineering sector: “We get high numbers of drop out, the issue is that they perceive other companies as better than ours as our company is not a well know name.” Similarly, one employer from the energy sector indicated that they were losing engineering graduates to larger, higher paying recruiters from outside the sector: “we found that non-engineering type sectors are targeting engineers with higher salaries to attract them. Larger companies have large quotas to fill.” Conversely, other factors raised by a minority of AGR members included a perception that some graduates preferred to work for smaller employers to increase their exposure to a wider breath of work opportunities within a business. In addition, it was suggested that working for a smaller recruiter would equate to additional mentoring time from colleagues as opposed to being one individual amongst a large volume of graduates. 28 Graduate Recruitment Survey 2013 Winter Review One employer from the accountancy and professional services sector indicated that there was a growing trend amongst graduates of accepting offers but consequently turning these down once they had received a better offer. As highlighted by an employer from the accountancy and professional services sector: “We are finding that graduates are making multiple applications. They will accept the first offer but may then receive an offer from a bigger rival. In previous years they would be open and honest about where they were applying but now they wait for other offers before making a decision. If the first offer is not with the firm they are after they tend to sit on other offers that they will pursue and then decline others they have already accepted.” The consequences for recruiters were that vacancies were left unfilled because they were not able to recruit a replacement to the position in the time available. However, one employer from the retail sector stated they drew upon a bank of graduates (coined their ‘talent bank’) to fill these positions. One employer from the engineering sector suggested that the timing of the offer to graduates determined the level of drop-out, revealing the earlier the offer is made, the higher the likelihood they would drop out. This view was shared by an employer from the public sector who felt that they had high drop-out as a result of their recruitment processes being longer than other recruiters. AGR members were asked about the approaches they adopted to counteract drop-out of this nature. The majority of employers reported that regular communication with graduates throughout the recruitment process was essential. One employer from the accountancy and professional services sector talked about their “keep warm strategy” which involved inviting recruits to work functions, linking them to university ambassadors and maintaining telephone communication with them at regular intervals. One employer from the banking sector also highlighted the importance of maintaining communication with their interns as potential future employees for the business: “with our programme we get a lot of interns, so we work hard to ensure they don’t forget about us.” Another employer from the transport sector described their approach to tackling drop-out: “The points put in place in the recruitment process to reduce drop-out are those that hopefully inspire people to think this is the right job for them or not. At every point in the recruitment process; the application form, the telephone interview, the assessment centre, we will make them do tasks and answer questions that are around things that are specific to the job and that give them a real insight into what the job is like and it gives them and us a clear indication of how they behave to see whether they are a right fit for the company.” 29 Graduate Recruitment Survey 2013 Winter Review Chapter 2 Graduate salaries 30 Graduate Recruitment Survey 2013 Winter Review Graduate salaries This chapter focuses on graduate starting salary levels at AGR employers in 2011-2012 by business sector, region and career area and explores members’ expectations for salary levels in 2012-2013. It also provides information in relation to the provision of educational premiums and financial incentives. Graduate salaries in 2011-2012 and 2012-2013 As predicted in the Winter 2012 Review, there has been a 4.0% increase in graduate starting salaries following three years of stagnation. The views of recruiters were summed up by an employer from the transport sector: “Of all the economic variables you can look at, salary has been the one to rise slowest versus prices of fuel, prices of houses for example. We have managed to keep the salary static at a competitive rate for quite a while now. I think most companies are looking at their overall salary levels and thinking ‘it’s time to raise the graduate salary now.’” The median graduate starting salary has increased from £25,000 in the 2010-2011 recruitment season to £26,000 in the 2011-2012. There is a further predicted increase for the 2012-2013 recruitment season when graduate starting salaries are set to increase by 1.9% to £26,500 (Figure 2.1). 2000 5.7% 2001 2.7% 2002 2.6% 2003 4.1% 2004 3.4% 2005 7.1% 2006 2.0% 2007 2.4% 2008 1.8% 2009 0.0% 2010 0.0% 2011 0.0% 2012 2013 (predicted) 4.0% 1.9% Figure 2.1: Changes in median graduate starting salaries at AGR employers from 2000 to 2013 (predicted) – Percentage increase or decrease on previous year (varying bases) 31 Graduate Recruitment Survey 2013 Winter Review During in-depth interviews with AGR members, a number of reasons were given to explain the rise in graduate starting salaries. Overall, most AGR employers believed that salaries had increased because firms wanted to improve their competitive advantage. Nearly half of those interviewed stated that they thought employers had increased their graduate starting salaries partially as a result of other firms, particularly their competitors, increasing theirs. According to the interviewees, organisations are seeking to keep pace with their competitors in terms of average graduate starting salary levels: “The longer we wait to put our salaries up, the further behind we’ll drop in terms of being below that average and the further we’ll move away from the average. So there comes a critical point, where we have to kind of say ‘Well, we really need to move now with the market.’” They are also looking to ensure they attract the top talent to their business, as an employer from the retail sector explained: “we’ve not moved on graduate starting salaries but one of our competitors has in order to attract the real top talent. Companies are looking to pick up the cream of top level graduates.” One employer from the law sector suggested that firms were increasing salary levels to retain graduates on their existing programmes, as a consequence, others were raising their starting salaries to match these increases. In addition, employers in the energy and transport sector suggested that salary increases could be the result of companies taking account of the inflation that occurred during the preceding period of salary stagnation. However, a minority of employers highlighted that the economic climate was still preventing them from increasing their salaries. . Comparative data: decrease in salary levels According to the Labour Force Survey, for the period July to September 2012, the median salary for adults with a degree or equivalent level qualification was £30,004. This has decreased from £30,524 for the same quarter in the previous year. This indicates that the predicted increase observed amongst AGR employers is not representative of the wider market. The salaries reported in the Labour Force Survey are for individuals who are at any point in their career showing that AGR employers remain competitive. Figure 2.2 shows overall that the proportion of employers offering salaries in the specified categories is predicted to remain relatively consistent. However, as salaries are predicted to rise in 2012-2013, it is perhaps not surprising that the proportion of employers offering salaries in the lower categories is decreasing. The largest predicted change is amongst the proportion of employers who pay between £22,001 and £24,000, with a decrease of 3.8 percentage points from 17.3% to 13.5%. There is also a predicted decrease from 24.6% to 22.4% in the proportion of employers expecting to pay £24,001-£26,000 and from 5.8% to 4.2% in the category £19,001-£22,000. There has, however, been an increase in the proportion who predict they will pay £26,001-£31,000 from 24.1% to 27.6%; alongside this 5.7% of employers are still unsure what their starting salary will be in 2012-2013. 32 Graduate Recruitment Survey 2013 Winter Review 14.1% £36,001 or more 13.6% 9.4% £31,001-£36,000 9.9% 27.6% £26,001-£31,000 24.1% 22.4% £24,001-£26,000 24.6% 14.1% £22,001-£24,000 17.3% 4.2% £19,001-£22,000 £19,000 or less Don’t know 5.8% 2.6% 3.1% 2012-2013 (predicted) 5.7% 2011-2012 1.6% Figure 2.2: Graduate starting salaries at AGR employers in 2011-2012 and 2012-2013 (predicted) – 2011-2012 Base = 191; 20122013 Base = 192 Expected changes in salaries by business sector Table 2.3 shows the predicted change in salaries between 2011-2012 and 2012-2013 by sector5. The highest increase in graduate starting salaries can be found in the public sector; after the stagnation predicted in the Winter 2012 Review, an increase of 7.5% is predicted for this recruitment season. The accountancy or professional services firm sector is in second place with a predicted increase of 5.8%. The construction company or consultancy sector predicts an increase of 4.3% following a predicted decrease of 1.1% in the Winter 2012 Review. 5 The following sectors are not reported in our analysis as the small number of respondents within the sector may jeopardise their anonymity: oil company, chemical or pharmaceutical company, insurance company and motor manufacturers. 33 Graduate Recruitment Survey 2013 Winter Review Table 2.3: Expected salary change from 2011-2012 to 2012-2013 by sector Public sector 7.5% Accountancy or professional services firm 5.8% Construction company or consultancy 4.3% Retail 4.2% Investment bank or fund managers No change Law firm No change Consulting or business services firm No change Banking or financial services No change FMCG company No change Energy, water or utility company No change Transport or logistics company No change IT/Telecommunications company -0.9% Engineering or industrial company -1.0% An employer from the public sector indicated that other organisations may be increasing their graduate starting salaries in order to ensure they were aligned to the sector average: “In comparison to others, we are higher than a lot of other graduate schemes, so other organisations in the sector might be aligning their salaries to the average.” In sectors where there was no reported salary increases, employers suggested that it was not necessary for companies to increase graduate salaries as they are satisfied with the volume and quality of applications they receive. As reported by an employer in the transport sector: “We are attracting good graduates and we think the market is still pretty buoyant. So, as long as we get the good people in, we won’t just raise salaries to match the market necessarily, but we will be conscious of the average and making sure we don’t fall behind too much”. One company in the banking sector also felt that the firm was offering a sufficiently high salary to remain competitive: “We got to a level where we felt we couldn’t go higher. We’ve not needed to raise our salary levels. We are comfortable with the levels that we are attracting. And the business is happy with the talent that we are recruiting.” Others highlighted the issues faced by employers when setting salary levels and considering raising the level for future cohorts. They highlighted that an increase in salary level would need to take into account the salary of those who are already in post. An employer in the transport sector summed up the challenge: “When companies are planning salary changes, there is a whole activity of making sure that the current graduate cohort understands why they are not getting a rise, but other people are. If we run a programme that is eighteen months long and that at the end of the programme, they will move on to substantive roles, so they should be getting significant pay rises then anyway, but you know, you have to look at it as an organisation and think, ‘Does this pay rise for the future graduates starting in 2014 affect 34 Graduate Recruitment Survey 2013 Winter Review those who started in 2013?’ The answer is probably yes, so it’s not a light decision to make, because it has a big impact on your business.” This view was echoed by an employer from the engineering sector who commented: “One big problem with changing starting salaries is you’ve got to look at the existing graduates you’ve recruited over the last 2-3 years so it does not create a problem for existing staff. For any salary rises you have to think what the market rate is and then over the years edge your salaries up rather than step change.” Only two sectors are predicting a small decrease in their graduate starting salaries at 1.0% for engineering or industrial companies and 0.9% for the IT/Telecommunication companies sector. In-depth interviews suggested that general market conditions were the causal factor, with companies reporting that they are increasingly having to deliver against tighter budgets. In-depth interviews also explored whether employers endeavour to match salary levels to their respective sector average. Members provided mixed responses to this but the majority suggested that they did not. Employers instead indicated a preference for benchmarking their salary levels against organisations of a similar size, or brand recognition as the sector average could be skewed by larger firms. As suggested by an employer from the law sector: “It all depends on the size of the law firm. We would look at a benchmarking tool looking at firms of a similar size as we can’t compete with bigger law firms because their charge out rates are a lot higher”. Employers were also asked to what extent they competed for the best graduates on the basis of salary. Overall, our consultations revealed that while salaries are regarded as an important component of the overall offer to graduates, other elements such as the training on offer, work opportunities, career progression and organisational culture were equally significant. As one employer in the transport sector explained: “I don’t think salary is the biggest factor that plays into it and I look at the biggest salaries in the market and actually our graduates are looking at those salaries and going, ‘why are they paying so much? What’s the deal there?’... Our single biggest unique selling point is the career advancement in our organisation. That’s the pull for us. It’s the big sell. We also have the distinct advantage of offering regional programmes. A lot of the programmes are London based. I think offering a job that is regional and local is quite appealing to people.” Policy insight Drops in university applications for 2012 by subject area varied quite significantly. Subjects such as physical science (-0.6%), engineering (-1.3%) and mathematics and computer science (-2.8%) fell by comparatively small amounts when contrasted with more significant falls in non-European languages (-21.5%), architecture (-16.3%) and creative arts and design (16.3%). 35 Graduate Recruitment Survey 2013 Winter Review Graduate salaries in 2011-2012 by business sector Table 2.4 shows the median graduate starting salary by sector6. The sectors with the highest median graduate starting salaries remain the same as in previous years with the investment bank or fund managers sector taking the top spot at £38,250 followed in second place by law firms at £37,000. Third place continues to be banking or financial services (£28,750) followed by IT/Telecommunications companies at £28,500. FMCG companies have seen a big increase in salaries from 2010-2011 with a starting salary increasing to £28,250 in 2012-2013 from £25,750 reported in the Winter 2012 Review. Consulting or business services firms have also seen an increase from £23,000 in the Winter 2012 Review to £26,500 this year. Table 2.4: Median graduate starting salaries at AGR employers by sector in 2011-2012 6 Investment bank or fund managers £38,250 Law firm £37,000 Banking or financial services £28,750 IT/Telecommunications company £28,500 FMCG company £28,250 Consulting or business services firm £26,500 Accountancy or professional services firm £25,750 Engineering or industrial company £25,250 Energy, water or utility company £25,000 Transport or logistics company £25,000 Retail £24,000 Public sector £23,250 Construction company or consultancy £23,000 Other £23,000 The following sectors are not reported in our analysis as the small number of respondents within the sector may jeopardise their anonymity: oil company, chemical or pharmaceutical company, insurance company and motor manufacturers. 36 Graduate Recruitment Survey 2013 Winter Review Graduate salaries in 2011-2012 by region Graduate vacancies in London (including regional weighting) continue to attract the highest starting salaries in the UK at £28,500. This has increased from £27,250 reported in the Winter 2012 Review and is in line with the prediction made in the Summer 2012 Review (Table 2.5). Salaries in the South East have remained static at £25,000. Scotland has seen graduate salaries increase by £1,250 since the Winter 2012 Review when they stood at £23,500; this brings them in line with the starting salaries paid to graduates across other regions in England. Table 2.5: Median graduate starting salaries at AGR employers by region in 2011-2012 London £28,500 South East £25,000 Scotland £24,750 North West £24,500 Yorkshire and Humberside £24,500 Wales £24,250 South West £24,000 East of England £24,000 East Midlands £24,000 West Midlands £24,000 North East £24,000 Northern Ireland £23,000 USA £33,500 Rest of World £33,500 Europe £28,500 Asia £28,000 37 Graduate Recruitment Survey 2013 Winter Review Graduate salaries in 2011-2012 by career area Table 2.6 shows the median graduate starting salary by career area7. Investment banking continues to occupy the top spot with the highest median starting salary of £38,250. This has, however, dropped from the £39,000 reported in the Winter 2012 Review. Legal work remains in second place and the median salary has increased since the Winter 2012 Review from £35,500 to £37,000 – back to the level reported in the Winter 2011 Review. Salaries in consulting continue to rise, increasing from £26,500 in the Winter 2011 Review, to £27,750 in the Winter 2012 Review and again to £28,500 in the Winter 2013 Review. Table 2.6: Median graduate starting salaries at AGR employers by career area in 2011-2012 7 Investment banking £38,250 Legal work £37,000 Consulting £28,500 Actuarial £28,500 Manufacturing engineering £26,500 IT £26,000 Sales/customer management/business development £25,500 Human Resources £25,500 Logistics £25,500 Financial management £25,250 Marketing £25,250 Research and development £25,250 Accountancy £25,000 General management £25,000 Electrical/electronic engineering £25,000 Mechanical engineering £25,000 Purchasing £25,000 Science £24,750 Civil engineering £24,500 Retail management £23,000 Other £25,000 The following career areas are not reported in our analysis as the small number of respondents within the career area may jeopardise their anonymity: health and education. 38 Graduate Recruitment Survey 2013 Winter Review Education premiums for graduates in 2012-2013 AGR employers were asked if they paid premiums to graduates with specific qualifications or work experience (Figure 2.7). Over three-quarters (76.6%) stated that they did not pay any premiums, similar to the 77.7% reported in the Winter 2012 Review. There has been a small increase in the proportion of AGR members who pay a premium to those with a PhD which has risen three percentage points since the Winter 2012 Review to 13.5%. There has also been a rise in the proportion of employers who pay a premium for MBAs and post-graduate degrees since the last Winter Review. The proportion paying a premium for an MBA has increased from 5.2% to 8.9% and for a post-graduate degree from 6.6% to 8.9%. We do not pay any education premiums 76.6% PhD degree 13.5% MBA 8.9% Post-graduate degrees 8.9% Relevant work experience 4.7% Don't know 4.7% Other 0.5% Figure 2.7: Qualifications for which premiums will be paid in 2012-2013 – Base = 192; multiple responses possible Figure 2.8 shows the proportion of employers who offer financial incentives to graduate recruits in addition to the package of benefits available to other staff at their organisation (such as a company pension or a company car). Just over one-third (34.6%) of AGR employers offer no financial incentives to graduates. A relocation allowance was the most frequently reported incentive by AGR members (27.7%), closely followed by a signing on bonus (27.2%). We will not offer any financial incentives to graduates 34.6% Relocation allowance 27.7% Signing on bonus 27.2% Other type of financial incentive 15.7% Location allowance Don't know 13.1% 3.7% Figure 2.8: Additional financial incentives offered to graduates in 2011-2012– Base = 191; multiple responses possible 39 Graduate Recruitment Survey 2013 Winter Review The proportion of employers who offer no financial incentives to graduates was further explored by sector (Figure 2.9). Those in the public sector were least likely to offer financial incentives at 61.5% followed by the retail sector (53.3%). All 34.6% Public sector 61.5% Retail 53.3% Accountancy or professional services firm 50.0% Consulting or business services firm 50.0% Transport or logistics company 50.0% Law firm 38.2% Construction company or consultancy 33.3% IT/Telecommunications company 33.3% Engineering or industrial company 28.6% Other 28.6% Energy, water or utility company 27.3% FMCG company Investment bank or fund managers Banking or financial services 25.0% 10.0% 7.1% Figure 2.9: Proportion of employers who did not offer any financial incentives to graduates in 2011-2012– Base = 191 In-depth interviews with members were undertaken to explore the motivations of employers to offer financial incentives such as a ‘golden hello’ or relocation allowance to graduate recruits. Responses from employers suggested that financial incentives overall act as an additional way for employers to attract graduates, especially in the context of rising student debt and increased competition for the highest calibre recruits. Employers perceived that the offer of an initial lump sum payment on joining a company could influence a graduate’s decision making. One employer from the law sector also suggested that ‘golden hellos’ served as a retention strategy for firms where there is a time-lag between the offer and starting date. Here the incentive acted to militate against the possibility of a graduate accepting other offers. Employers from the engineering and transport sector highlighted that they did not directly offer a universal financial incentives but would offer financial assistance in exceptional circumstances through an interest free loan: “There is a recognition that new graduates are short of cash, as we find new graduates financing the relocation is very difficult for them. We don’t have a particular policy for people with financial difficulty, but we offered him an interest free loan.” 40 Graduate Recruitment Survey 2013 Winter Review Employers were also asked how effective financial incentives were as a mechanism for securing the best recruits. The majority of employers consulted did not currently offer incentives but had done so previously. The majority were, therefore, of the opinion that financial incentives were not useful when trying to recruit the right type of graduate. Companies are seeking to recruit and retain graduates with an interest in the sector rather than those who are motivated by money alone, as illustrated by an employer from the banking sector: “We don’t really want graduates to join us on the basis of a golden hello. It’s not a get rich quick career, it’s a slow burner so we did find it detrimental when we did have it.” This view was echoed by an employer in the retail sector, where salaries overall are typically lower than in other sectors: “you won’t earn the biggest amounts in the retail sector; if money is the main motivator then it’s the consultancy or banking sectors, plus I don’t think they [graduates] would be happy in the long term.” One employer revealed that a financial incentive was offered only when the graduate had achieved a recognised professional status (i.e. charted status). This approach was undertaken to try and prevent individuals from receiving an initial sum of money and then resigning from their post. Employers perceived that this approach helped to motivate an individual while also removing the administrative burden and associated costs incurred when money had to be clawed back from individuals who left the organisation prematurely. Policy insight The UCAS end of cycle 2012 report demonstrated that the average tuition fee of UK and EU students in English universities was £8,389. Half of acceptances were onto courses charging £9,000. The average tuition fee at higher tariff institutions was £8,981 compared to £7,919 at lower tariff institutions. Foundation degrees came in at £6,660 and HNDs at £6,047. 41 Graduate Recruitment Survey 2013 Winter Review Chapter 3 Graduate recruitment marketing 42 Graduate Recruitment Survey 2013 Winter Review Graduate recruitment marketing In this chapter, we investigate AGR members’ graduate recruitment marketing practices. We describe the nature of, and expenditure on, activities aimed at attracting graduate talent in 2011-2012 and explore how this compares to AGR employers’ strategies for the 2012-2013 recruitment season. Total marketing spend in 2011-2012 and 2012-2013 The mean8 marketing spend for 2011-2012 by AGR employers was £88,7509. This is predicted to decrease slightly in 2012-2013 to £87,000. However, as can be seen in Figure 3.1 below, the mean figure disguises the wide ranging budgets spent by organisations who recruit different numbers of graduates. As could be expected, those employers who recruit the most graduates spend more on average on marketing their positions than those who recruit fewer graduates. However, companies that recruit more than 500 graduates are predicting the largest reduction in marketing spend for 2012-2013, dropping by almost a quarter (23.9%) to £240,500. £240,500 More than 500 graduates £316,000 £200,000 251-500 graduates £185,250 £134,250 101-250 graduates £144,000 £138,500 76-100 graduates £121,750 £82,500 51-75 graduates 26-50 graduates £97,500 £82,250 £71,250 2012-2013 (predicted) 1-25 graduates £44,500 2011-2012 £48,750 Figure 3.1: Mean (trimmed) total spend on graduate recruitment marketing by number of graduates recruited in 2011-2012 and 2012-2013 – 2011 Base = 160, 2012 Base = 165 8 A trimmed mean at 5% was used to calculate these figures. This excludes 5% of responses in the sample (2.5% of cases from the lower end of the scale and 2.5% from the higher end of the scale) to prevent the mean being skewed by organisations with extremely high or low figures. This ensures that the mean more accurately reflects the majority of organisations in the sample. 9 Any increases in marketing spend from the Winter 2012 Review may be as a result of an improved methodology to increase the accuracy of the data reported in this section and not a true increase in marketing spend. 43 Graduate Recruitment Survey 2013 Winter Review During in-depth interviews AGR members provided several reasons to explain the predicted decrease in marketing budgets for the 2012-2013 recruitment season. The majority of interviewees highlighted that overall costs were being reduced as a consequence of the current economic climate with respective teams having to achieve more with less. As outlined by an employer from the Engineering sector: “The recession has gone on longer than anticipated while the upturn in business had not quite happened to the timescales we envisaged. This has put pressure on costs to the point that marketing will and has been hit.” In the context of budgeting restrictions, a minority of members reported that firms are increasingly monitoring the return on their marketing investment more closely. These members explained that they are now questioning the value of traditional marketing methods, such as print media, because they are relatively costly and it is difficult to track the impact; there is also evidence that some companies are taking a more targeted approach to campus visits. As explained by one employer in the law sector: “If we visit x [number] more campuses we have to think what difference does it make in the volume and quality of applications coming through”. A minority of members also indicated that there is a growing trend of firms now preferring to manage their own marketing campaigns rather than outsourcing them to marketing agencies in order to reduce costs. One employer from the transport sector for example reported that they were designing and managing their own online campaigns: “I’ve taught myself what’s needed, so that I don’t have to pay an agency to do it for me. It’s easier than you think to actually publish and develop a campaign and to use social media in a beneficial way, such that you can track analytics. The power base of a marketing agency has shifted a little bit.” Finally, one employer from the public sector indicated that they were now required to encompass marketing for other talent streams such as apprenticeship and school leaver programmes within their existing budget. They recognised that other recruiters were already channelling marketing resources into these programmes to attract emerging talent into different roles within the business. Although this does not represent a reduction in the total amount of budget available, existing resources are being diluted; this is clearly another example of a organisation that is trying to do more with the same or less. 44 Graduate Recruitment Survey 2013 Winter Review Graduate recruitment marketing activities in 2012-2013 Figure 3.2 shows the graduate recruitment marketing activities that are being used by AGR members in 2012-2013. Online promotions continue to be the most popular activity with 96.3% of AGR employers using these followed by on-campus activities (87.8%). The use of student competitions has increased by 7.6 percentage points from 25.9% in the Winter 2012 Review to 33.5%. Other activities have decreased slightly from 37.1% to 34.6% and include handing out free promotional items and running specific targeted events. Online promotions including company website, social media and job boards 96.3% On-campus presentations/promotions including careers fairs 87.8% Print including company brochure and directories 81.9% Student competitions 33.5% Other (such as promotional items) 34.6% Figure 3.2: Graduate recruitment marketing activities in 2012-2013 – Base = 188; multiple responses possible Consultation with AGR members suggests that a number of factors influence the types of marketing activity undertaken. The increase in the popularity of online promotions for raising brand awareness and graduate recruitment is attributed to the perceived cost effectiveness of this mechanism compared with print media. A minority of members indicated that they had decided not to print any publications for the 2012-2013 recruitment season, believing that social media, coupled with advertising on universities’ portals, could reach graduates more effectively. In addition, there was a view amongst employers that certain types of print media are no longer appealing to graduates with the advent of social media. As suggested by an employer in the construction sector: “graduates may not pay too much attention to directories anymore. While they might flick through them, it does not capture a greater audience as online does.” Alongside this, members felt that graduates’ job search skills were improving and that the internet is now integral to the process. In the context of the information age, employers perceive that they need to sell themselves more effectively. An employer from the retail sector observed: “Graduates are getting better at looking for opportunities and universities are getting better at teaching them. People will now research and come to your websites because of the nature of how they now search for jobs.” Although online strategies are now a central feature of members’ marketing campaigns, employers were also keen to emphasise the value of face-to-face activities such as careers fairs to complement online marketing. As highlighted by one employer from the transport sector: “campus visits and careers fairs are still going to be important as we still need to have a physical presence at universities. Everything we do in social media embellishes the work we do face-to-face, but we still know that face-to-face is the most important aspect.” 45 Graduate Recruitment Survey 2013 Winter Review While this was echoed by other AGR members, it was also noted that the level of face-to-face activity is likely to be reduced and become more targeted in the context of budgetary constraints. The same employer from the transport sector commented: “In terms of face-to-face careers fairs, we’ll be very specific about that, so we’ll pick and choose the universities we go to based on the regions and locations where we have graduate opportunities in.” Mean spend on key activities in 2011-2012 and 2012-2013 The mean spend on key activities for 2011-2012 and the predicted spend for 2012-2013 is shown in Figure 3.3. Online promotions continue to attract the highest budget at £28,000 in 2011-2012 and this is set to increase to a predicted £29,750 in 2012-2013. However, the budget for the second highest area of expenditure, on-campus activity, is set to decrease from £22,000 to a predicted £20,750 in 2012-2013. Budget allocations for print are likely to reduce by an average of £1,500. £29,750 Online promotions including company website, social media and job boards £28,000 £20,750 On-campus presentations/promotions including careers fairs £22,000 £17,000 Print including company brochure and directories £18,500 £7,750 Student competitions £6,500 £10,750 Other (such as promotional items) £11,250 2013 (predicted) 2012 Figure 3.3: Mean (trimmed) spend on key graduate attraction activities in 2011-2012 and 2012-2013 (predicted) – Base = 145 46 Graduate Recruitment Survey 2013 Winter Review Marketing spend per vacancy Marketing spend per vacancy has been calculated by dividing the total budget aimed at attracting graduates by the number of vacancies offered by AGR members. The median marketing spend per vacancy by AGR employers in 2011-2012 was £1,422; this is set to decrease to £1,250 in 2012-2013. The mean10 spend for 2011-2012 was higher at £2,009 but this is also expected to drop to £1,922 in 2012-2013. Figure 3.4 shows that there is a predicted decrease in the proportion of employers who plan to spend £10,000 or more per vacancy, dropping from 5.3% of employers in 2011-2012 to 4.2% in 2012-2013. There proportion of members who plan to spend £2,501£4,500 is also a decrease by 2.4 percentage points to 15.8%. Conversely, the proportion of employers in the lower bands is predicted to increase; the proportion of those spending up to £500 per vacancy is likely to rise from 19.4% to 21.2% and those spending £1,001-£2,500 from 27.1% to 29.7%. £10,001 or more 4.2% 2013 (predicted) 5.3% 2012 9.1% £4,501-£10,000 8.8% 15.8% £2,501-£4,500 18.2% 29.7% £1,001-£2,500 27.1% 16.4% £501-£1,000 17.1% 21.2% Up to £500 Null budget per vacancy 19.4% 3.6% 4.1% Figure 3.4: Spend per vacancy on key graduate attraction activities in 2011-2012 and 2012-2013 – 2012 Base = 170, 2013 Base = 165 10 Trimmed mean 47 Graduate Recruitment Survey 2013 Winter Review Targeting universities in 2011-2012 and 2012-2013 AGR employers continued to target UK universities for campus events or local advertising in 2011-2012 (Figure 3.5). Nearly nine out of ten (89.3%) AGR members targeted UK universities in 2011-2012, an increase from the 84.4% reported in 2010-2011 in the Winter 2012 Review. The upward trend in the proportion of employers targeting UK universities in this way is predicted to continue in 2012-2013 (90.8%), however, there is also a predicted rise in the proportion of employers who are unsure (5.1% in 2013 compared with 1.5% in 2012). 90.8% Yes 89.3% 4.1% No 9.2% 5.1% 2013 (predicted) Don't know 2012 1.5% Figure 3.5: Targeted marketing in UK universities in 2011-2012 and 2012-2013 – Base = 196 AGR employers reported that they contacted 15.9 UK universities on average in the 2011-2012 recruitment period which is comparable to the estimate for the 2012-2013 recruitment seasons of 15.8. Figure 3.6 shows the proportion of AGR members who target UK universities and the numbers they target. The proportions targeting different numbers have remained relatively stable between 2010-2011 and 20112012 with just a small increase in the proportion targeting more than 20 UK universities (26.8% to 29.7%) and a corresponding decrease in those targeting 11-20 UK universities (34.6% to 32.0%). As illustrated in the graph below, the predictions for 2012-2013 are relatively consistent with previous years, although there is a small predicted drop in both the proportion of employers expecting to target 1-10 universities (from 37.1% to 34.3%) and 11-20 universities (32.0% to 30.9%). 2012 2013 (predicted) 37.1% 34.3% 32.0% 30.9% 29.7% 29.8% 5.1% 1.1% 1-10 11-20 More than 20 Don’t know Figure 3.6: Number of UK universities targeted for campus events in 2011-2012 and 2012-2013 (predicted) – Base = 177 48 Graduate Recruitment Survey 2013 Winter Review Policy insight Institutions were free to recruit an unlimited number of students securing AAB+ at A level (this moves to ABB+ in 2013). A number of high tariff institutions were, therefore, able to increase the number of high achieving students they were able to recruit, as previously this had been capped. Over time this is likely to lead to a concentration of high achieving entrants in a smaller number of institutions which could have implications for the number and type of institutions targeted by graduate recruiters. Higher tariff institutions saw acceptances rise by 1.6% in 2012, medium tariff institutions fell by –1.4% and lower tariff institutions saw acceptances fall by –10% in the last cycle. Recruiters were asked to rate the extent to which they agree with a series of statements about possible reasons why they target specific UK universities on a scale from one to six, where one was ‘not at all’ and six was ‘very much’. The reputation of the faculty or university remains the most highly rated reason at 5.10, followed by the relationship with the university which has increased slightly from 4.47 in the Winter 2012 Survey to 4.79. The number of graduates hired is rated relatively highly at 4.77 followed by the institution’s attitude to employability at 4.22 (Figure 3.7). Reputation of faculty or university 5.10 Relationship with university (academics or careers advisory service) 4.79 Number of graduates hired in previous years 4.77 Attitude to employability 4.22 Course content 4.14 Calibre of graduates according to the Recruiters’ Guide to Courses and Campuses 3.39 Proximity to company premises 3.37 We have always gone there 3.26 Figure 3.7: Reasons for targeting UK universities for marketing activity; mean ratings on a scale from 1 (not at all) to 6 (very much) – Base = 172 49 Graduate Recruitment Survey 2013 Winter Review Chapter 4 Hot topics in graduate recruitment 50 Graduate Recruitment Survey 2013 Winter Review Hot topics in graduate recruitment The final chapter focuses on one hot topic in graduate recruitment: the Higher Education Achievement Report (HEAR). Higher Education Achievement Report Degree classification is used as a screening tool by a high proportion of AGR employers (82.1%) when recruiting graduates. The majority (81.3%) use the 2:1 as a cut off for most of their positions, 15.0% use a 2:2 and a small minority (3.8%) state that it varies by role. The Higher Education Achievement Report (HEAR) has been designed to complement the degree classification system. It is an electronic document which summarises a student’s achievement while in higher education. The six page document is produced by their higher education institution and conforms to a standard template to ensure consistency across institutions. The HEAR not only includes the student’s academic achievements to date but also summarises the function of the qualification (what courses the individual could go on to study and the professional status gained), additional awards undertaken by the student outside of their qualification, any university or departmental prizes, and additional recognised activities (such as volunteering, student union roles or national sports representation). The HEAR has been trialled by the Burgess Implementation Steering Group, chaired by Professor Sir Robert Burgess (Vice-Chancellor, University of Leicester). In 2008, 18 institutions took part in the trial, which was extended to a further 12 in 2010 representing a range of institution types from across the UK. Individual higher education institutions can decide whether or not they will adopt the HEAR, however, over 60 UK universities report that they are starting to make arrangements for its implementation or have already delivered HEARs to students on graduation. The Burgess Implementation Steering Group hopes that the HEAR will eclipse the degree classification system and believes that a sector-wide approach to the HEAR is vital to ensure maximum impact and success.11 AGR members were asked if they had heard of the HEAR; just under half (45.1%) reported that they had, the remaining 54.9% had not. Those who had heard of the HEAR were then asked what they thought the HEAR was intended to do. The majority (93.0%) reported that it was intended to complement the degree classification system, 5.8% perceived that it was designed to replace the degree classification system and 1.2% stated another use. 11 Universities UK (2012) Bringing It All Together: Introducing the HEAR, London. 51 Graduate Recruitment Survey 2013 Winter Review Those AGR employers who had heard of the HEAR were asked whether or not they planned to use it (Figure 4.1). Just over half of those who had heard of it (57.5%) did not plan to use it, 19.5% stated that they would use it as a recruitment tool and 17.2% as a development tool. Of those who did plan to use it, a higher number (22 out of 36) reported that they would prefer to access the HEAR as an electronic pdf; the remaining 14 stated a preference for online access via a secure website. Of those who planned to use it as a recruitment tool, 10 (out of 17) intended to use it as an assessment tool and 9 as a screening tool in the recruitment of graduates. The same number of employers also stated that they would use it as an assessment tool (n = 10) and a screening tool (n = 9) to recruit student interns. I do not plan to use it As a recruitment tool As a development tool Other 57.5% 19.5% 17.2% 14.9% Figure 4.1: How AGR employers plan to use the HEAR – Base = 87; multiple responses possible (this question is answered only by those who reported knowing what the HEAR was) Of those AGR members who had heard of the HEAR but do not plan to use it the primary reason for not adopting this was because they were happy with the recruitment tools they already use (46.9%). Nearly a quarter (22.4%) stated that the reason they would not use it was because it was new and untried whilst 16.3% thought it contained too much information. I am happy with the recruitment tools I already use 46.9% It is new and untried It contains too much information I do not know how to access it I do not understand what it is Other 22.4% 16.3% 14.3% 12.2% 20.4% Figure 4.2: Why AGR employers do not plan to use the HEAR – Base = 49; multiple responses possible (this question is answered only by those who do not plan to use the HEAR) 52 Graduate Recruitment Survey 2013 Winter Review In-depth interviews with members found that the majority had limited knowledge of the HEAR and were, in the main, cautious about whether to adopt it in their recruitment and selection processes in the future. During the in-depth interviews, AGR members highlighted several barriers to implementing the HEAR. The principal concern expressed by the majority of members consulted was that, based on their understanding of the HEAR, it was perceived to duplicate rather than add value to the information that was already collected. One member from the Law sector highlighted: “I’ve not seen the format, but everything that’s been described to me of what it contains is what we collect already.” Another area of concern reported by one employer from the transport sector was its limitations in relation to international recruitment. It was perceived to put international students at as disadvantage as well as to add to the cost and administrative burden of recruitment: “At the minute, it’s not widely recognised as a standard. I’m recruiting internationally, so my applicant tracking system would require tweaking to the degree that wouldn’t be worth my time and effort in doing that.” Members were asked specifically about the potential benefits of the HEAR in relation to the recruitment of graduates. The general consensus was that the HEAR could be of benefit towards the latter stages of the recruitment process rather than as an aid to the initial sifting of applications. As suggested by an employer in the construction sector: “Maybe at the offer stage it could be of value. We could make copies of their certificates and it could be useful to know more about them.” A minority of members suggested that the HEAR could improve the quality of applications as graduates could draw on the HEAR to demonstrate their experiences and skills gained at university when completing their application forms, CV, and/or covering letter. As suggested by an employer in the banking sector: “It would help to make them aware that they have to demonstrate perhaps those things and be involved in activities outside of their academic work to improve the quality of their application.” One member suggested that because the HEAR captures non-academic achievements, the introduction of the framework could encourage future graduates to undertake, or be more considered, when making decisions about the types of non-academic activities they engage in while at university. Linked to this, one member from the law sector suggested that the HEAR would help organisations to validate non-academic achievements: “we do ask them about extracurricular activities but there is no way of checking that.” An employer from the retail sector also suggested that the HEAR would help to reduce the extent to which graduates exaggerate their achievements on their applications. However, as another member observed, it may not be able to capture and validate individuals’ achievements or activities outside higher education which may also add value to their application. Other members suggested that the HEAR had the potential to make elements of the recruitment process more efficient and to save them money as a consequence. For example, the HEAR could be utilised by the recruiter to validate a graduate’s grades/qualifications which would reduce costs for those that procure this service from an outside agency. However, consultation with low volume recruiters suggests that it is likely to have limited appeal for them, as an employer from the transport sector explained: “I can see the benefit of the document for validation purposes, but when we only hire around twenty graduates a year, it’s not really an issue. It might be an issue for employers in the higher hundreds. I can see it being beneficial for them, as that is a lot of work.” 53 Graduate Recruitment Survey 2013 Winter Review Policy insight It is highly likely that the HEAR will be made available to the vast majority of graduates leaving university over the next few years. It will, therefore, start to become a more prominent feature in the graduate recruitment landscape. Steps are also being taken to ensure that electronic versions of the HEAR are compatible with software used to sift graduate applications. Policy insight A number of UK universities are also trialling the implementation of the ‘Grade Point Average’ (GPA) more commonly used in the United States. Rather than the 'cliff edge' jumps between categories in the degree classification system (first, upper second, lower second etc.) the GPA is a continuous scale. 54 Founded in 1968, the Association of Graduate Recruiters is an independent, not-for-profit organisation dedicated to supporting employers in all aspects of graduate recruitment and development. Our aim is to set the agenda for change in graduate recruitment and development and our unrivalled knowledge and experience in this field gives employers the edge. www.agr.org.uk CFE are research and consultancy specialists in employment and skills. We have been providing our expert services to public and private sector clients since 1997. We re-invest our profits to fund innovative research projects and our Policy Insight series. With a team of dedicated staff, we work on behalf of government departments and agencies, local authorities, colleges, universities and employers. www.cfe.org.uk

The AGR Graduate Recruitment Survey 2013

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