With a fresh batch of university students soon to be looking for gainful employment, we look at the growing relationship between new graduates and SMEs.
For many years now graduate schemes with the big businesses have been seen as the holy grail among new graduates, with the likes of PwC, Deloitte and Google often found topping the lists of graduates’ most desirable employers. It’s easy to see why, what with the promise of big salaries, proven development and support paths, and healthy career prospects. However, increasing graduate numbers over the past decade (around 1.7 million undergraduates finished university in 2015) has led to these places becoming hugely over-subscribed, with only 14% of applicants being accepted.
As a consequence of the level of competition for the most desirable places now being so high, a study carried out by market researcher High Fliers found that the large recruiters expect that a third of this year’s full-time graduate positions will be filled by graduates who have already worked within their organisations through internships and work placements. More than 90% of the UK’s leading graduate employers are offering paid work experience programmes during the 2015–2016 academic year. There are concerns, however about the accessibility of both paid and unpaid placements to all students, with only a handful of employers having developed internship programmes aimed at engaging under-represented candidates. Ultimately though, due to the experience and CV boosting qualities that work placements can provide, competition for these placements is often just as intense as is it for the graduate schemes themselves.
Another avenue which students have explored in more recent times in a bid to boost their employability has been to get more involved in extra-curricular activities during their time at university. Employers have increasingly been looking for the extra experience and personal development that these activities can build in an effort to differentiate between the glut of similarly qualified job seekers. Yet again this is not without its issues, as a report by charitable policy association, The Bridge Group points out that – yet again – students can face an uneven playing field due to the largely differing varieties and availability of opportunities at particular institutions.
So, with demand for the ‘golden ticket’ positions outstripping supply, students are increasingly looking towards the nation’s SMEs for gainful employment. Up until recently, there were major concerns about an apparent under-representation of graduates within UK SMEs; so much so that the Department for Business, Innovation & Skills commissioned a report looking into it. The key findings highlighted that the main causes for this were largely down to misconceptions on both sides. The report suggested that the majority of SMEs had not fully recognised graduates as ‘a natural source of recruitment’, while on the part of graduates there was a general lack of interest stemming from perceptions relating to levels of pay, career progression and working conditions within SMEs.
This is not to say that there weren’t any graduates to be found within any of the UK’s smaller operations in the past. With SMEs accounting for 99.9% of private sector business in the UK, there will inevitably have already been many graduates featuring among their payrolls. However, in the past where graduates were recruited to SMEs, they would rarely have been in graduate-specific roles and the recruitment often occurred in an incidental way and/or through informal networks and recruitment methods. Research conducted for the report found that this method of recruitment often led to poor identification and utilisation of a graduate’s skills and attributes – certainly a missed opportunity given the acknowledged skills gaps within SMEs.
Nevertheless, with increased awareness and interest on both sides, many more SMEs are now offering their own graduate schemes and many graduates are setting their sights beyond the potentially more lucrative yet elusive options. There are still many SMEs that do not have their own graduate schemes of course but graduates would write them off at their own peril, as they often present a number of distinct benefits.
For a start, working for a smaller company will simply be more desirable for some, after all graduate schemes, large companies and the corporate world are not for everyone. Alongside this, a number of studies have suggested that the potential benefits and opportunities of working in SMEs actually exceed graduates’ expectations – particularly with regards to levels of freedom, flexibility and input into the business. A graduate’s roles and responsibilities in a smaller business are likely to be more numerous and varied, and there’s likely to be plenty of opportunity to demonstrate and exercise a wider range of differing skills. Working closely with other departments and alongside more senior figures in the company allows for a greater understanding of the business and how it works. As a result, recognition and progress within an SME will almost certainly be a much swifter affair.
Yet another positive for many is the friendlier and more open culture often found within smaller businesses, and as there are fewer employees, working relationships with colleagues tend to develop much quicker and are often stronger. Unlike the majority of recruitment for graduate schemes which takes place at a particular time each year, roles in SMEs can be found year round because they recruit as and when a position becomes available. The recruitment process tends to be much shorter too.
The last real barrier that still exists is the fact that positions with SMEs are usually much less well advertised, largely due to costs and the lack of a dedicated HR department. Dan Hawes, Co-Founder and Marketing Director of the Graduate Recruitment Bureau, based in Brighton remains optimistic however: “Although they are more hidden, SME recruiters are certainly becoming an increasingly popular choice among ambitious graduates.”
Also, there is the interest from the other side too, with SMEs increasingly turning to specialist recruitment agencies such as GRB to help them source graduate talent for their business. Dan adds: “Smaller recruiters use GRB services as they are fast growing and need seriously talented graduates to drive the company forward. These graduates are often lured by larger recruiters with bigger marketing budgets and more established branding, so they struggle to get noticed in an extremely crowded marketplace.”
With so many apparent benefits to both new graduates and UK SMEs, one has to wonder just why the relationship has struggled to develop until now. A few culprits could be the distinct rise in competition between young job-seekers and/or the noticeable saturation within the job market – both inextricably linked of course. But, with years of education behind them, including uncountable hours of time spent studying, effort and also a huge amount of money pumped throughout those years, graduates are not just looking for a typically successful career. They are looking for a satisfying career. A poll of just over 1,000 students conducted by Ernst & Young last year found that only 11% of students regarded the size of the wage as the most important factor in a job or when choosing a future employer. Whereas having a job with a good work-life balance was ranked highly alongside the people and culture (21%), as well as how respected the company is overall (14%).
Julie Stanbridge, Head of Student Recruitment at Ernst & Young, said: “Today’s graduates are looking for job satisfaction at inspiring and progressive workplaces, with initiatives such as flexible working being seen as ‘business as normal’ and something to be expected rather than a perk.”
Looking at the evidence, SMEs are certainly where graduates will be able to find this much-desired work-life balance and job satisfaction. With more and more graduates prioritising the company reputation, people, culture and flexibility over salary sizes, this may well be the year for SME recruitment success.