Graduate recruitment investment reaps return of more than 500%

Businesses that invest in graduate recruitment see a return on investment of more than 500%, according to a new study.

The Lancaster University research found graduates pay for themselves 20 months from their start date and by their third year, mid-sized graduate recruitment and training programmes - those which involve the hiring of 170 graduates - generate a £5.30 return for every £1 invested.

The formula identifies the ratio between the cost of investment in a graduate and how much a graduate 'earns' for a business. The findings challenge the decision by some businesses to stop graduate recruitment schemes or not hire at all due to their initial costs.

Anthony Hesketh, who conducted the research, said: "We know that in these tough economic conditions businesses are considering the value of graduate recruitment, however they remain a vital source of future capability for organisations. The report clearly reveals that while it is a front-loaded investment, businesses do enjoy substantial returns from the 20-month mark and overall find themselves at a financial advantage from working with graduates."

The research as been backed by professional services firm PricewaterhouseCoopers, which recruited 1,000 graduates this year and plans to hire a further 1,000 in 2010.

Carl Gilleard, chief executive of the Association of Graduate Recruiters, said: "Many of our members continue to engage in graduate recruitment - even during this tough economic climate. Past experience tells us that businesses that close their graduate talent pipeline, even for a short period, find themselves at a commercial disadvantage when the upturn comes as they do not have the talent in place to respond quickly to improved market conditions."