When
times are hard, graduate development plans are streamlined. But withdrawing
posts can harm corporate image – and make recruitment difficult when the
economy picks up. Paul Nelson reports
Graduate
recruitment is often a litmus paper for a company’s performance.
Unfortunately,
the recent indications are not positive, and research shows that employers are
starting to feel the bite of global recession.
A
report by the Institute for Employment Studies released earlier this month
shows that employers are significantly reducing the size of their graduate
intake by deferring, or even cancelling, job offers.
A
quarter of employers have decreased the number of graduate vacancies being
offered at their half-yearly reviews. Furthermore, a quarter of these admit to
doing so because of the current business climate and market conditions.
The
report, called Graduate Recruitment in an Uncertain Labour Market, shows that
there has been a 5.5 per cent decrease in the number of graduate vacancies.
"We
reduced the number of our graduate intake because of the market conditions, and
because the company started getting nervous about taking on graduates when it
did not know how the market would be," one respondent explained.
The
downturn in the US, global recession and falling demand were all factors cited
by others. Over 165 members of the Association of Graduate Recruiters were
surveyed – and this was before the 11 September terrorist attack.
Carl
Gilleard, chief executive of the Association of Graduate Recruiters, said, "The
reduction in graduate jobs is very disappointing and does suggest that we are
in for a much tighter graduate market. Recruiters are still active, but are
very unsure about and unwilling to quote numbers."
Graduate
recruitment is always one of the first areas of staffing to suffer in a
downturn, particularly as it rests at the more expensive end of the recruitment
scale.
Gerwyn
Davies, author of recent CIPD research on graduate recruitment, said,
"Employers have learnt the lessons from previous slowdowns and are now
looking firstly at retaining their current skilled employees.
"Graduate
recruitment is an expensive area of business, although just cutting costs is a
very short-term outlook. Employers will be looking much more long term by
focusing on retaining the highly skilled staff that they already have.
"When
the good times return, it is very costly to have to recruit skills and retrain
employees."
Some
employers are concerned that cutbacks in graduate numbers could leave employers
short of talent.
James
Darley, global team leader graduate recruitment, global markets for Deutsche
Bank, said, "We believe in graduate recruitment and bringing in new talent
– these people are the company’s future managers.
"We
reduce the head count by getting rid of poor performers. This is the
responsible way for an organisation to act as it shows a commitment to graduate
re-cruitment."
There
are also fears that low graduate recruitment now would damage the quality and
quantity of line managers in a few years time.
Ann
Bailey, head of education affairs at the Engineering Employers Federation, said
that this could cause problems further up the management ladder in the longer
term.
The
need for a longer-term approach to graduate recruitment was supported by
Michael Hunting, director of graduate recruitment at law firm Eversheds.
He
said, "Companies that take their foot off the graduate recruitment pedal
because we may be entering into recession could leave themselves dangerously
exposed later on."
One
in 10 organisations has withdrawn graduate offers and one in five have deferred
them.
Last
month, two large City firms deferred the employment of over 400 graduates.
Only
170 of 570 of Accenture’s graduates started work this month. The deferred
staff, who will start in January, will receive half their salaries while they
wait, and £6,000 of their promised £10,000 signing-on fees on the day they were
due to start. They will receive the remaining £4,000 after a year as planned.
Citigroup
blames the current economic situation for deferring one-fifth of its 100
graduate analysts who were due to start training. They have been paid around
£13,000 to take a year out.
Deferment
is popular because employers are conscious of the need to compete in the war
for talent. They are trying to reduce the short-term costs of having to pay and
train them, while retaining them for the future when the economic situation has
improved.
Gilleard
said, "This is an approach that companies should consider – by not
withdrawing the offer it still gives them the opportunity to get back some
return on their investment, as graduate recruitment is a very expensive
business.
"When
I first entered the labour market over 30 years ago, I had a job offer
withdrawn and I have never forgotten it, although I am sure that companies only
do this when they have no alternative as it damages their reputation."
Graham
Thomsett, recruitment manager at Land Rover, warned graduate recruiters against
actions that would harm their images. "Even if employers are reducing
numbers, they must maintain the same profile. Our aim at Land Rover is to build
long-term relationships with universities and students – to do that we must
stay in the marketplace."
Deutsche
Bank’s Darley urged recruiters to ditch the "spray and pray" approach
and reduce the number of universities and courses they target.
Gilleard
said, "Recruiters should also be honest with graduates if they are unsure
about the numbers that they will be recruiting. Today’s graduates have much
more nous about what is going on in the world."
How
graduate targets have been cut
–
A quarter of companies have decreased the target number of graduates at
half-yearly reviews
-The
number of graduate vacancies has decreased by 5.5 per cent
–
One-fifth of respondents have deferred jobs – with eight of out 10 doing so for
12 months
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–
One in 10 employers have withdrawn job offers – most withdrawing 10 per cent or
less
–
Over one-fifth reported that they had unfilled vacancies at the end of the
recruitment year
