Grads pay for themselves in 20 months
The costs involved in recruiting and training a graduate are typically recovered within less than two years, research from Lancaster University Management School has found.
The study revealed that businesses can expect to see financial returns from new graduates after 20 months of employment.
It also found that a typical graduate recruitment training programme will generate a return of £5.30 for every £1 invested after three years. Figures are based on the ratio between the cost of investment in a graduate and how much a graduate “earns” for a business.
According to author of the study, Lancaster University’s Dr Anthony Hesketh, the results challenge the decision by some firms to stop graduate recruitment schemes or not hire at all, because of upfront costs.
“We know that in these tough economic conditions, businesses are considering the value of graduate recruitment,” he said. “However, they remain a vital source of future capability for organisations.”
The Association of Graduate Recuiters’ chief executive, Carl Gilleard, added:
“While it is a front-loaded investment, businesses do enjoy substantial returns and overall find themselves at a financial advantage from working with graduates. Those that delay graduate recruitment during the recession are likely to lose out when the economy picks up.
“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,” said Gilleard.
However, the Forum of Private Business (FPB) warned that smaller firms do not always benefit from employing jobseekers with degrees.
“Higher salary expectations and the increasing numbers of graduates with non-vocational degrees mean that many employers prefer to take on apprentices,” said an FPB spokesman.
“It does depend on the graduate’s degree course but many small businesses may prefer to run apprenticeships or their own in-house training schemes than take on graduates. While the research shows that graduates can offer good value for money, often small firms feel specific expertise and enthusiasm are just as important.”