MoneyMagpie

Mar 24

Gradu-ace: Why graduates can be a cost-effective option for your business

Hiring staff can be a pricey exercise, but it’s an area that, if done right, can pay back your expenditure many times over.

Graduates can represent the very epitome of this and are increasingly attracted to small businesses as an alternative to traditional grad schemes. Peter Ames, from workplace experts OfficeGenie.co.uk, looks at why uni-leavers can represent great hires for your company.

The bottom line

First and foremost, arguably the most significant reason for hiring graduates is they generally command a lower wage than a more experienced candidate. Indeed, even ten years of experience could mean double the salary if you are looking at two degree-level candidates.

Of course, there are downsides to this and there are other areas in which these candidates can cost money, which we will touch on later. Ultimately though, newly-graduated employees have been found to be particularly cost-effective; on average making £5.31 back for every £1 spent on them.

Priorities

Gradu-ace: Why graduates can be a cost-effective option for your businessThere’s more behind the cost factor: Not only do graduates command lower salaries, it would appear university leavers are not overly concerned with getting a high starter wage. Recent research found earnings were only fifth on a list of priorities; training, a dynamic environment, a friendly atmosphere and supportive leaders were all above high future earnings when grads named what they want from a job.

This can be great news for a small business in particular. While such enterprises might not be able to offer the wages a big corporate can, they generally (and quite often do) offer some or all of the above. The best thing is the fact most, or indeed all, of that list can be established for almost no cost.

Bang for your buck

When it comes to assessing cost-effectiveness, it’s one thing to look at the balance sheet and another to look at what you’re getting for your money. While graduates command lower wages they generally offer great value in terms of their work rate: Last year we found people of a graduate-age put in more hours than any other age group.

Of course, there are further implications of this. While the research found grads are putting in the hours, this isn’t always a good thing. The transition from university to working life can be a tough one, so make sure long hours aren’t a symptom of burnout or staff simply struggling to keep up the pace.

Train staff, your way

Training is very much a two-way swing: It can certainly cost money to train up entry-level candidates, but you get to train them your way. So, in the long run, you’ll have someone who should know the company inside-out and eventually have the exact set of skills required for the role. This can be a very valuable asset.

You can also save money on training costs by developing an in-house programme. In our experience peer-to-peer learning can be a brilliant idea. It gives teachers confidence and authority, while it helps cut the costs of training to a minimal level; the in-house academy system at Genie has worked well using this model.

Tomorrow’s leaders today

Of course, linked to the above, graduate candidates represent an investment for the future. While most will be coming in at a fairly junior level, given time and the right training, talented candidates can go on to become leaders at any enterprise.

Hiring for a top-level position can be a hugely expensive experience. If you’ve got someone in your company who already fits the bill (or you think could, with a bit more work) then this is a really viable alternative to looking elsewhere. In the words of Steven Rothberg on Linkedin: “Recruiting your next Chief Marketing Officer from within is far less expensive and far less risky than luring that person from another organization.”

It’s not all about the money

Gradu-ace: Why graduates can be a cost-effective option for your businessBeyond the potential financial benefits, there are all sorts of other reasons you might want to hire a university-leaver:

  • Get the right person: Most importantly of all, recruiting grads can enable to you get the right person for the job, rather than the right CV for the job. They may lack the experience of other candidates, so you have to look more at how their personality would fit. If you hire on this basis, you’re probably going to be in a very good place.
  • Energy: Linked very much to the above, but another key advantage of hiring graduates is the energy they can bring to a workplace. Of course, it can vary massively from person to person, but there’s little doubt that talented, creative people can bring a huge amount of life to an organisation, which can only be a good thing.
  • Easy planning: The natural academic year allows you to dip into the graduate talent pool at strategic points. For example if you’re looking to hire people in this demographic, looking in August and September can be particularly fruitful. This can really aid planning.
  • Cut recruitment costs: OK this is mainly about money, but another advantage of the availability of graduate candidates is you’re probably less likely to have to seek out external help – recruitment agents can be expensive!

Of course, there are a number of drawbacks: As mentioned, training and development can add considerable cost; you also definitely want to avoid staff feeling burned out; finally churn can be high, with some studies finding as many as one in four graduates leave their job within a year.

However, we’d always argue there is a place for talented graduates at any business and there can certainly be a number of financial benefits too. Many of the drawbacks can be alleviated by a rigorous and targeting hiring process, which ensures you get the right person for the job. So good luck and happy hiring!

 

Peter Ames is head of strategy for OfficeGenie.co.uk, a marketplace for desk rentals and office space in the UK

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