Between 90-100 graduates apply for each job. That still doesn't make it any easier to hire the right ones.
The higher education landscape has changed markedly since 1992, when the old polytechnics were transformed into universities. For employers, finding the best graduates has become a task of needle-in-haystack proportions. Now with the introduction of tuition fees, the struggle to attract and retain looks set to intensify. A 1997 survey of the largest firms, commissioned by the Guardian from recruitment specialist Park Human Resources, shows that nearly half are devising remuneration packages incorporating so-called golden hellos to help graduates pay off their loans.
According to the Institute of Employment Studies (IES) Annual Graduate Review 1996-1997, there are now around 1.5 million students, over 50% more than in 1988-89. With graduate recruitment only now regaining the levels of the late '80s, there are an estimated 90-100 applications for each vacancy. Yet 64% of employers (as against 38% last year) in the Guardian-backed survey found increasing difficulty recruiting graduates of the right calibre.
There are basically two types of graduate companies are looking for.
There are the specialists in areas such as engineering, IT or textile design, where a good technical degree is essential. Then there are generalists for whom degree subject matters little. Away from the fast-track management development programmes at companies like ICI, Shell and Unilever, the class of degree isn't that critical for the many employers who are looking for well-rounded candidates. In a survey conducted by the Association of Graduate Recruiters (AGR), the skills most highly valued were motivation and enthusiasm, inter-personal skills, teamworking, flexibility and adaptability, and oral communication, plus the traditional ones of initiative, proactivity and problem-solving.
Part of the difficulty for recruiters lies in the standards imbalance between the different institutions. Including the 41 former polytechnics, there are now over 100 universities - with the result that graduates are no longer an elite.
There is much debate about whether an American-style Ivy League has become established. Certainly, says Roly Cockman, chief executive of the AGR, 'it exists in most people's minds'. High Fliers Research publishes Graduate Careers, an annual survey of 12,000 students from 24 leading universities.
Survey director Martin Birchall observes: 'There is a very definite pecking order among universities and there are no new universities at the top of it. It all comes down to academic entry requirements. Imperial College, for example, will want one or two As at A level, while the University of East London may accept one D and one E. That's not to say there are not good students at the former polytechnics but it makes it difficult for companies to compare standards between institutions.'
So how do companies find the best graduates? Marketing literature, careers fairs and adverts in graduate job directories still play a part, but the real investment of time and resources goes into targeted activity at chosen institutions based on a tight specification of what's required. Time was when blue chips used to haul a milk-round presentation roadshow around the country each autumn. By Christmas, applications were in and, after on-campus interviews, the best candidates were smartly snapped up. But the milk round no longer has the prominence it once had. Though it is still used, many companies have replaced it with regional interviewing at centres covering a number of universities. Mars, for example, sends its literature to every university in the UK, and accepts applications from all, but company presentations are by invitation only (based on completed application forms) at city-centre locations.
The timing has changed, too, with the gradual trend from a three-term to two-semester system and module-based courses. Instead of a once-a-year big bash, for many companies graduate recruitment is now a year-round affair, organised mostly in the vacations. Says BT's head of graduate recruitment Hugh Smith: 'We strive to ensure that recruiters can respect the work pressures of students who are working towards as good a degree as possible.'
Forging closer links with careers services and university departments is crucial: industrials go for relevant courses, while non-industrials target particular institutions to limit application numbers and raise candidate quality. According to the AGR, the average number of universities targeted is 15, mainly traditional ones with high entry criteria. Merchant banking and management consultancy stick most closely to this model.
It's a statistic that gives new universities cause for concern. Pat Quinn, head of the careers service at Sheffield Hallam University, believes students from new universities often have precisely the skills employers want: 'We put an enormous amount of effort into equipping our students with "employability" skills to operate rapidly in the world of work.' Yet, she says, too few companies even send marketing information to more than a handful of institutions: 'That's all it takes, plus a couple of regional briefing seminars.'
Some groups have made efforts to cast the net more widely. BT, for example, which typically takes on 800 graduates a year, 400 of them highly technical, targets a mix of up to 50 old and new universities and, says Smith, 'goes to quite extreme lengths not to limit the breadth of its search. The idea that we are looking at an Ivy League list of organisations doesn't apply.' Nevertheless, the balance is still in favour of older institutions. Says John Bulpitt at Unilever, which recruited 90 onto its fast-track general management scheme in 1997: 'We find that 80% come from 20% of British universities.'
At Unilever and elsewhere, work placements are increasingly seen as enhancing the chances of getting suitable employees who will stay. Three years ago, BT pulled back from its old system of sponsorship to concentrate on summer placements. 'We used to offer several hundred bursaries but although we used to recruit about 65% it was still an incredibly expensive method,' says Smith. 'A lot of courses now incorporate sandwich placements, and the former polytechnics always did.'
HR departments are finding new ways of making contact with promising candidates on campus, too. Mars has a list of around 20 universities where it has recruited successfully in the past, whose careers services and student bodies it supports actively, running skills workshops and attending Insight into Management courses. Procter & Gamble, which takes on some 100-120 graduates a year into specific roles in seven to eight functions, also eschews presentations on campus. It targets some 40 institutions, traditional and redbrick, based on past success, participating in training events through the international cultural exchange organisation, AIESEC, and the Student Industrial Society, and often fielding large numbers of young managers to spread the word.
Despite the increasing technological literacy of today's students, there is little evidence that companies are using the Internet specifically to attract graduate applications - yet. ICL's HR development manager, Peter Forbes, believes that will soon change, as access is broadened: 'It should be possible to use it for applications, putting in pre-selection filters to screen out unsuitable applicants.' Some employers already operate this kind of pre-selection by telephone when people ring for application forms.
The sifting process is extremely time-consuming, even if companies have come up with a precise specification. Employers still cling to the interview as an essential part of the selection process. But there is increasing awareness of the danger of subjectivity and the need for structure based on the competencies required. 'The big change,' says the AGR's Cockman, 'is the tendency to use some sort of assessment centre where companies keep shortlisted candidates for 24 hours or more, to gain a broader picture of how they inter-relate.' This may involve a battery of tests, including exercises to assess skills like prioritising, teamwork and communication, often using role play. Increasingly, psychometric tests play a part. ICL's Forbes expresses the view of many: 'Given that graduates have little experience, the more objective data we can compile the better. But it's not a "go/no go" part of the process.' As well as an initial interview, often with testing of numerical and verbal reasoning, candidates face a final interview based on performance at the assessment centre. Objectivity is a key concern: for this reason, companies often prefer an interview panel of two, or sequential interviews with different people.
Once offers are made, the brightest candidates may have to choose between more than one offer. Starting salaries vary widely. According to the AGR, the forecast median starting salary in 1997 was £16,000 or £17,650 in inner London. Few employers pay less than £13,000 but there are now more organisations paying £20,000 or more, with financial institutions and legal services at the top end and public service bodies at the bottom.
In addition, says Cockman, 'three-quarters of our members already pay something on top of salary.' This might be a lump-sum bonus or an interest-free repayable loan of anything from a few hundred pounds to several thousand.
With the introduction of tuition fees, High Fliers' Birchall believes the whole careers climate will change: 'Students with debts of £12,000-£15,000 won't leave their career plans so late because they will want to know how they are going to pay back their loans. Employers may have the option to pay off the debt in exchange for a longer, fixed-term contract of three to five years, possibly in conjunction with lower starting salaries.' There's food for thought, for employers and students alike.
MARKS & SPENCER
'WE DON'T JUST WANT TO MEET THE CAPTAIN OF THE HOCKEY TEAM'
M&S planned to attend 14 careers fairs this autumn and give 39 presentations held in stores across the country. It targets its activity where it has been successful in previous years and is very specific about what it is looking for. Like many of the blue chips, M&S's brand name is so well known that advertising in national media is unnecessary, but the group uses specialist ethnic media, for example, the Voice and Eastern Eye, to ensure applicants are representative of the student population. It believes that one of the best ways of raising awareness of itself as an employer is supporting student societies like AIESEC with skills workshops on campus.
M&S has no generic management training programme and most of the graduates it takes on each year start in store management. For 1998, 300 of the UK intake will go down that route, with a further 50 specialists - in areas such as food technology, textile design, merchandising, selection and buying - destined for head office. While the specialist roles attract applications from older universities, quite a lot come from former polytechnics.
'Students from vocationally based courses tend to have more highly developed managerial skills,' says graduate recruitment manager Jit Jethwa.
Students are first interviewed on a one-to-one basis where they are questioned about their extra-curricular activities: 'We don't just want to meet the captain of the hockey team,' says Jethwa. 'We want to know about organising a sister's wedding or a charity trip for a group of 13-year-olds.' Candidates then attend an assessment centre where they are tested on planning and organising, leadership, analysis, adaptability, motivation, assertiveness, business awareness and teamwork through group exercises and have a further one-to-one interview.
The 1998 starting salary of £16,800 plus an extra £3,600 in London is in the upper quartile, according to the AGR's survey, which Jethwa believes gives M&S an edge. M&S currently offers no golden hellos, but, says Jethwa, 'people can progress as far as they want to: our training programme is second to none'.