Why Skimping on Graduate Talent is a Rookie Mistake

Trying to save money on hiring new talent might seem like an obvious short term fix in a downturn, but it can do lasting damage to your reputation as an employer of choice in the long run...

According to a recent survey, an emerging trend in the UK job market is that companies are dramatically scaling back their graduate hiring efforts.

The survey, by Robert Walters, found that 57% of UK employers are taking on fewer graduates than they did last year, with 31% hiring "a lot less."

Some 39% of employers blame tighter hiring budgets, 25% have less capacity for training, and 22% are shifting focus towards more experienced hires.

It’s not a great situation to be walking into if you’ve only just taken off the cap and gown.

A knee-jerk response to control costs could, however, lead to severe talent pipeline issues further down the road. Companies that take a purely short-term view may find themselves desperately trying to refill the pipeline in three to five years when the situation changes.

Ben Harper, exec at Content at Scale, says: “As a company… it fully depends on what type of role you're looking to hire for. A degree on its own means nothing, and we'd rather hire someone with experience (even if it's in setting a side hustle up and learning the hard way), rather than someone with a great degree but nothing to back it up.

“For me, it's not a budget issue in terms of hiring graduates. It's more I would rather pick from a wider talent pool (that includes graduates), but with that clear focus on experience and lessons learned. It's often the graduates with no real experience who are presenting themselves as the most entitled and are the least qualified for roles overall.”

Ouch! Any graduate hiring freeze is bound to have a significant impact on the talent pipeline over the next few years. According to Adzuna, graduate job postings have already dropped by nearly a third across the UK job market.

Such a supply squeeze comes at a particularly inopportune moment because, by next year Gen Z will account for over a quarter of the global workforce. Failing to maintain a robust graduate intake means companies will miss out on an entire cohort of young talent just as it hits a critical mass.

As many sectors learned from the post-COVID hiring frenzy, ignoring the pipeline leads to bidding wars and unsustainable “wageflation” just to attract the limited supply of experienced workers. Companies that take their eye off graduate hiring today might pay a steep premium in a few years when the well runs dry.

Many companies are turning towards a “skills-based” mindset in their hiring. As Tom Jauncey, head “Nerd” (their job title) at Nautilus Marketing, says: “Although the traditional method was to analyse the talent based on their degrees, the recent scenario is different. Taking the example of some of the big companies like Apple, Google, and IBM are now hiring on the basis of a changed perception. They prefer to hire a skillful person rather than hiring someone who has excelled on their mark sheet.”

The Impact on Employer Brand

Beyond the supply and demand dynamics, turning off the graduate recruitment tap could severely tarnish employer brands in the long run. University leavers already struggle to get a foot on the career ladder, with 58% describing their current job search as "extremely difficult", and 44% still unemployed after six months of searching.

So, if companies are perceived as a hostile environment for graduate opportunities, students simply won’t waste more time on them. Highly-rated universities provide ample guidance on employers' campus recruitment efforts and grad scheme reputations. Why pursue a company with a poor reputation for hiring entry-level talent?

The vicious cycle of a dwindling graduate pipeline and an eroding employer brand gets harder to break over time. The best and brightest will continue to be attracted to companies that maintain a consistent commitment to graduate hiring even through lean times. Those that cut back  will find themselves boxed out of entire universities and struggling to re-build their reputation as an employer of choice.

Early talent recruitment

Ultimately, a drastic pullback in graduate hiring could prove to be a massive shot in the foot from a succession planning perspective.

Habiba Khatoon of Robert Walters warns: "Failing to establish a robust graduate hiring and retention strategy now can result in significant skills-gaps as well as present further challenges when senior talent opt for an early retirement and there is no one next in the line to take their place."

Maintaining a consistent feed of early talent represents a crucial safety valve when more experienced employees begin aging out. Every few years, a new cohort of graduates cycle through the lowest rungs, gain vital experience, and progress upwards to steadily backfill vacancies across the organisation.

Without that pipeline constantly refreshing and expanding the talent pool from the bottom up, companies will find themselves in a mad scramble to attract experienced outside hires once the current crop of senior leaders begins retiring en masse. Spoiler alert - those employees will be sought after by every other company that cut back on grad hiring as well.

Daniel Space, owner of DanFromHR, says: “I believe a lot of these companies that don't focus on new grad or internship hires will run into problems over time as robust pipelines have lead into some really great employment trends (at least here in the US).”

Preserving the Talent Pipeline

Despite the clear risks of ignoring graduate recruitment, Khatoon acknowledges that the "tougher market has resulted in a lower volume of grad positions." So how can companies compete, and preserve their pipeline without blowing the hiring budget?

The key lies in taking a balanced, sustainable approach:

Keep the door open for critical roles: While cutting grad schemes altogether poses major risks, companies can certainly prioritise intake for strategic roles and skillsets that will be vital 3-5 years out. Every hire may not make sense, but don't turn off the tap entirely.

Improve your process: With applicant volumes still high due to the tough market, companies have an opportunity to be even more selective and hone their recruitment marketing and their screening/interviewing process to pinpoint the highest potential graduate hires with enduring skills. That doesn’t mean making it even more rigorous. Don’t waste candidates’ time by making them jump through hoops pointlessly.

Invest in training: Lean into re-skilling by investing more into junior employee development, rotations, and professional development. It fulfils the training mandate while turning graduate hires into a self-sustaining asset.

While reducing graduate intake may provide short-term cost relief, companies must tread carefully. Draconian cuts to early talent pipelines today risk creating bottlenecks, succession problems, and reputational employer brand crises tomorrow.

A balanced, strategic view towards preserving graduate recruitment will prove crucial towards remaining competitive during the downturn and preserve your employer brand reputation.