Why are so few graduates working in SMEs within the UK?

NBS final year Management students Emily Ward and Amy Simmons, share the findings of their research report into the issues surrounding the lack of graduate employment within small and medium sized enterprises (SMEs).

The article below was written by Emily Ward and Amy Simmons, two Nottingham Business School Management final year undergraduates, and is based on a paper they presented at their "Contemporary Issues in Management" conference.

The members of their team had all worked in smaller companies on their year-long placement and felt they had reaped the benefits. They were therefore keen to explore why graduates seem less likely to opt for smaller companies.

According to Mildred Talabi, places on graduate schemes are fairly elusive, with an average of over 70 applications for every graduate job. One company, PwC reported receiving over 30,000 applications for its scheme.

As the number of graduates looking for work increases, does more need to be done to raise awareness of the different career opportunities available to students after graduation?

In October 2013, a research project was undertaken regarding a contemporary management issue within business. The lack of graduate employment within small and medium sized enterprises (SMEs) became a recurring theme in the reviewed literature.

This was then compared to the human resource management (HRM) practices of multinational corporations (MNCs); along with the reasons behind how and why graduate recruitment can be so successful within these large organisations and what value graduates can add to a variety of enterprises.

The overall aim of the study was to underline and address the issues surrounding graduate recruitment to SMEs.
SMEs are the driving force towards the recovery of the economy as they account for 99% of the UK businesses. They also provide 67% of private sector jobs and contribute to 50% of the UK’s GDP.

The number of graduates leaving their first degree and looking for productive work has increased from 89.9% in 2008 to 90.8% in 2012 according to the Higher Education Statistics Agency (2012). However, despite the rise in graduates looking for jobs, the employment opportunities have not increased relatively. [NB According to the AGR, recent stats are more positive.]

The key findings to emerge from this research into graduate recruitment to SMEs include the view that graduates are under-represented in SMEs (Sear, 2012). This is due to a lack of knowledge regarding graduates in the SME sector – some businesses being unaware of what different qualifications are actually worth.

According to an AGCAS survey commissioned in 2012, 89% of SMEs had not recruited a graduate within the last 12 months. The main reason behind this was there being no job vacancies with requirements specifically for graduate applicants. The Centre for Enterprise (CFE) "conclude that the real issue for graduates is raising employers' demand for their skills" (Universities UK, 2010), especially as there is an excess supply of graduates in the UK (Sedghi, 2012). In the current economy, not only is it necessary to obtain transferable skills, but the ability to sustain these is highly regarded, as businesses expand and develop alongside technological and societal adaptation.

The graduate skills that arose from our research that were demanded the most by employers were:

  • Team working/communication skills
  • Flexibility to handle multiple roles
  • Good team player
  • 'Can do' attitude
  • Common sense
  • Understanding of profit and loss
  • Attitude and commitment.

Actually connecting with SMEs might be at the heart of the issue. "SMEs like to meet other companies outside of core office hours, i.e. breakfast, lunch or after 4pm" (Tipple et al, 2012). An interesting finding suggests that networking events and career fairs used to promote graduate employment were held at inconvenient times for SMEs (normally during working hours).

On this basis, it would seem making these events more accessible to SMEs would thus increase graduate awareness and/or employment.

To try and tackle the current lack of awareness, we constructed a model representing the 'Four Es';

Exposure

  • SME exposure to the graduate labour market through more accessible career fairs and events; Graduate exposure to the SME job vacancies through links between SMEs and universities.

Education

  • Educating SMEs about the value graduates can bring to their organisations; educating Graduates about the benefits of working in smaller organisations.

Engagement

  • The use of university online portals to allow SMEs and graduates to engage with one another.

Experience

  • Allowing SMEs to witness the benefits of recruiting graduates and ensuring graduates recognise the benefits of working in an SME first hand through the use of placements and internships.

It is evident that there is a lack of understanding and appreciation for the value that graduates can bring to SMEs. The limited profile of SMEs is a factor preventing graduates recognising the potential opportunities available. A combination of university support, Government intervention and SME involvement can rectify the unawareness of graduates’ potential.

ReferencesLowden, K., Hall, S., Elliott, D. D. & Lewin, J. (2011) Employers’ perceptions of the employability skills of new graduates. London: Edge Foundation.
Sear, L. (2012) Graduate Recruitment to SMEs. Department for Business, Innovation & Skills (BIS).
Sedghi, A. (2012) Graduate Employment; by skill, subject and graduation, The Guardian [online] Available at: the Guardian [Accessed: 17 Oct 2013].
Tipple, N., Taylor, P., Cumming, M. & Tan, S. (2012) Interaction between HEIs and SMEs – The student perspective, sl: The Higher Education Academy.

Why are so few graduates working in SMEs within the UK?

Published on 7 March 2014
  • Category: Nottingham Business School

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