Graduate recruitment and starting salaries survey 2017

XpertHR research looks at the current state of the graduate labour market, focusing on how employers recruit, retain and reward graduates.

Graduate recruitment activity

The graduate labour market looks set to remain robust in 2017/2018. Four-fifths (79%) of the 186 employers taking part in the XpertHR survey are recruiting or have already recruited graduates in 2017/2018.

For the majority of employers that are recruiting graduates, the number of recruits that they are looking to take on in 2017/2018 is either stable or increasing when compared with 2016/2017, as table 1 shows.

Table 1: Expected change in number of graduates recruited between 2016/2017 and 2017/2018

Size of organisation Increase
(% of respondents)
Stay the same
(% of respondents)
Decrease
(% of respondents)
1 to 249 employees 42.3 57.7 0
250 to 999 employees 54.1 37.8 8.1
1,000+ employees 39.7 48.3 12.1
All employers 44.2 49.0 6.8

n = 147.
Source: XpertHR.

One private-sector-services employer that is increasing its graduate intake highlights the positive contribution that graduates can make to organisations: "Graduates provide a higher, more consistent return to a business both short term and long term. Their application is great - conscientious and professional with a desire to learn more, so why would we not want to hire more?"

About this survey report

This report covers key findings from the 2017/2018 XpertHR survey on graduate recruitment and starting salaries.

XpertHR's benchmarking service has the full data from all questions from the survey, covering graduate recruitment and graduate starting salaries, including data breakdowns by factors such as industry sector and organisation size.

The median number of graduates that employers are seeking is five per organisation for 2017/2018, while the interquartile range - which spans the middle 50% of the sample when arranged from lowest to highest - goes from three to 15.

The strongest demand is for graduates to fill engineering roles, mentioned by around one-third (29.9%) of respondents. By broad sector, this figure rises to more than two-thirds (70.3%) of manufacturing-and-production-sector respondents. For private-sector-services firms, graduates are most sought after for marketing and finance/banking roles (mentioned by 23.6% each).

Attracting graduate recruits

Employers are using a mix of online and more traditional candidate attraction methods for their graduate vacancies. As table 2 shows, three of the five most widely used graduate candidate attraction methods are online: job advertisements on the organisation's own corporate website (used by 78.9%); social media (63.9%); and advertisements on general job boards (51%). Usage of each of these methods has risen when compared with XpertHR data for 2016/2017, suggesting that graduate candidate attraction is increasingly moving online.

Table 2: Graduate candidate attraction methods - usage and effectiveness

Graduate candidate attraction methods used
(% of respondents)
Most effective graduate candidate attraction methods (% of respondents)1
Online job advertisements (own corporate website) 78.9 13.0
Social media 63.9 6.2
Notifying vacancies to university careers services 63.3 11.0
Links with universities 53.1 8.9
Online job advertisements (general job boards) 51.0 11.6
Employee referral schemes 45.6 4.8
Online job advertisements (specialist job boards) 41.5 7.5
Recruitment fairs 40.8 6.8
Ex work-placement students 34.7 8.2
Speculative applications 30.6 1.4
Presentations on/near university campuses 29.9 3.4
Employment agencies 22.4 6.2
Published directories of vacancies for graduates 12.2 0
Published bulletins of vacancies for graduates 9.5 1.4
Open days for prospective applicants 9.5 2.7
Sponsored students 7.5 1.4
Specialist journals and/or trade press 5.4 0.7
Local newspaper advertisements 3.4 0
National newspaper advertisements 2.0 0
None - 3.4
Other 3.4 1.4

1 Respondents were invited to select the single method that they consider most effective.
n = 147.
Source: XpertHR.

The three highest-rated candidate attraction methods of finding good-quality candidates are job advertisements on the corporate website, job advertisements on general job boards, and notifying vacancies to university careers services. However, while use of social media as a graduate candidate attraction method is widespread, only a small minority of respondents (6.2%) say it is their most effective method.

Assessment and selection for graduate recruits

Traditional methods dominate when it comes to assessing and selecting graduate recruits, both in terms of usage and perceived effectiveness.

The three most widely used assessment and selection methods when recruiting graduates are first interviews (used by 76.9%), manual sifting against predetermined criteria (66%) and second interviews (57.8%).

However, when respondents identify the assessment and selection methods they consider the most effective for selecting good-quality recruits, a different pattern emerges. Assessment centres are by far the highest-rated method in terms of effectiveness, despite being used by just under half (49.7%) of employers. It is likely that the comparatively limited use of this method across our sample reflects the time and expense it requires.

Graduate starting salary levels

The median starting salary for graduates is £24,000 a year, while the average is slightly lower, at £23,990. As table 3 shows, the median graduate starting salary increases in line with organisation size, from £22,000 at the smallest organisations to £25,000 at the largest.

Table 3: Graduate starting salaries 2017/2018

Size of organisation Lower quartile
(£pa)
Median
(£pa)
Upper quartile
(£pa)
Average
(£pa)
1 to 249 employees 19,000 22,000 24,000 22,782
250 to 999 employees 20,000 23,000 25,000 23,271
1,000+ employees 22,000 25,000 27,000 25,403
All employers 20,000 24,000 26,000 23,990

n = 140.
Source: XpertHR.

However, the overall range of graduate starting salaries in our sample is significantly wider, going from a minimum of £15,000 to a maximum of £48,000. Top-end graduate starting salaries are the exclusive preserve of private-sector employers, a breakdown by broad industry sector finds. All of the one in 10 (10.3%) graduate starting salaries pitched at £30,000 or higher are on offer from private-sector organisations. Three employers are offering graduate starting salaries of more than £40,000 for 2017/2018. Two of these are finance-sector organisations, while the third is a large retailer seeking graduate management trainees.

Graduate starting salaries frozen

The median increase that employers have applied to their graduate starting salaries between 2016/2017 and 2017/2018 is nil. The most common percentage change in graduate starting salaries is also nil, at more than half (56.3%) of employers providing details of changes. The last time that XpertHR recorded a median increase to graduate starting salaries above nil was in 2008/2009.

Among the two-fifths (43.7%) of employers that have increased the level of graduate starting salaries in 2017/2018, the most common increase is 2%, with most increases pitched between 1% and 5%.

Graduate starting salary levels over the past decade

While the headline percentage increase in graduate starting salaries is nil, the actual graduate starting salary rates on offer show reasonable growth when compared with those recorded by XpertHR a year ago. At £24,000, the median graduate starting salary for 2017/2018 is up by £1,000 from the £23,000 median for 2016/2017.

However, longer-term analysis of XpertHR data shows that graduate starting salaries have been subdued for a protracted period. Chart 1 shows the median graduate starting salaries recorded by XpertHR over the past decade. The composition of our sample changes each year, meaning that a matched-sample analysis is not possible. But even with this caveat, it is clear that graduate starting salaries are showing little movement over time.

Chart 1: Change in median graduate starting salaries, 2008/2009 to 2017/2018

Chart 1: Change in median graduate starting salaries, 2008/2009 to 2017/2018

Source: XpertHR.

Issues experienced when recruiting graduates

Nearly nine in 10 employers (87.1%) have experienced problems when recruiting graduates. The most common problem - cited by more than two-fifths (44.2%) of respondents - is the poor quality of graduate applicants, in terms of knowledge, skills or experience. "Despite the high volume of graduates, the level of genuine talent is low", one private-sector-services employer comments.

A breakdown by broad industry sector reveals that the issue of perceived poor-quality candidates is particularly acute in the manufacturing-and-production sector, where it is mentioned by more than half (54.1%) of respondents.

Across the whole sample, the next most common graduate-recruitment problems are a lack of applicants (mentioned by 34.7% of organisations) and graduates' salary expectations being too high (30.6%).

Detailed analysis suggests that the level at which graduate starting salaries are pitched might play a role in whether or not graduate recruitment problems are experienced or avoided.

The three most common graduate recruitment problems listed above are most prevalent among organisations pitching graduate starting salaries below the £24,000 median. In contrast, the minority (13.1%) of employers that have not experienced any issues are offering a median graduate starting salary in line with the whole-economy figure of £24,000.

A minority of respondents mention anecdotally that they aim to reduce potential problems by managing graduate salary expectations. Common actions among this group include being clear upfront on pay and progression, with some conducting a first salary review for new graduate employees after six months in post.

Effectiveness of graduate recruitment processes

Overall, the majority of employers taking part in our research are confident that they are doing a good job when it comes to graduate recruitment. Around four-fifths (77.5%) feel that their organisation is effective or very effective at recruiting and selecting high-quality graduates. A breakdown by organisation size reveals that small organisations are more likely than medium or large organisations to rate themselves as effective or very effective on graduate recruitment.

Labour turnover for graduates

While recruiting graduates might bring problems, comparatively few employers have issues with graduate retention.

One in three employers (32.3%) collects voluntary resignation data for graduates within their organisation. Of these employers, three in five (60%) report that labour turnover is lower for graduates with less than 12 months' service than it is for employees across the organisation as a whole - just over one in eight (13.3%) says that it is higher and exactly one in 10 that it is the same, while the remaining one in six (16.7%) does not know.

Our research

This summary report is based on original research carried out online by XpertHR during May and June 2017. Usable responses were received from 186 organisations employing a total of 387,269 people. The breakdown of respondents by economic sector is as follows:

  • 135 (72.6%) are in private-sector services;
  • 47 (25.3%) are in manufacturing and production; and
  • 4 (2.2%) are in the public sector.

Broken down by workforce size, the respondent organisations comprise:

  • 76 (40.9%) with between one and 249 employees;
  • 44 (23.7%) employing between 250 and 999; and
  • 66 (35.5%) with 1,000 or more employees.

The smallest organisation in the survey sample has 10 employees and the largest has 70,000. The median number of employees is 425.

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