The Three Rs: Retention, Return on Investment and Recession

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New research examining graduate retention and investment during the recession.

Hana Searson, Head of Talent Management of IDG

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Results from independent research, published on September 21, show that 67% of graduates surveyed are likely to consider leaving their current employer as the country comes out of recession. Commissioned by the Inspirational Development Group (IDG), provider of bespoke leadership and management programmes, the results offer a snapshot of how graduates are viewed and valued in the workplaces of some of the UK's largest employers, including the NHS, Thomson Reuters and the Lloyds Banking Group.

Focusing on graduates two and a half to three and a half years into their scheme, the report investigates the perceptions and reality of graduate retention, recession impact and valuation issues for graduate programmes, both from the organisation and graduate's perspective.

Key findings

Retention

  •     49% of HR managers highlighted the difficulty of retaining graduates for long enough, with 22% reporting that on average they lose graduates within two years of their employment.
  •     57% felt that there was more they could do to retain these graduates - the ability to identify and retain the right graduates will be a crucial success factor as the economy comes out of recession.
  •     75% of HR managers saw most graduates leaving between two and a half and three and a half years after starting their graduate programme, or one year after the end of the programme.
  •     78% of HR managers agreed or agreed strongly that a specific development programme to increase retention of graduates one year after the end of their graduate programme would be of benefit.

Return on investment

  •     The research uncovered the many difficulties HR managers face in measuring the return on investment of graduate schemes. 16% of respondents didn't know when a company's investment in a new graduate reached the break-even point and, in most cases, this figure is an estimate rather than a reliable piece of management information - 57% stated that this occurred before three years.

Recession

  •     While some respondents stated that graduate programmes had been scaled down, the majority of HR managers viewed stopping schemes altogether as a mistake that would lead to a disproportionate gap in the talent pipeline amongst new graduates.
  •     A big effect of the recession has been a shift in application patterns, with the financial services seeing a drop-off and public sector organisations, such as the NHS, seeing a massive rise - 7,000 applicants last year compared with 16,000 in 2009.
  •     HR and graduate managers thought the recession could have a significant impact on the attitudes of graduates starting work now, that 'Generation Y' may feel less secure and change their long-term career plans as a result.

Hana Searson, Head of Talent Management for IDG, said: "The information we have gathered highlights a lack of measurement in terms of return on investment and a need for companies to get better at identifying the right graduates for their business. It seems that many companies view the high turnover of graduates at this crucial two to three year point as inevitable.

"Organisations need to identify potential stars early on in their placements in order to map out clear plans to retain these individuals. How companies measure the value of a graduate also needs examining.

It is not all about monetary return - the enthusiasm and fresh-thinking that graduates bring to an organisation is definitely beneficial and can be reaped throughout the duration of the graduate programme, even if individuals decide to leave once this is over.

"Those businesses that have cut or greatly reduced their graduate schemes are, in IDG's view, short sighted. Graduates remain a vital source of future capability for organisations. Yes, there's a short-term cash flow gain from removing or reducing the scale of a graduate programme, but the long-term gap in the pipeline of young, energetic, affordable, mouldable graduate talent will be much more painful in the end."

Evidence was gathered from over 150 graduates in the second or third year of their employment within companies that employ 500 or more staff. IDG also surveyed 65 HR managers/directors across a range of industry sectors, including banking, engineering and public and private sectors. In addition, IDG conducted face-to-face, qualitative interviews with 10 HR managers.

Editor's notes:
This report summarises the findings from two parallel quantitative surveys and ten follow-up qualitative interviews carried out by Community Research and Consultancy Ltd (Community Research), an independent research company, on behalf of IDG.

Methodology:

The surveys were conducted using a national online consumer panel (run by Research Now). Results are based on the responses from two distinct samples:

  •     150 graduates, all of whom were between two and a half and three and a half years into employment on a graduate training scheme within a large organisation (defined as one with 500 or more employees)
  •     55 HR managers/directors in large organisations (defined as above) that are running a graduate recruitment/training programme
  •     10 additional HR managers/directors were interviewed face-to-face.

Respondents came from organisations across the public and private sectors and from a variety of industries and professions. The surveys were conducted in February and March 2009.

About IDG

IDG delivers bespoke leadership, graduate and management programmes designed to enhance the performance of a business by creating sustainable, cultural change.

IDG is an award-winning organisation, working with some of the biggest names in the financial, public, healthcare, engineering and sporting sectors, including HSBC, Lloyds Banking Group and the NHS. With an exclusive partnering agreement with the Royal Military Academy Sandhurst, IDG combines its commercial and professional acumen with over 200 years of leadership experience from the British Army.

Hana Searson, Head of Talent Management is available for interview. Telephone 0207 798 2848 or email: hana.searson (at) inspirationaldg (dot) com

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