Something very odd is happening in the world of graduate recruitment.
Despite the potentially negative economic head winds of Brexit and a Trump presidency (inflation, currency fluctuations, and a booming industry for wall builders), graduates fresh to the employment market are exhibiting behaviour that at first glance, appears highly irrational.
Firstly, they are rejecting job offers in record numbers from some of the UK’s most prestigious employers. In 2015, 8.2% of offers were reneged on.
Secondly, many of the brightest graduates that do accept an offer at a top tier blue chip firm are failing to turn up for work.
This behaviour is a new theme in the graduate market and could have significant consequences for employers (some of whom are hiring up to 1,500 graduates a year and plan their business around a predictable talent pipeline). This article will seek to explain this phenomenon, and what action you can take to inoculate your organisation from this new trend.
Why are graduates rejecting and reneging on offers?
In our latest research on this issue, in which we surveyed 2,500+ undergraduates [1], we found the following reasons as to why 64% said they would reject an offer they had already accepted in order to pursue a better offer from a different employer:
- More exciting role - 38%
- More prestigious firm - 21%
- Bigger salary - 19%
- Better location - 10%
- Better experience during the application process - 9%
- Other - 2%
- Regular communication with recruiters - 1.3%
- Joining bonus - 1%
I believe there are two main drivers behind the reasons graduates are giving – one based on macro- and behavioural economics; the other on how graduate engagement and attraction has failed to evolve for an audience that is extremely clued up about how marketing works.
The economic reason is relatively straightforward. In short, the very best graduate talent, like all graduate talent, is in more demand than ever before. The laws of economics dictate the value of a commodity and demand for the best graduate talent has never been higher – when demand is strong and supply is fixed, supply has more power in the market.
While UK GDP growth last year was only a modest 2%, the size of the economy is bigger than ever. The good news for graduates is that this is filtering down to their job market - the top 100 graduate recruiters are seeking to hire 21,000 graduates to their management programmes, 4.3% more than last year (868 in real numbers). This is the fifth consecutive year that leading employers have expanded graduate recruitment, demonstrating continued growth post-financial crisis (let’s not forget the average graduate starting salary is £30,000 and law firms have increased their starting salaries to £43,000 [2]). With such high demand for graduates, the most employable candidates are receiving multiple offers.Laid on top of this demand is a prevalence of first-year programmes where firms compete to attract the best first-year talent. These programmes were started by American investment banks, and now all major employers are offering first-year programmes to pipeline their talent.
At Bright Network we track the offers of our 120,000+ members and we regularly see members who receive 10+ offers for first-year programmes. With such record demand for undergraduate talent, students know they can afford to pick and choose. They can now take on multiple internships and work experience programmes, and talk to a variety of different employers while keeping other conversations quiet.
Hence, when they get that golden job offer, they know they are in a position to pick and choose, and reject multiple offers, picking the one they want. This also explains why candidates will accept an offer, only to renege on it. A typical banking graduate might do an internship in the summer of their second year, secure an offer at the end of the summer which they (rationally) accept, then go back to campus for their final year. Once back on campus they may (rationally) apply for a graduate programme at their preferred employer. If the fact they already have a confirmed offer from a competitor comes out in the selection process with their preferred employer, this will make their application stronger as the hiring manager at the preferred employer knows the candidate has performed well during an eight-week summer internship at the other bank. So, when the student receives an offer from their preferred employer, they accept it – after all, wouldn’t you? There is no downside for them – they’ve got an offer from the place they really want to work.
The second reason is to do with how many firms conduct graduate marketing. When graduate programmes properly started (back in 1950s), students had little power. Big firms ‘marketed’ their programmes to a, quite frankly, undemanding and unsophisticated audience. Fast-forward 60 years and millennials are the most marketed to generation ever – it’s estimated they see 5,000-20,000 marketing messages a day [3]. While there are lots of great innovations happening in the graduate industry, the majority of firms have simply not kept pace with their audience - yet go out onto campus to market their vacancies in October and November expecting the same results.
So with two such big forces at play, what can you do to protect your organisation and drive both a higher acceptance rate in the first place, and a lower reneging rate to make sure the candidates you offer actually turn up on their first day?
Leveraging our own intelligence on our 120,000 Bright Network members and having personally been in the student market for 16 years, here are three relatively cheap and straightforward things to help you.
1. Involve your stakeholders from the start
Graduates are desperate to meet the business leaders they are going to be working with day-to-day. With so many marketing messages coming at them, recent research by Edelman [5] has shown that a candidate is twice as likely to trust an existing employee’s view on what it’s really like to work at an organisation – something any sales person has known since the dawn of time: people buy people. The more you can deploy the great people from your organisation in your graduate attraction strategy, the better.
At Bright Network we work with over 300 of the world’s top employers and we get to see how different organisations go about their graduate hiring. The market leading firms (who are normally also the top businesses in their field) always deploy their very best people to our events to meet our members. They invest less in the ‘marketing fluff’ (i.e. students giveaways) as they know that what will stand out in a top graduate’s memory is the amazing person they met who inspired them about the work of the organisation, rather than how many branded freebies another firm gave them. The more you can get the talent you have in your business (from recent graduates to business leaders) in front of the talent you want to bring into your firm, the better your chance of both closing the candidate and making sure they actually turn up for work.
2. Keep them warm
You’ve delivered your attraction campaign - gone out to however many campuses, done more train journeys that you can remember and met thousands of graduates. The applications start rolling in, you make some great offers, these are accepted and come December you’re done with your talent acquisition. Wrong! The problem here is that your new joiners, who have told you they will be turning up for work in a few months time, are still being targeted by your competitors. Just when you stop engaging them, your opposition starts to (sometime between November and March). By doing a few simple and resource-light activities, it is possible to keep that talent warm between them accepting their offer and starting on your graduate programme. Some small and easy to implement things you might consider are:- Buddying. Giving each of your new graduate hires a ‘buddy’ from your current graduate cohort. The buddy can be tasked with making sure the graduate turns up for work. This can be relatively easy for the buddy - maybe a coffee, a couple of calls over the winter/spring months to answer questions the graduate may have, etc.
- Business update calls or video conferences. Having accepted your offer, a typical graduate will be excited to join your organisation. Keeping them updated on what’s happening with a monthly 30-minute conference call or video conference should feed that engagement. You might want to consider asking your business leaders to run the call (a bit like the Town Hall format) as CEOs know the future of their business is dependent on the talent they hire.
- Easter pre-start meet-ups. You could run a light touch get-together for all your new starters in the Easter break. You can invite them into your organisation late afternoon, give them a short overview of what’s happening within the business, how the graduate programme will work and then host some drinks. If you wrap the event early evening, they are then free to socialise with their soon-to-be fellow graduates. Building a peer network should also increase their likelihood of turning up for work.
3. Hope for the best, plan for the worst
Despite all your best efforts, and while you can increase your success rates, it’s still highly likely that some graduates will reject or renege on your offers. As such, having a strategy in place to cover the worst-case scenario is always a good idea. You can look at a number of different plans to deal with the challenge – these can range from keeping a list of your runner-up candidates from your original selection process and making them an offer, or opening up applications again with a pre-designed fast-track application. How affected you are by rejections and reneging will depend on your brand, sector and the number of hires you make, but having a plan in place on how to handle the worst outcome will not only help you sleep better at night, it will also reassure your business stakeholders that you have all angles covered.
Expert opinion
I wanted to get expert views on this issue and caught up with James Darley, Director of Strategic Alliances, Teach First and Craig Smith, Talent Development Manager, Babcock.
James says:
"The war for talent has always been fierce but a change over the last few seasons is the explosion of graduates reneging on offers. It is happening because top talent is seeking multiple offers, and even if they have one or two top employers in their pocket, they are still searching for ever more options. Maybe it can be compared to this generations approach to dating? It’s a numbers game - you put yourself out there and once you have all the options, you decide!
What can we do about it then? I would suggest a few ideas. Firstly, try and build a stronger relationship with the candidate once the offer has been made. Listen and respond to any of their concerns, introduce them to the business unit where they will working, connect them to their wider cohort – all will build a stronger emotional connection to you. Secondly, have honest conversations – ask them about their other offers and is there anything you can do to supplement their understanding of why you are a good option. Resist the natural response of “if you don’t truly want me, I don’t want you” and listen to their reflections on their situations and try and alleviate any concerns or misunderstanding they may have. Maybe even pull in senior stakeholders to close the deal. You might also want to have a reserve list so if you do suffer the pain of a late reneged offer at least you have others who do want the role on standby.”
Craig says:
"For me, this is happening because the students are being encouraged to accept multiple offers. In many cases they will hear back from employers at different times and don't want to decline on offer when they may still get a better one. They then sit on these and decide which offer to pursue right up to induction. In a previous organisation, we had seven reneges out of 47 hires the week before induction.
The key to being the 'offer of choice' is to make the graduates feel part of the organisation from the point of offer acceptance. You can do this though a communication plan - include them in newsletters, email, WhatsApp or Facebook groups - whatever you use. Invite them in for an insight/welcome day. Introduce them to their buddy as early as possible. By creating a sense of belonging you will become their clear offer of choice."
Conclusion
While there are some big forces at work that are driving record levels of graduates to both reject and renege on employer offers, the good news is there is plenty you can do to compete for the best talent. By deploying the best people in your business as part of your attraction and selection campaign, investing a small amount of effort to keep graduates warm after you’ve made an offer and having a fall back plan in place to cover all scenarios, you’ll put yourself in the best position possible to win the war for graduate talent.
- Bright Network - 'What do the brightest graduates want?' 2017/18
- The Times, Monday 16th January
- http://blog.telesian.com/how-many-advertisements-do-we-see-each-day/
- CEB, 2014
- Endelman Trust Barometer 2017