Graduate recruitment in the City of London

Summary
Introduction
Labour market characteristics
Recruitment and selection objectives
Recruitment practices
Skills requirements and the need for a common skills language
Recruitment of international graduates and comparison with UK higher education
Strengths of UK higher education
Collaboration and partnership between HEIs and employers
References

Summary

In this article, Martin Gresty of Graduate Prospects summarises research examining graduate recruitment into the City of London. Among the key points are:

Recruiters tended not to place emphasis on degree subject, looking instead for skills such as intelligence and analytical aptitude.
Employers increasingly favoured recruiting overseas graduates as they saw them as having stronger language skills, cultural awareness, greater maturity and business awareness than their British peers.
There was a dichotomy in the skills language used by higher education and employers and, therefore, a need for a common skills language.
Few instances of collaboration between higher education and employers existed, despite the view that such partnerships would be mutually beneficial.

Introduction

In September 2006, the City of London published Graduate Skills and Recruitment in the City (referred to as the City of London report hereafter), which examined the relationship between UK higher education institutions (HEIs) and Financial and Related Business Services (FRBS) employers in the City of London [1]. It analysed perceptions of skills required of graduate recruits, discussed existing recruitment practices and assessed views on the performance of UK HEIs as providers of suitably qualified labour. The study was based on a sample of 25 international FRBS companies (19 of which were large firms and 6 were small to medium-sized firms) and 10 UK HEIs. This article summarises the report’s key findings and draws on other evidence where appropriate.

Labour market characteristics

Research examining graduate career choices has pointed to the popularity of investment banking as a career destination for graduates. The latest UK Graduate Careers Survey, published in April 2006 and based on 16,452 finalists, noted that 11.1% of finalists from 2006 wanted to go into investment banking [2]. In October 2006, Zurich Financial Services launched a global graduate scheme in a bid to develop senior financial experts for the future [3]. Various courses have also been developed to equip graduates with skills appropriate for work in financial and business services. In January 2006, Reading University and NASD, the private regulator of securities firms and brokers, launched a Masters degree in Capital Markets, Compliance and Regulation, while in April City University’s Cass Business School introduced a Masters degree in pensions [4].

Evidence has demonstrated a rather complex picture of the job market in the City of London. On the one hand, recent business forecasts from the Centre for Economics and Business Research (CEBR) showed an anticipated rise of 18% in bonuses for 4,200 City workers [5]. On the other hand, stories of leading City of London-based employers outsourcing jobs to India and China, potentially resulting in job cuts in the City of London, have also made the headlines [6].

The City of London report argued that it was difficult to define accurately the City’s graduate recruitment market given the scarcity of timely, appropriate and publicly available data. It reviewed three potential models that looked at the size of the graduate recruitment market, and indicated tentatively that graduate intake lay in the range of 7,950 to 10,750 per annum. However, the study recommended that further research was needed in order to produce a reliable and meaningful measure.

Recruitment and selection objectives

The majority of graduate posts in firms surveyed for the City of London report were client facing and non-specialist. Over 70% of recruiters surveyed placed no emphasis on degree subject, looking first to attributes such as intelligence, confidence, analytical and critical skills and aptitude for learning. A minority of specialist posts in investment banking and fund management, such as financial engineering, quantitative research and risk management, demanded more specialised technical skills.

The following three factors (in order of importance) were identified as criteria used when selecting graduates:

A good firm ‘fit’ - background and character, social maturity, cultural understanding and language skills.
Soft or transferable skills - communication, teamworking, problem-solving and analytical skills, drive, tenacity and motivation.
Hard or technical skills - knowledge or familiarity with specific subjects or business processes.

Recruitment practices

The City of London report noted that recruiters operated along traditional routes, with 75% of recruiters saying that they concentrated their recruitment activities on a relatively short target list of HEIs. This approach was founded, the report argued, on historical precedent, and on the proven record of these universities in providing employers with recruits they needed. The Milk Round was the most common method of identifying graduate recruits; however, the report warned of this method of recruitment becoming outdated, given the rising number of students deferring applications until after university.

Larger firms employed various recruitment methods, including sending recruitment representatives to universities, sponsorship of degrees, skills sessions, advertising in university journals and other publications, and the internet. Larger firms also operated carefully timed autumn campaigns.

Smaller employers, in contrast, used more informal methods. They attended universities to a far lesser extent than larger companies. Recruitment among small employers was more passive, in that these firms relied on candidates finding them rather than vice versa. Small firms maintained contacts with universities but these tended to be with individual advisors and academics, and their online presence was also less significant. Although some followed an annual recruitment pattern, they were on the whole more inclined to recruit on an ad-hoc basis.

Skills requirements and the need for a common skills language

Employers surveyed in the City of London report felt that a key role of higher education was to prepare graduates for work. As a result, they looked for graduates who could apply their education practically, although there was a general observation among employers that graduates struggled to do this. Recruiters perceived graduates to be poorly prepared to undertake key tasks such as synthesising and summarising information, both verbally and in writing, skills that employers wanted HEIs to integrate into curricula. There was also evidence of graduates struggling to plan their time and prioritise workloads.

The study also revealed a discrepancy in the skills language used by employers, which was obscuring the message employers were sending to HEIs. There was strong evidence of employers using skills terms regarding recruitment and selection, but there was disparity about what those terms meant, and as a result employers favoured their own interpretations based on their own organisations. This lack of clarity meant that HEIs were unable to identify employer requirements exactly.

HEIs had a broader interpretation of skills, but divergence was also evident here as institutions pursued their own educational objectives and sought to differentiate themselves from competitors. The fundamental problem, therefore, was that employers and HEIs talked at cross-purposes. The study recommended that employers and HEIs develop stronger relationships and clarify skills language.

Recruitment of international graduates and comparison with UK higher education

Given the international nature of the sector, employer respondents in the City of London report were looking increasingly towards overseas graduates and students to fulfil recruitment needs. European graduates were perceived to be more mature, business aware, to have relevant gap-year or intra-course experience, and to be better prepared for the competitive recruitment process than their British counterparts. Employers also prized the cultural awareness gained from studying outside one’s home country.

Employers highlighted various reasons for employing international graduates. As degree courses took longer to complete in other countries, overseas graduates were seen to have greater opportunities to undertake voluntary and other types of work. UK students at UK HEIs were deemed to lack mobility, for example by not participating in international exchanges.

Other research has suggested that hiring foreign graduates offers business benefits to UK firms. A study based on 104 personnel and HR professionals published in 2002, for example, found that 66% of recruiters hired graduates from European countries other than the UK [7]. The most popular reasons for doing so were graduates’ strong language skills and adding diversity to the workforce. European graduates were also seen to be more work oriented. A study published in May 2006 by the Council for Industry and Higher Education (CIHE), meanwhile, stated that international students in the UK ‘have already displayed the qualities of drive, determination, ambition and command of languages that make them a self-identifying cadre of potential leaders’[8].

Strengths of UK higher education

The City of London report concluded that higher education in the UK produces flexible thinkers who can use their initiative. Employers thought that UK students had the opportunity to develop their soft employability skills such as teamwork, problem-solving and communication. The report noted that UK higher education had developed an employability agenda to a greater extent than other countries.

The CIHE’s report also highlighted strengths of higher education in the UK, noting that it ‘develops some of the best graduates and research in the world’. It also argued that higher education in the UK ‘encourages the spirit of enquiry and curiosity, of problem-solving, constructive questioning and lateral thinking that they [employers] seek in their high fliers.' [8]

Collaboration and partnership between HEIs and employers

There were very few instances of collaboration between UK HEIs and recruiters surveyed in the City of London report. Recruiters perceived HEIs to be unresponsive and uncoordinated to business dealings. Yet, coherent collaboration was seen to be mutually beneficial. The CIHE’s report also raised the wider issue of business and higher education collaborating, noting the benefits for both business and the wider competitive advantage of the UK.

Recruiters surveyed in the City of London report wanted to cooperate with universities in order to provide a greater range of meaningful work-experience schemes, but they regarded university curricula as inflexible. A number of the employers surveyed wanted to develop relationships with teaching staff, and expected careers services to be more active in brokering relationships with HEIs.

References

1 Graduate Skills and Recruitment in the City, I Dawson, A Jackson and M Rhodes, September 2006.

2 The UK Graduate Careers Survey 2006, High Fliers Research.

3 Zurich Financial Services launches one-year structured global graduate training programme, Personnel Today, 10 October 2006.

4 'Compliance demands leads to degree course', Financial Times, 25 January 2006; 'Cass introduces Masters in pensions', Financial Times, 10 April 2006.

5 'Soaring City bonuses hit £8.8bn', BBC Business, 30 October 2006.

6 'Credit Suisse outsourcing plan to hit jobs at Canary Wharf', Personnel Today, 22 February 2006.

7 Graduates in the Eyes of Employers 2002, Association of Graduate Recruiters/Guardian.

8 International Competitiveness: Businesses working with UK universities, CIHE, R Brown and P Ternouth, May 2006.

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