Employers delivering for new graduates


Employers are working hard on retention policies for new graduates, according to new research. But while the average retention rate after three years is 86 per cent, fewer than four out of ten graduates believe that their direct line managers do a good job of developing graduate talent.

New graduates will remain loyal to their employers providing that career development and opportunities are there, according to a new report from the Institute for Employment Studies (IES).

A survey of 362 employers who between them employ more than 7,500 new graduates, showed that most new graduates stay with their employer for at least three years. The average retention rate for graduates after three years is 86 per cent, underlining that retention is an issue of long-term planning.

One third of organisations had retained 100 per cent of new graduates after three years, with the highest retention rates in the public and not-for-profit sectors, and the lowest in consumer services.

But graduates have a low opinion of their line managers, with fewer than four out of ten (37 per cent) saying that they had managers who were ‘good’ at developing new graduates.

As a result, around a quarter of employers have much lower retention rates, losing up to half of their intake within the first year.

In their report, Measuring Up: Benchmarking Graduate Retention, IES researchers Claire Tyers, Sarah Perryman and Linda Barber reveal that planned long-term development is the key to protecting investment in new graduates. Retention is lower among graduates who take on more ‘general’ roles rather than those linked to a ladder of professional training.

The IES findings are in stark contrast to a recent survey by career consultancy Penna Sanders & Sidney that found that four out of ten employees feel no loyalty towards their employers and do not expect to be with in their current job in 12 months' time. This ‘itchy feet’ syndrome is largely because four out of ten employers show no interest in finding out what their staff want from their careers.

When it comes to their new graduates, however, the IES research suggests that employers are working hard on their retention policies. Nine out of ten employers use training and development programs as a means of keeping new graduates, with eight out of ten offering coaching and mentoring.

For two thirds of employers, career and salary progression is their main retention weapon. Almost half use the carrot of flexible working, and more than four out of ten use accelerated promotion schemes. Loyalty bonuses are used by only 15 per cent of employers.

New graduate recruits are also highly valued, with more than half (56 per cent) of employers admitting they had some new graduates they ‘couldn’t afford to lose’. But there is no real sense of a shortage of graduate talent, with fewer than a third of employers complaining that they had to ‘fight with competitors over a small pool of good new graduates’.

"Students increasingly see themselves as consumers; they want a fast return on the investment they make in getting a degree," said the report’s author and IES Research Fellow, Claire Tyers.

"For employers, the main retention difficulties seem to occur at the lower end of the job market. Where structured career paths or professional training is part of the package, graduates are more loyal.

"Employers need to show graduates that the opportunities they want are available internally and that they don’t need to leave in order to get where they want to go."

Despite the often large investment required to recruit and support graduates, more than four out of ten employers lack any form of monitoring system that might provide insights about why graduates leave. Employers offering formal or professional training schemes are the most likely to monitor their investment.

The most common reason given by employers for losing graduate staff was that they were unhappy with their role or with the employer they had joined (45 per cent). Pay was considered an issue by less than one-third of employers and unhappiness with work-life balance by a quarter.

Other reasons included the desire by new graduates to broaden their CVs by working for a number of employers in their early years in the labour market.

A full summary of the findings is available here.