Should you hire graduates or experienced professionals?

Should you hire graduates or experienced professionals?

Recruitment dilemma: should businesses hire graduates or experienced professionals?

Finding a new candidate costs a business £3,300 on average, according to a recent study.

The study, conducted by SmallBusinessPrices.co.uk, assessed five key sectors, including accounting and finance.

When searching for new talent, companies are faced with the dilemma of hiring a graduate, who have lower starting salaries but need more investment, or choosing an experienced professional who will cost more up front but will be able to get stuck in straight away.

The average starting salaries for graduates across all assessed industries is £24,000 and this rises to £35,700 after three years of experience.

Looking specifically at accountancy, graduates earn an average of £24,760 while those with three years of experience are paid £30,181. The technology, retail, advertising, and legal industries were also assessed.

Legal demonstrated the largest gap between graduate pay and experienced hires, a 59.6% rise, although graduates who go in to legal start on considerably higher salaries of £38,159 than the other sectors.

The cost of training

While graduate salaries may cost businesses less, the amount it takes to get them up to speed with the role and the business is far higher.

The study compared graduates, experienced hires, and experienced employees moving within the sector.

In accountancy it takes an average of 15.6 weeks to train a graduate, compared with 13 weeks for experienced employees moving within the sector and only 6.4 weeks for experienced hires.

The sector with the biggest difference between graduates and experienced hires was retail, where graduates averagly need 24 weeks of training while experienced hires need eight weeks.

How long will employees stay in the job?

Making a new hire is not just about the upfront cost to the company. Businesses must also consider whether someone is worth investing in, including how much value they will bring to the company and how long they will stay.

There is quite a significant gap between graduates and experienced hires when it comes to job expectancy in the accounting industry.

Accounting graduates are likely to only stay for 2.9 years, while experienced hires will dedicate 5.23 years to the business.

Graduates in accounting actually stay around for the shortest amount of time, in comparison to retail, where graduate employees will stay for an average of 4.15 years and experienced hires will remain for 6.48 years.

The biggest gap in job expectancy between graduates and experienced employees is in the legal industry, where graduates are likely to stay for 3.64 years while experienced hires will remain in the role for 6.73 years.

What does recruitment cost?

An easy-to-forget aspect of hiring a new employee is how much the recruitment process actually costs, from advertising the job to assessing candidates and making the selection.

Selection and assessment activities across all sectors cost an average of £1,181 per employee.

The cost of this element of hiring someone new is relatively low in the accounting industry compared with other sectors. Advertising and marketing for roles costs an average of £800, while assessment and selection costs £1,777. This amounts to £2,577 in total.

This is quite cheap compared with legal, which costs £5,191 just for the attraction and marketing element of the recruitment process, though accounting firms must still factor this cost in.

Pension contributions

Employers contribute 3.2% of salary on average as part of their pension schemes. Businesses must take this cost into consideration when deciding whether to employ more people.

To put this in perspective, because law graduates have such high starting salaries, they will cost firms over £5,000 in just pension contributions over the typical 3.64 years they stay in their roles.

Employers across all industries who have three years of experience and spend an average of six years in a job will cost businesses £6,865 in pension contributions.

 

Ian Wright, spokesperson at SmallBusinessPrices.co.uk, said: “Employees can offer so much to companies of any size, but it’s always important to consider the financial impact they have as well.

“Some business owners would rather train someone from scratch, almost like an investment, but the value of an experienced employee is that they can hit the ground running. While these are fairly obvious assumptions, it’s interesting to see the hard figures and how it varies across different industries.”

Hiring the right candidate takes far more than just how much their salary will cost the business. Not only must companies consider the value of the extra costs, such as training and recruitment, but they must also think about how long that employee might stay, how much value they will bring, and whether they need someone who get launch straight in to work.

It is all about assessing each situation individually, and making an informed decision rather than choosing the easy option.

 

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