THE ambitious student hungry for that job in banking with its enticing salary and bonuses may have to put his or her plans on hold for a while. Many banks are losing their appetite for graduates as the credit crunch eats into budgets.

Fiona Sandford, head of the careers service at the London School of Economics, said: “There has been a certain amount of cutting back in graduate recruitment in the financial sector, which will have an impact next year.

“While many banks are keeping their graduate streams going, they are relying on their interns and looking to recruit only those with specialist skills such as Mandarin or Russian speakers.

“Students who have intern-ships with banks are being offered jobs at the end, which will leave few general graduate jobs for the following year. So while some will still get excellent jobs, from the student perspective it may be a slightly worrying time.” Sandford said that, as a result, the more savvy were already changing their plans, trying to find work in other parts of the sector that have been less affected by the crunch, such as private equity and hedge funds. Others were plotting even more strategic routes.

“Many are widening the types of organisation they are looking at, perhaps working for a professional-services firm and picking up qualifications or joining the finance department of a leading graduate recruiter and then, after a few years, planning to go to a bank as the market picks up again,” Sandford said.

The past decade has been a boom time for graduate recruitment and development schemes.

With survey after survey showing growing numbers of vacancies – up 8% year-on-year since 2000 – businesses have competed to attract the best.

The finance sector has produced some of the most attractive programmes, but graduate recruitment and development is an expensive and time-consum-ing business. As banks look to cut costs in the face of the challenging economic climate, such schemes are tempting targets.

Allied Irish Bank has already announced it has “postponed” its 2008 graduate-development scheme. Other financial institutions are planning to cut back on numbers for their 2009 intake.

However, banks should be mindful of previous bouts of budget jitters. Carl Gilleard, chief executive of the Association of Graduate Recruiters (AGR), said that while it was understandable, shutting down programmes could prove catastrophic.

“There’s an underlying confidence in the concept of recruiting fresh graduates into your organisation and putting them onto structured training programmes to develop the leaders of tomorrow,” he said.

The AGR’s last survey on graduate recruitment, completed in December and published in February, anticipated an increase in the overall graduate-scheme market of 16%, the highest rise for a decade. Gilleard admitted he would be shocked if such growth were repeated in July’s survey.

He believes, though, that most banks will reduce the numbers recruited onto development schemes rather than axe the schemes altogether. “If businesses shut their programmes, past experience shows that this leads to enormous problems further down the line with succession planning,” he said.

“Those that have taken the short-term view and have opted out or severely cut back on numbers, catch a cold when things get better – and they always do get better.”

The technology company Fujitsu ended its graduate recruitment to make savings when it faced tough times at the end of the 1990s. By 2003, however, it wanted the scheme back.

Matthew Staley, recruitment-services manager at Fujitsu Services, said: “We needed to bring high-calibre individuals into the organisation and start looking forward to our future.

“Graduate recruitment requires specialist knowledge and a specialist approach, and we didn’t have the expertise any more,” he said.

Fujitsu had a matter of months to bring in the first 50 graduates by October 2003. So it turned to Alexander Mann Solutions (AMS), the international recruitment firm, to run the operation – from attracting the right students on campus to the selection process itself.

“AMS had the capacity to put people on the recruitment drive and manage the hundreds of applications that came in,” Staley said.

Fujitsu developed an in-house graduate-development programme designed to address the needs of the business. This programme takes over the process from AMS from the day the new recruits turn up for work.

The 18-month programme cuts across job training, providing graduates from engineering to human resources with the same support.

“It’s looking at giving individuals the skills and competences to make them successful in a business the size of Fujitsu rather than the skills they need to be successful in the job they are doing,” Staley said.

“These are the sorts of skills they would not necessarily have picked up if they had just come straight out of university.”

The investment Fujitsu had to make was significant – but that first cohort of graduates is already making its presence felt in the organisation.

“They have really rocketed through the business and some are now in quite influential positions just below the leadership level,” he said.

Clodagh Brannigan, emerging-talent client director at AMS, said that businesses that had cancelled their graduate-recruit-ment schemes around the year 2000 subsequently found they did not have enough good graduates in middle management. Their experience provided a cautionary tale for today, she said.

In some sectors, such as IT, telecommunications and engineering, recruitment was strong – some firms were doubling their intake over last year.

Brannigan said, though, that the investment banks and other financial-sector firms among AMS’s clients had been talking about cutting budgets for graduate recruitment in 2009 by between 10% and 20%.

Before the credit crunch, they had been expecting to boost numbers by the same amount. Furthermore, none would be embarking on the usual June “top up” campaigns to bring in additional numbers.

“Everyone is looking at their budgets,” Brannigan said.

“But none of my clients has said that it will not be recruiting graduates.”

FIND OUT MORE

The Sunday Times Recruiter Forum is a platform for employers and industry experts to communicate with job candidates. They can share best practice and discuss the issues affecting recruitment and retention. Each week, forum members will appear here and at timesonline.co.uk/ recruiterforum, where readers can also have their say.

To find out how your organisation can be involved, contact Brendan Jones at brendan.jones@newsint.co.uk

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