Back to the Future: Cream of the Crop Fed Peanuts
By Sheffield Consulting Group director Tony Forsyth
National Business Review
Wednesday, 7 November, 1990
Sheffield Consulting Group director Tony Forsyth laments the lack of rewards for graduates.
Five (long) years ago, at the height of the Rogernomics-inspired deregulatory boom, the clamour from commerce and industry was for graduates, graduates and more graduates. Companies and professional firms went to extraordinary lengths to woo and to secure young talent – cocktail parties, audio visual presentations and “please sign on the dotted line”. Now, graduates are lucky if they get half a glass out of a bag-in-box and “please don’t take away the glossy brochures, they cost money”.
Since the 1987 crash there has been an unprecedented and massive squeeze on graduate recruitment. It was bad in 1988 and 1989. It is much worse in 1990.
Some may say that it is market forces at work. But how can you expect market flexibility from a productive unit – the universities – that takes three years and more to fashion its product – the graduate. Three years ago, the brightest of our school leavers heeded the signals and enrolled in marketing, economics, accounting, engineering and the law. Now there are simply not enough jobs for them. At a time when the universities are turning out increasingly relevant and better quality product, there is nowhere for them to go. Apart from overseas. Or on the dole. Groan, ye taxpayer, groan.
Education, which translates into a high-quality human resource, is the life blood of commerce and industry in a successful economy. Germany and Japan demonstrate that.
Today’s university graduates are tomorrow’s captains of industry. Yet it seems that this year, only the accounting profession is taking the medium term view and recruiting in any volume, thus shouldering its share of the responsibilities for training tomorrow’s executives. The other major employers – banks, the legal profession and the manufacturing sector – are simply not employing graduates in anything like past numbers. Particularly worrying for New Zealand is the lack of much interest in employing those with marketing training. If any country needs marketers, that is this country.
The pressure of competition for available jobs is intense. A recent Sheffield recruitment exercise for one of the few wholesale banks which still has a graduate programme, had more than 130 applications for three jobs. They were of such a high standard that more than 45 screening interviews were necessary. Finally, it was top grades, relevant disciplines, all-round achievement and clean shoes that determined the winners. We are now advising many undergraduates to seek a career start overseas and return in two to three years’ time, when hopefully the market improves.
The poor graduate recruitment market is keenly reflected in salaries. Fortunately, the graduates are showing real market flexibility. At the height of the boom, top graduates could expect a starting income in the high $20,000s through to the low $30,000s. Sheffield’s top graduate appointment in 1986 was at a level of $32,000 and a BMW. Practically the first question that was asked was “What’s the salary?”. Negotiations would then start between competing offers.
Now the graduate salary range is more like $21,000 to $25,000 with the high 20s only tested in exceptional circumstances. And they don’t haggle. Not a little bit. Discounted for inflation it means a real drop in the order of around 50%. That’s labour market flexibility…
In recent years the institutions of higher learning in this country have responded well to the call by industry for post-graduate business qualifications, such as the MBA. They are now producing MBA graduates in quite large numbers. Unfortunately, there are simply not enough opportunities available. Some who sacrificed a year or two out of their careers, not to mention the financial costs, are finding that the effort was just not worth it. The lack of senior opportunities means they can’t step up to a broader general management role. They are generally stuck with a more senior specialist job and so can’t put the MBA to use.
The lack of graduate recruitment may meet short-term cost-cutting objectives. But it has a real sting in its tail for New Zealand in the medium term.
If today’s school leavers heed market signals, they will turn their attention again to esoteric academic pursuits such as Greek history or the culture of the Eskimos. Business will be the loser.
Businesses must take a medium-term view and provide opportunities to graduates, practically, as a matter of course. With starting salaries now at the clerical level and graduates grateful for any experience or opportunity, surely it makes sense. Or are we to return to past days when New Zealand exported, in addition to wool and meat, the cream of its human resource.
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