Hugh Thompson charts the relationship between graduates and SMEs.

We are schizophrenic about graduates. A recent poll of more than 200 major graduate recruiters at a conference of the Association of Graduate Recruiters shows that most think the increase in numbers of graduates is affecting their quality. This survey also shows only 38 per cent agree UK universities are producing the right skills for employment and nearly half feel the UK is producing too many graduates. On the other hand, such is the complexity of more and more jobs that more employers from organisations of all sizes are demanding graduates.

For small and medium-sized companies without either the reputation, the training facilities or the ability to pay large starting salaries this represents something of a problem. However, increasingly, smaller companies are not only the main source of new jobs in the economy they are the main source of new graduate jobs. At present only eight per cent of those working in SMEs are graduates against a total graduate population of 13 per cent.

The very number of graduates does give SMEs their opportunity. While 35,000 undergraduates showed an interest in becoming accountants, the big four lankly recruited 3,500 this year. That means there are an awful lot who are potentially ready to listen to the overtures of smaller accountancy firms and others in the financial services industry.

Between the ages of 20 to 24, two in five graduates are in non-graduate jobs. This goes down to one in five by age 29 and less than one in ten by age 35. So many graduates pass through seemingly dead-end jobs which are unstructured in a career sense, often in smaller companies, on their way to 'proper work'. Though, of course, that isn't the only story. Not all non-graduate jobs are dead ends. An individual becoming a well-paid builder or salesperson instead of a badly-paid (graduate) publisher's assistant or a political researcher may be making a very sensible career move.

But these so-called dead-end jobs may well be with small companies. As more students realise they can't all get into blue chip graduate training schemes, they are casting their net wider to include smaller companies. As more companies realise not all graduates are work-shy dope fiends but bright young things looking for a chance, so more are seeing graduates as an opportunity rather than a problem. Not least as the graduate population widens so more and more people running small companies are themselves graduates who realise the potential of better-educated workers.

Dr Luke Pittaway, Lecturer in Entrepreneurship at Lancaster University, has done a study of graduate experiences in small and medium-sized firms. He says: "Although most are initially employed at non-graduate levels, there are two very distinct groups. The small firm which is growing fast is very positive about employing graduates in non-graduate roles. They see the upgrading process as part of their growth force. The firm and the graduate grow together. However, there are many more small firms who are not growing who see the employment of graduates as a waste of time. There is a big difference in working for a small growing firm of 50 people and working for one that isn't growing which only employs ten. In the smaller, stable company, the owner-manager tends to do all the graduate work himself."

However, not everyone is so positive. Janet McLaughlin is Operations Director of Pertemps, a 200-branch recruitment agency which has a staff of 1,800 and every week sends out 25,000 permanent and part-time workers into the marketplace.

She says: "The attitude to graduates has changed over the past ten years. A lot of degrees are pretty soft in vocational terms. What organisations are looking for is drive and commitment which will translate into value - that does not come automatically with a degree. Nevertheless, more of our work, because of legislation and so on, does require a level of education and understanding. However, five years ago we did try a graduate recruitment scheme for our managers but we gave it up because we found it made no difference."

In a recent survey put out by Reed it was shown that 50 per cent of workers who had been promoted did so by taking on more tasks in the organisation while nearly 20 per cent got promoted because they asked for it. Both categories would seem to fit the graduates working in jobs where they are underused and can therefore take on more responsibility and, given their higher estimation of self, are more likely to ask for promotion. That is, graduates may grow your firm in their efforts to grow themselves. Typically a graduate may take on a job in a shop and find he or she has something of a flair for the business and be quickly promoted to becoming a manager Mike Hill, Chief Executive of the agency Graduate Prospects, says: "Many who run small companies still have a prejudice about graduates. They feel they are expensive, naive, know nothing about business and are potentially disruptive. In fact 40 per cent of graduates are over 25 and even those who are 21 have probably been working at summer and evening jobs for five years, not to mention work experience while they were at university. Only around 20,000 of each year's 300,000 graduate population get into blue chip graduate training schemes. Many of the rest know that they should take what they can, whatever the size of the company. Many know that they will be starting on salaries of around £14K."

"Research over the past 25 years has been remarkably consistent. It shows that eventually 90 per cent of graduates, even with the increasing population, get graduate jobs, although the increase in numbers is reflected in a narrowing differential between their wages and the rest of the population. In small and medium-sized companies, where many graduates doing non-graduate work start their careers, opportunities exist and are spotted both by management and the graduate. Many graduates don't know what they want to do when they leave university and that is no bad thing."

Many work-experience students return to the same company for employment on graduation and, with surveys showing ever-increasing salaries on offer in the larger graduate schemes, an effective work-experience placement is one way in which SMEs can compete with the bigger employers for the next generation of graduates. Work experience is a win-win situation: students gain essential experience and employers gain a helping hand.

The logistics, however, can often be a stumbling block for smaller firms. How do companies actually go about attracting a student? How do they ensure they get the most out of them while they're there? A toolkit has been designed by the National Council for Experience with just these issues in mind. It aims to break down the barriers, to the benefit of smaller businesses and students alike. The toolkit is available from National Council for Work Experience at a cost of £15 plus postage and packing.

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