The benefits of employing apprentices for small companies

At the start of National Apprenticeship Week, Peter Done looks at the practicalities of taking on an individual.

At first glance, hiring an apprentice may seem like a costly way to fill a position compared to hiring a candidate with the necessary experience and qualifications. However, this isn’t necessarily the case, as according to a 2015 report by the Centre for Economics and Business Research, UK businesses could see a possible increase in revenue of £18 billion from apprenticeships alone.

It is important to note, that any business can benefit from having an apprenticeship programme as they are a tried and tested method of training new staff. Apprenticeship schemes provide the opportunity for employees to be brought into the workplace with the specific objective of developing the exact skills required by the business in question. Additionally, employers should be aware that apprenticeships are not utilised solely for new recruits, but can be implemented as a means to ‘up-skill’ existing employees into higher job positions.

If your business is experiencing a skills shortage, training a staff member to increase their knowledge and skill level can help alleviate undue pressure on the business, while giving you a significant competitive advantage in your sector. If you do not currently offer an apprenticeship scheme, monitoring and analysing skills or staff shortages within your business can help you identify whether hiring apprentices could be part of the solution to solving this issue.

While some employers may feel discouraged by the additional financial strains felt by training an individual from the ground up, alongside the need to cover a mentor’s workload during this period, they needn’t be as businesses can receive funding from the government to support apprenticeship programmes. This has been put in place as a measure to make apprenticeships more widely available by offsetting the cost to the business. Usually this funding covers the cost of the training, leaving the salary to be paid by the employer.

Related: A small business guide to taking on interns and apprentices

This is generally less costly than hiring an applicant with experience, as apprentices under the age of 19 or in the first year of their apprenticeship are entitled to a minimum level of pay under the national minimum wage (NMW). The NMW for apprentices is currently £4.30 per hour – compared to £8.36 for an employee aged 21-22 or £8.91 for those over 23 (2021 figures). This can work as an advantage for SME’s which cannot afford to pay an adult wage to numerous employees. It will allow them to employ a person for the role at a fraction of the cost through the tough economic climate.

Another advantage is that you can tailor apprenticeships to fit your organisation and the specific job role you are looking to fill. This makes them a flexible way to strengthen your workforce, whilst meeting the demanding needs of your business. Apprenticeships can be particularly helpful for small to medium sized business or start-ups by introducing fresh ideas, knowledge and talent into the business, encouraging positive growth, while adding a competitive edge.

As apprenticeship schemes are generally open to a younger age group, it can bring generation specific knowledge to an organisation, as well as a different perspective on industry specific issues. Adding an extra level of diversity to your workforce will in turn help you to diversify and/or widen your range of customers and clients through innovation and out of the box thinking.

Many employers feel that apprentices can increase the productivity of their organisation through exchanging ideas with more experienced staff and offering feedback. Moreover, as they are fully employed, you can task them with responsibilities which can have a direct boost to the staff productivity and performance.

Along with all the aforementioned benefits, apprenticeships can have a positive impact on your employee retention. Reducing costs due to staff turnover can significantly reduce the total costs to your organisation. An apprenticeship can be a great way to assess the suitability of a candidate; it can be like an extended review period allowing you to retain only the talent which you need. Developing your talent management strategies to allow your employees/apprentices the opportunity to grow and develop within the company will build a strong employment relationship which will encourage them to remain with the company leading to a more motivated and satisfied workforce.

Young adults believe apprenticeships restrict career path

More than one in five young adults believe taking the route of an apprenticeship means you’ll have to work in that industry for life, research finds.

The study, conducted by Positive Outcomes, questioned 227 young adults aged between 16 and 24, as part of research ahead of 2016 Apprenticeship Week.

Kelly Ball, joint managing director of Positive Outcomes says, ‘The apprenticeship star is on the rise, but a big element holding apprenticeships back from becoming the go to educational career route is the misconceptions that surround them.

‘One of the more surprising we uncovered during our research indicated a fifth of prospective apprentices believed their career path was set in stone were they to take up an apprenticeship. This certainly suggests that work needs to be done to dispel these myths!’

Respondents to the study were asked “Why do you think young adults are put off by the idea of doing an apprenticeship?” and asked to select from a list of potential options, ticking all that applied.

In addition to the 22 per cent who think doing an apprenticeship meant they had to work in that industry for life, the study also reveals that 88 per cent feel ‘wages are too low’.

Some 41 per cent are concerned apprenticeships ‘aren’t seen as a proper job’, while 30 per cent assume they’d be ‘earning more after going to university’ than through doing an apprenticeship.

Ball adds, ‘Apprenticeships have long been associated with the stigma of poor wages, and it’s clear that stigma is still firmly in place. People need to realise though that in 2016, this simply isn’t the case.

‘Many apprenticeship providers are keen to bring in the right talent at a young age in order to nurture their abilities. You’ll often find employers are willing to pay more in a competitive marketplace.’

She adds that it is also important to bear in mind there are no associated costs with an apprenticeship; you are literally paid to learn, so elements such as university tuition fees aren’t a factor.

‘Competition for graduate jobs is fierce, but apprentices have invaluable practical experience which simply can’t be replicated in any other learning environment.’

UK Apprenticeship Stats

  • In the decade 2010 to 2020 there were 4,588,800 apprenticeship starts.
  • For 12 month period May 2019 to May 2020, Higher Apprenticeships accounted for over a quarter of starts (25.6% or 82,500 starts) while Intermediate and Advanced apprenticeships accounted for 74.4% of starts (240,100)
  • For same period, under 19s accounted for 23.6% of starts; 19-24s for 29.5% and those aged 25+ made up 46.8%

[Article updated in January 2021)

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Peter Done

Peter is the founder and group managing director of Peninsula Business Services, established in 1983.

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