Did business size affect skill utilisation?

6.5.1 Hypotheses

This chapter tested whether business size affected skill utilisation measured by: (1)

whether the graduate used their (a) skills and (b) knowledge developed during their degree at work; (2) the likelihood of being required to use specific skills at work; (3) whether the job required a degree; and (4) graduates’ self-reported job appropriateness. The results indicated that business size did not usually affect any of the four measures of skill utilisation when controlling for occupation, industry and personal background, except in some cases, as discussed below.

H1.Graduates working in small businesses will report different levels of skill utilisation as measured by (a) using skills that they developed during their undergraduate degree, and (b) using subject/discipline knowledge that they developed during their

undergraduate degree, compared to graduates working in large businesses when controlling for occupation, industry and personal background.

There was no evidence that business size was associated with graduates’ responses to using skills they developed during their degree in their job, but there was some weak evidence that graduates were more likely to use the subject or discipline knowledge if they were employed in small or medium-sized businesses. The effect of being employed in small and in medium- sized businesses relative to large businesses was positive and significant in the restricted model, however business size ceased being significant as soon as occupations were added into the regression model. This hypothesis was not supported.

H2.Graduates working in small businesses will report different levels of skill utilisation as measured by the frequency of being required to use specific skills at work, compared to graduates working in large businesses when controlling for occupation, industry and personal background.

The extent to which graduates reported being required to use the eleven skills and

competences varied by the type of skill. The graduates’ responses for being required to use each of the eleven skills were correlated with the other skills in the list. This suggested that graduates reported using some groups of skills together in their jobs. Exploratory factor analysis suggested that either two or four underlying factors could be used to model the underlying structure of skill use. Retaining four factors gave better patterns of skill use than

163 two factors, and was also more closely supported by parallel analysis. The four factors were named ‘creative thinking,’ ‘mobilising own capacities,’ ‘critical analysis,’ and ‘mobilising others.’

Employment in micro, small, or medium-sized businesses was not significantly associated with the creativity factor, but was negative and significant for mobilising own capacities, critical analysis and mobilising others. On the one hand, these results contradict other findings in the literature which suggest that skill utilisation may be higher in smaller firms (e.g. the importance of self-reliance skills in SMEs (Hawkins and Winter, 1996), or that graduates in small firms were less likely to report underutilisation of skills (Nove et al., 1997). On the other hand, the evidence here is consistent with other research (e.g. Salas Velasco, 2010).144

However, there were within-factor differences: when the 11 skills were considered individually, the skills loading on the creative thinking factor had different patterns with respect to business size. Working in small businesses increased the likelihood of being required to use research skills and working in micro businesses increased the likelihood of being required to use entrepreneurial skills ‘a lot,’ but working in medium-sized companies decreased the likelihood for presentation skills. For innovative thinking skills there was no significant relationship by business size. These differences make the results difficult to interpret.

H3.Graduates working in small businesses will report different levels of skill utilisation, as measured by whether the job required a degree (qualification match), compared to graduates working in large businesses when controlling for occupation, industry and personal background.

Business size did have a significant and negative effect on the likelihood of graduates reporting that their job required a degree at the aggregate labour market level, for those

144 _{However, innovative thinking and research skills were investigated further in the Qualitative} phase rather than mobilising others: partly because previous regression model specifications in preliminary versions of this analysis pointed to the conclusion that the likelihood of using these skills was higher in smaller businesses than in larger ones. As discussed in Section 3.2.3 this was a

particular challenge in carrying out sequential mixed-methods research. Aspects relating to the ‘mobilising others’ factor do come through in some of the interviews, particularly in the reasons some graduates employed in small companies gave for changing jobs.

164 employed in micro and in small businesses. These findings held both for any degree type and for specific and general degrees (more so for general than for specific).

H4.Graduates working in small businesses will report different levels of skill utilisation, as measured by self-reported job appropriateness, compared to graduates working in large businesses when controlling for occupation, industry and personal background. Business size did not significantly affect the likelihood of the graduates reporting high job appropriateness.

6.5.2 Discussion

Compared to findings from the Nove et al. (1997) study, which suggested that graduates working in smaller firms were less likely to report that their skills were under-utilised, the Futuretrack sample findings presented here indicated that there was no obvious difference between skill utilisation as measured by the likelihood of using degree skills and knowledge when controlling for the occupational group, industry sector, and personal background.145

Occupation, and to a lesser extent, industry, appear to be the variables which have the most important effect on skill utilisation. This is consistent with Allen and van der Velden’s (2011) findings that the use of degree knowledge at work was primarily associated with ‘classical professional’ and ‘semi-professional’ occupations (these may be viewed as similar to professional and associate professional occupations (SOC 2010), or to expert and communicator jobs (SOC(HE)2010).146

A key finding was that graduates’ perceptions of being required to mobilise their own capacities, mobilise others, and to use critical evaluation were lower for those working in small firms than in large businesses. The OECD (2013) Survey of Adult Skills (PIAAC) reported similar findings: “the use of information-processing skills [reading, writing, numeracy, ICT, and problem solving] increases with establishment size across all the domains,” and co-operation at work (may be considered similar to mobilising others) was

145 _{Some positive association was found with the perceived likelihood of using entrepreneurial skills} and research skills.

146 _{Allen and van der Velden’s (2011) REFLEX study looked at the employment and skill and} knowledge use of university leavers graduating in 1999/2000 five years after graduation in 16 countries.

165 also less commonly found in smaller establishments (p. 166). It should be noted that the likelihood of use of research skills was higher for graduates employed in small businesses compared to large ones. OECD (2013) also found that self-organising skills also did not seem to vary much across establishments of different sizes - this was partly supported by the finding in this thesis that working individually did not vary with business size, but time management, and the factor onto which both these skills loaded, mobilising others, decreased with business size.

Thus, it appears that for graduates employed in small and large businesses, from the perspective of skill and knowledge use there are no clear differences. From the quantitative phase analysis the following questions for qualitative investigation emerge:

 Why was the proportion of graduates reporting using degree skills lower than those using degree knowledge? What do graduates understand by degree skills and knowledge?

 What do graduates understand by research and innovative thinking skills, and how do they use these skills at work?

 Given that high levels of job appropriateness scores did not appear to be affected by business size, were there any skills and knowledge that the graduates wanted to be able to use at work but did not have the opportunity to do so?

Chapter 8 investigates these issues in more detail using a qualitative approach focusing on graduates employed in the associate professional occupations predominantly in the business services sector.

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7

Qualitative phase

The following chapters discuss the findings from 20 interviews conducted with

predominantly highly-qualified graduates from highest- or high-tariff universities, elite graduates,147 _{who were employed in business and public service associate professional} occupations at the time of the Futuretrack survey (SOC 2010 minor groups 354 and 356). Thirteen of the respondents worked in small companies and seven in large companies. For an overview of the graduate interview sample, see Section 3.5.4.2. The interviews explored how these university graduates experienced their jobs and the challenges they faced. The graduate participants were selected specifically to focus on the ways in which elite graduates were able to use opportunities in such businesses and whether there were any differences by business size. The group of interviewed graduates is referred to as ‘elite graduates’ in this Section.

The quantitative analysis in Chapter 6 raised several questions that have been investigated in the qualitative phase of the study. First, what did graduates mean by degree skills and subject knowledge and how did they use degree skills and degree knowledge at work? Second, what did graduates mean by, and in what ways did they use, some of the specific skills listed in the Futuretrack survey (research and innovative thinking)? Third, did their employer specifically recruit graduates? And last, did the graduates think that they had any skills or knowledge that they did not have the opportunity to use at work? These questions are addressed in Chapter 8.

The Futuretrack quantitative analysis presented little information about graduates’ perception of career development (see Section 5.3.5), and so this topic was discussed in the interviews. Chapter 9 presents graduates' accounts of their experiences of work, particularly regarding their early career development in terms of taking on more responsibilities, experiences of promotion and changing jobs.

147 _{See Section 3.3.5.2 for a rationale of selecting these graduates and for the description of the} sample selection process.

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