In this guest post, Caroline McDonald of SME-focused bank Aldermore discusses how small businesses can prepare themselves financially before hiring apprentices, and how they can ensure their new recruits get a great learning experience.
With skills shortages causing concerns for many UK industry sectors, a growing number of employers are exploring the opportunities of apprenticeships and considering establishing apprentice schemes.
Before establishing such schemes, businesses must meet a number of different requirements and ensure they provide a strong learning environment.
Apprenticeships can be fairly straightforward to implement for larger businesses with the necessary funding and resources. However, smaller companies with limited time and finances may find committing to an apprenticeship scheme more challenging.
The minimum wage for apprentices currently stands at £3.30 an hour, but employers have the option to pay more than this if they wish. The amount an apprentice will be paid can depend on a number of factors, including the industry sector, region and apprenticeship level. As well as ensuring all apprentices are paid no less than the minimum wage, employers must also ensure they are paid for any time they spend at study sessions or classes at a college or training provider, if these form part of the apprenticeship.
Employers should refrain from just viewing apprentices as a way to grow their workforce on a budget; they need to make sure they take training costs into account while providing a valuable learning experience for the apprentice to develop a career.
It is also worth noting that employers have a contractual agreement with their apprentices, meaning they cannot decide to make them redundant if circumstances change and they feel unable to fund the scheme anymore. Because of this, financial planning is necessary to guarantee the sustainability of the apprenticeship scheme.
If a business intends to implement an apprenticeship scheme, consideration should be given to the financial implications that employing an apprentice could have. By budgeting accordingly, businesses can start to create an “apprentice pot” whereby funds can be held in a specialist business savings account that pays typically higher interest rates than current accounts. Some business accounts allow savers to choose the date of maturity so they have better control of their savings.
Applying for grants
Employers who meet certain criteria will have access to grants if they choose to take on an apprentice. Normally, if a company has fewer than 50 employees and takes on an apprentice between the ages of 16 and 24 they will be entitled to a grant of £1,500. Businesses that are eligible can claim grants to support up to five apprentices.
Employers can also apply for funding to cover the cost of an apprentice’s qualification. The amount of money a business can apply for will vary depending on the candidate’s age.
Providing apprentices with a mentor
Guidance and mentoring is an essential part of any apprenticeship scheme, as Mike Johnson, group training manager for Gelder Group explains: “To look after an apprentice you need to have a dedicated person to be their mentor. And over the last three or four years, most SMEs haven’t had the spare people to do that.”
As well as providing mentors, there are a number of other practicalities that businesses must take into account, such creating apprenticeship agreements that cover the course length, levels of training, and target qualifications.
“It’s not the risk factor that puts many SMEs off, it’s more the time factor,” Mike Johnson adds.
The mentor chosen doesn’t have to be an employee, which can come as a relief to businesses that are already faced with stretched resources. Businesses can seek assistance from a third party training provider that will be able to give hands-on support to an apprentice.
The benefits of apprenticeships for SMEs
In 2012, Holts Group CEO Jason Holt was commissioned by the Department for Business, Innovation and Skills to lead an enquiry that investigated ways to make apprenticeships more accessible to SMEs. This enquiry led to some important changes in the way apprenticeships are now managed.
Prior to the enquiry, only 10 per cent of SMEs offered apprenticeships, but this figure has since risen. In fact, a 2014 study found that 20 per cent of SMEs were planning to take on one or more apprentices within the next 12 months.
“I think the big picture we are seeing is a cultural shift in the mind of the small business owner,” Holt commented, adding: “When taking on a new person, they are more likely, I feel, to think of an apprenticeship than ever before. And not just employers in the manual trades but, crucially, in areas that are newer to the apprenticeship arena like IT and hospitality.”
When a business decides to offer an apprenticeship scheme they can see any number of benefits, from tackling skills shortages to helping employers provide individuals with the company values and goals needed to succeed.
“We first looked into getting an apprentice quite late in 2012,” commented Alice Prescott, sales and marketing executive for IT support and consultancy firm The Oxford Knowledge Company. “We’re a small business and our main values are continual progression and learning so it makes sense to have someone on board who’s got the same kind of ambition.”
After recruiting two apprentices, The Oxford Knowledge Company saw a number of benefits, with Alice adding: “It’s really great because it means our more technically qualified consultants are freed up for more advanced projects if required, and we haven’t looked back.”
As skills shortages continue to pose a problem for nearly a third of SMEs, could apprentices hold the key to long term business success?
Founded in 2009, Aldermore is a modern, SME-focused bank which challenges the established view of what banking should be. They deliver award-winning business finance, mortgages and savings to Britain’s SMEs, homeowners and savers.