What is a Hiring Freeze? A Few Smart Things Recruiters Must Do During Hiring Freeze

Introduction – Hiring Freeze

A hiring freeze is a temporary situation where companies may stop hiring new employees to cut costs. The company initiates a hiring freeze to assess where it is going in the market and then slow down its expenditures and evaluate which parts of the business are fundamental.

And for recruiters, it means canceling all the open roles and putting a halt to evaluating or accepting new applications for some time for that specific client.

But that does not mean talent acquisition activities pause completely.

Hiring freezes begins with putting a hold on hiring and hiring-related activities for the client and as a recruitment firm that has frozen new hires in the following activities primarily-

• Sourcing
• Screening
• Interviewing, and
• Hiring

What is a Hiring Freeze?

A hiring freeze refers to the condition when companies stop hiring new employees for open positions, and in this situation, a company might continue hiring candidates for important roles. It halts the efforts to fill non-essential roles and prohibits the creation of new roles.

Why Companies Implement Hiring Freezes

During a hiring freeze in an organization, an employer decides to stop hiring employees for all non-important job positions because of unexpected economic instability or financial issues. It allows the employer to consolidate current employees and then potentially restructure departments to complete the work that is essential for serving the customers of the business.

1. Changes in Market Conditions

The paradigm shift in market conditions can have a notable impact on revenue generation and the overall profitability of a business. An example of this can be a downturn in Amazon and Meta, for example. Among other employers reducing headcount with layoffs concentrated in the tech industry, there are several other major employers who have slashed jobs in response to concerns about slowing economic growth, rising interest rates, and high inflation. All firms directly involved in the manufacturing, distribution, or value-added services, might implement hiring freezes with the aim to counter the impacts of the changing market conditions.

2. Global Emergencies

Business and company leaders may implement hiring freezes to protect company finances and keep the business operational. 

Let’s understand with an example. The current example of the COVID-19 pandemic outbreak has affected many businesses. This crisis has impacted businesses all over the world negatively. During this crisis time, businesses delayed onboarding new employees and continued to monitor global markets and trends. During the pandemic time, employers become more conservative and prudent and ensure that they can at least keep their current workforce.

3. Budgetary Concerns

If the hiring process and paying new employees has the potential to cause overspending, company leaders might halt recruitment. The company might decide to delay the hiring of candidates until they’ve improved the financial situation of the business. 

Budgetary concerns may also tend to layoffs of temporary or permanent employees due to a lack of budget and work. During layoffs, company leaders might freeze the hiring to save funds, preserve the fiscal stability of the business and avoid having to conduct layoffs.

4. Emerging Liquidity Concerns

When an employer is uncertain if the company is maintaining enough liquid assets, the employer might stop the efforts in hiring. And in that case, they can allocate the same portion of the recruitment and salary budget to improve the company’s liquidity.

Hiring freezes make companies minimize filling non-urgent job roles. With hiring freezes, an employer shall be able to reorganize work teams and integrate staff and team members to achieve greater productivity in delivering necessary products and services to the consumers. After implementing a hiring freeze in an organization, a business’s objective remains to increase its profitability.

How Does a Hiring Freeze Impact Employees?

A sudden pause on hiring new employees might lead to an increased workload on existing employees as the existing work might become the responsibility of existing or new employees that can only be allocated to them.

Similarly, a hiring freeze can result in overworking employees and can affect their work-life balance negatively and result in a negative impact on morale and employee productivity in the long term, it might ultimately cause more employees to leave the company.

Effects of a Hiring Freeze 

Any hiring freeze is done to put off filling positions that are vacated during the freeze if they are not deemed essential to carry out any business activity of the firm. A hiring freeze is normally implemented to cut business costs for the right size of business. It is a less dramatic alternative to employee layoffs. Many employees will tolerate the uncertainty of a hiring freeze to save their own jobs and those of their coworkers and friends.

Final Words

The hiring freeze is a stop-gap measure to evaluate the success rate of the company and operations while retaining their most valued and essential employees.

Team NLB