Introducing a hiring freeze can be a hard decision and, once it’s taken, companies need to be focused on how they communicate it and handle how the workforce responds to it. In this post, we look at what a hiring freeze means and the different reasons why firms introduce one. We also consider the pros and cons of doing so and provide some tips for good communication when a hiring freeze is introduced.
What is a Hiring Freeze?
A hiring freeze is a period of time when a company stops hiring new employees. It is usually a temporary hold on recruitment that includes creating new positions and filling vacant positions (for example, if someone has left their role).
A hiring freeze can be a full freeze (no hiring at all), a partial freeze (usually no new positions but business essential roles will be filled) or department-specific.
How long a hiring freeze lasts usually depends on the reasons behind it. In some cases, there will be a specific time period. In others, it will continue until the reason for instigating a hiring freeze is resolved.
Reasons Behind a Hiring Freeze
A company may implement a hiring freeze for several reasons. In most cases, a hiring freeze allows the employer or company to limit any additional costs (from newly created positions) and to reduce existing costs when the opportunity arises (by not filling vacancies).
Budget concerns
If a company is aware that it does not have the financial resources to continue growing its workforce or even maintain its existing one, it can institute a hiring freeze to control employment costs.
Economic uncertainty
During an economic downturn, such as a recession or depression, a hiring freeze can stabilise costs and help a company handle challenging conditions.
Avoid widescale redundancies
If a company is experiencing financial difficulties, introducing a hiring freeze can allow it to keep close control of its existing costs, which can feed into a management or wider strategy to avoid making a significant number of redundancies.
Organisational restructuring
If a company is developing a strategic plan that involves a significant change in how it is structured, a hiring freeze may be introduced while this work is done to avoid recruiting new roles that don’t exist in the new structure.
Mergers and acquisitions
A company going through a merger or acquisition process may either initiate itself or be asked to start a hiring freeze. If the merger or acquisition goes ahead, roles may be duplicated or not required, so a hiring freeze can stop people from being recruited into roles that are not necessary in the long term.
National or global emergencies
A national or global crisis such as the Covid-19 pandemic may impact their operational capabilities and business leaders may need time to formulate a crisis plan in response. A hiring freeze allows a company to stabilise costs and minimise time spent on recruitment and retention at a time when attention needs to be elsewhere.
Pros and Cons of a Hiring Freeze
While a hiring freeze is usually a temporary measure, by its nature it stops business as usual, which can bring both advantages and disadvantages:
Pros
The pros of a hiring freeze include:
- cost savings from not paying recruitment costs and salaries of the positions not filled
- stabilises outgoings by reducing new expenditure on additional employees
- protects employees from redundancies through reducing costs where possible, which can be part of a strategy to be ensure financial stabliity
- if you do have to make people redundant, having a hiring freeze first demonstrates that you have considered all other options first
- provides a period of time where attention can focus on strategic workforce planning
- can create opportunities for people to take on new or different roles from their current jobs, leading to career development
Cons
Companies implement hiring freezes can experience challenges in in the following ways:
- not replacing employees when they leave their positions can create a skills gap, which can lead to other issues for the business if those skills are essential to the business
- the remaining employees can experience an increased workload and potential burnout from covering the roles that are not being filled
- there can be problems with morale due to the increased workload and anxiety over job security
- the reputation of the brand externally can be impacted if the hiring freeze is not handled well
How to Communicate a Hiring Freeze
When a company implements a hiring freeze, it is important to consider how to communicate with employees. A hiring freeze is often a response to financial distress or concern within the company so it can create a huge amount of uncertainty and anxiety. It can also add to the workload of existing employees, which can impact morale. Good communication can go a long way toward helping prevent issues with morale and employee dissatisfaction.
The following tips can aid communication:
- Be clear on the message: why a hiring freeze is necessary, who it will impact, the plans for covering the work of roles that are not being hired, and how long it will last or the timeframe for reviewing it.
- Use your emotional intelligence skills and be open and honest with your employees. If they can trust that you are telling them the truth about the reasons for the hiring freeze they will feel more secure and able to get on with their work.
- Give your employees a chance to ask questions and give feedback. This will help them feel valued, which can help them through an uncertain time.
- Before you communicate the hiring freeze more widely, make sure that managers and team leaders have a chance to ask questions and understand the reasons behind it. This allows them to reiterate.
- It can be helpful to focus on the message that the hiring freeze aims to protect the jobs of the company’s employees.
- If the hiring freeze directly impacts an employee in line for promotion, be understanding of the impact on them personally and take the time to explain it to them.
- If you are responsible for communicating a hiring freeze to job seekers outside of the company, try to get as much information as possible for the candidates so that they can make informed decisions about their next steps.
