Hiring Freeze and Its Purpose

What Do Employers Accomplish With a Hiring Freeze?

Tell us why we should hire you?
PeopleImages / Getty Images

How Can a Hiring Freeze Help Employers?

During a hiring freeze, an employer decides to stop hiring employees for all non-essential positions. It allows an employer to consolidate current employees and potentially restructure departments to complete the work that is essential for serving the customers of the business.

When Is a Hiring Freeze Necessary?

Sometimes, even the most successful company experiences a downturn. Perhaps a new product launch has failed to produce the desired customer base, or company revenues are down because the rent for your manufacturing facility just tripled. In such a scenario,

it may become necessary to implement a hiring freeze when revenue must be conserved for essential operations such as facilities maintenance, materials for manufacturing processes, and supplies needed to keep the organization operating.

Under these circumstances, when an employer is making efforts to stay in business, hiring employees is, for the most part, not essential to the operation.

Workarounds During a Hiring Freeze

Even during a hiring freeze, smart employers continue to strategically hire in areas where skills and talent are essential to ensure the successful run of the business, and in areas that generate revenue. Often times, these essential employees are consultants or freelancers who work hourly, daily, or weekly and are not paid benefits and have short-term contracts.

But, employers do hire essential employees during a hiring freeze. For example, if you are a software development firm, you will replace a project leader who is developing the next iteration of your key product. That individual's staff, because of the learning curve to bring a new developer up to speed might also be deemed essential. In certain situations, investing in the training of a short term contractor won't work for the long term.

During a hiring freeze, research and development, administrative support, training, and recruitment are key areas that may need to be placed on hold for the short term with no new hires. Of course, if you own a car dealership and it's your busy season, you may need to hire an extra salesperson or two–on a freelance basis, of course.

Lasting Effects of a Hiring Freeze

Another component of a hiring freeze is to put off filling positions that are vacated during the freeze if they are not deemed essential to carrying out the core business of the firm. A hiring freeze, which is normally implemented to cut business costs, or to right-size the business, 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.

How Employees May React

Employers should consider that a hiring freeze can affect current employees in negative ways. Due to a slimmer staff, employees may be required to take on more work or responsibility. They may also need to perform critical steps in work processes when you're not able to fill a vacant position due to a hiring freeze.

The majority of your employees will be willing to work with you to accomplish unfilled jobs and job duties, as long as they know, there is an endpoint. Believing that the additional workload is permanent will negatively affect employee morale at a critical point for the business–when you need help and understanding from your employees the most. This is a time when it becomes incumbent upon you to communicate with your employees and let them know that their jobs, and livelihood, is secure.

Keeping an Eye on Managers During a Hiring Freeze

During a hiring freeze, employers should restrain their managers from adding additional staff in ways chosen to get around the freeze. These workaround situations include such actions as adding temporary or contingent staff, hiring part-time employees with no benefits, and hiring interns.

This is crucial because your regular employees will see right through the managers' ploys and the need for the hiring freeze will then become questioned. Employees will resent having to take on more work, without the benefit of more pay.

The Bottom Line

Implementing a hiring freeze is nothing to be ashamed of and does not spell failure on your part. It is a stop-gap measure to ensure the success of your operation while retaining your most valued and essential employees.