Everything You Need to Know About Hiring Freezes

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Heather K Adams734
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  • A hiring freeze is a hold on hiring any new employees, typically undertaken when a company experiences sharp financial difficulties or an outright decline.
  • Some organizations will amend this definition, limiting the freeze to "non-essential" personnel, or filling the position through lower-cost temp agencies or freelancers. 
  • The effects of a hiring freeze, and what it says about a company, can linger, impacting both current and potential employees, as well as the reputation of the business itself.

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What's the purpose of a hiring freeze?

An organization institutes a hiring freeze when it's looking for a way to save money when business takes a downturn. The costs of employee salaries and benefits are usually the biggest expenses a company carries, after all. So when the pinch is on, this is an inevitable direction toward which it will direct some of its money-saving efforts.
An argument can be made that a hiring freeze is the healthier alternative to laying off or even terminating the employees a company already has. But it's still a problematic decision. For one thing, a hiring freeze places a burden on those existing employees by forcing them to take on work that would have otherwise been the purview of new hires.

What happens during a hiring freeze?

Hiring freezes begin at the executive level, with employers first deciding if a freeze is an initiative they want to undertake, and then defining its parameters. Is this to be a complete freeze, with absolutely no new hires? Or will they limit it to those "non-essential" positions, such as support staff? As far as length is concerned, temporary freezes lasting about 3-6 months are not uncommon. But others can be put in place for up to a year, or even longer.
When a company announces a hiring freeze, they're basically hanging a Do Not Enter sign on their (virtual) front door. Would-be applicants seeking long term employment turn their attention elsewhere. However, if a company has decided to source temporary staff from agencies or freelancers, they'll add that to their announcement. So while full-time employment isn't an option, temps and gig hunters might be able to get at least a foot inside that mostly closed door.
For a company's existing employees, a hiring freeze is a kind of limbo. With little to no new staff coming in, employees are left to manage a workload that may become difficult and stressful to keep up with. Undue strain can affect morale during even a brief hiring freeze, and under a longer freeze can cause burnout and resignation. 
No new hires also means no possibility for advancement inside the company. After all, you can't be promoted if there's no one available to fill the position you'd be leaving open behind you.

Long term effects of a hiring freeze

A freeze is a stop-gap measure, a quick way to save money. And from a straight bottom-line perspective, it's effective. But money isn't the only thing a business needs to succeed. It also relies on its reputation. Reputation is crucial to building customer loyalty, of course, but it is just as essential when it comes to finding, and keeping, quality employees.
A hiring freeze communicates that a business has problems, be it poor management, a history of unwise financial decisions or simply having over-extended itself. Whatever the source, "hiring freeze" carries a stigma that says "caution: unhealthy business." While a company can massage the appearance of their situation, it's still difficult to avoid at least a bit of a ding to their reputation.
Job seekers are especially sensitive to company reputations. Who hasn't checked out a potential employer's reviews on a job search board? And then, based on a ton of bad reviews, decided to pass on an interview? Exactly. The feeling that a company is shaky on its pins is pervasive, lasting long after a freeze has thawed. So even when a business takes down that Do Not Enter sign, it could be quite a while before worthwhile applicants come knocking again. Reputation and trust take a while to rebuild.
For employees inside a freeze, that sense of security can be the first thing to go. And wondering about the state of their company will only compound any added strain from an increased workload.

The myth, or maybe truth, of the holiday hiring freeze

So what about holiday hiring freezes? That period from late November through New Year's is often rumored to be a wasteland for job seekers. Is it true? The answer: yes and no. Some companies may not hire during the holiday season, largely because there just aren't a lot of applicants. Most people are focused more on family and the holidays than finding a new job.
The exception to this kind of hiring freeze by default goes back to the temp and freelance types of jobs (seasonal positions). Sales and service businesses in particular often bring on extra work during the busy holiday season. And there's always a chance one of those gigs could lead to a more permanent position within the company. The holiday job search is not quite as doom and gloom as you might have heard.

Last word

Hiring freezes are double-edged swords. On the one hand, they're an immediate and effective way a company suffering financially can save itself some money. In that respect, a hiring freeze does exactly what it needs to do. On the other hand? Instituting a freeze can strain and stress current employees, and discourage future potential applicants. A holiday hiring freeze isn't the same animal, but it does share the fact that in both situations, temp workers and freelancers can work a freeze to their advantage. Freezes deter job seekers oriented toward full-time employment, yes, but not those working in the gig economy.
So while the term "hiring freeze" is at least a yellow cautionary flag to most, a little flexibility and a willingness to try the temporary route could still get you through the door. If, that is, you decide it's a door worth trying to open.

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Heather Adams is a writer and a photographer. Find her on [email protected]