It will also give tips for both employers and employees when faced with a hiring freeze.
What Is a Hiring Freeze?
A hiring freeze means the head of the company, top management, the Board of Governors or the manager has halted appointing any new employers or positions to the company. The reason for a hiring freeze is primarily financial. For example, if a company has exceeded its quarterly or annual budget on spending, or it is making minimal profit or even a loss. A hiring freeze may also happen to maintain employee morale if the employer has had to restructure the company and lay off staff in the process; therefore, they may instill a hiring freeze for a period of time as respect to current employees. This commonly means not filling any empty positions or hiring anyone for non-essential roles.
What Are the Different Types of Hiring Freezes?
There are different types of hiring freezes. A total hiring freeze means a company would not employ any new people, as well as no maternity leave cover or replacements for people leaving the company. Freelancers or subcontractors might not continue working for the company while the freeze is active. A partial hiring freeze may mean management has only decided to appoint essential new roles but not replace people leaving or on maternity leave. Or it could be that the freeze is only happening in one part of the business. Commonly, a hiring freeze is only for a certain period of time while the company recuperates its finances. Some businesses may put a permanent freeze on recruiting, though. Even the most successful companies need to employ a hiring freeze at times, even if it is to conserve budgets and costs, and it can be a positive for the company. However, it can have a negative effect, particularly where current employees are concerned.
What Are the Effects of a Hiring Freeze?
It is important to look at the bigger picture when a company decides on a hiring freeze. Here are the positives and negatives:
Positives of a Hiring Freeze
Employees See a Cost-Conscious Company
Whether you are an employer or employee, it can be viewed that a hiring freeze is great for a business in terms of showing its consciousness towards preserving costs and budgets. By only employing essential workers, money can be spent elsewhere, such as developing products, services or current employee training.
Current Employees Are Valued
If a company is not hiring any new roles, it can show current staff that they are valued and capable without the need for extra workers. This can be good for morale. Hiring freezes can be advantageous to current employees as it may mean that a certain role is given to a current employee and more promotions happen in-house. This could be a management role, or certainly one with more responsibilities.
Focus on Current Relationships
Without new staff joining the company, current professional relationships and teams can be developed and nourished more.
Negatives of a Hiring Freeze
As with all situations, there are negatives to the positives. Here are some disadvantages of a hiring freeze:
Uneasiness for Employees
Understandably a hiring freeze can leave current staff worried that this could lead to redundancies. If there is a financial strain in the company, it could worry staff that it is going to get worse, so it’s important for management to reassure employees this is not likely to happen.
More Workload
If the hiring freeze includes not replacing or filling positions, it will mean a bigger workload for current employees. There may be a restructuring of roles and tasks, and resources may feel stretched as there is the same amount of work but fewer people working.
General Low Morale
As well as the fear of losing their jobs, the company’s employees may have low morale. It wouldn’t be unusual for them to feel that the company could cut costs somewhere else in the business rather than losing or not replacing staff. Here are some key tips:
Announce and Communicate the Hiring Freeze Properly
Communication is key, and announcing the freeze to current employees with transparency and conciseness is imperative. The manager or owner should be the one to announce the decision to staff, whether it is in an email or in person. Being honest and giving reasons for the freeze will help employees to understand why this is happening and how it is a positive for the business. The announcement should be explicit about what the future will hold and how the freeze will help the company and employers. Once the announcement has been made, managers and owners should be accessible to answer any concerns employees may have and reduce any worries of job cuts. Equally, employees should ensure they ask any questions they feel have been unanswered, such as what it means for their workload or role. Take the time to read up on hiring freezes and how they can be a benefit for the company, read testimonies from previous employees to put any concerns at ease.
Freeze Management’s Bonuses and Pay Rises
It would be wise for management to forego or freeze any bonuses and pay rises due to them during the hiring halt. If employees see higher management or directors getting their pay increased in any way, it will lower their morale and perhaps even make them lose faith in the business. It contradicts the businesses’ reason for the hiring freeze in the first place.
Keep Morale High
It is important for morale within the business to stay high, or at least good. Businesses could reward staff for their extra hard work or flexibility to the new way of working, with non-financial rewards and recognition. Regular updates and communication to employees are also recommended, so they feel they are part of the process. If employers and employees can work together during a hiring freeze, it will work significantly better.
Final Thoughts
A hiring freeze can be a quick and effective way to conserve or cut costs for a business, and even successful companies use this tool. It can get a business back on track or allow it to develop in other areas. However, a hiring freeze can sometimes affect the company negatively, with employee morale becomming low and staff leaving who are worried about their future prospects. It can also mean over-stretched workers and low-quality productivity. Managers and owners should look at all the positives and negatives of a hiring freeze before executing and ensuring it is the right decision for the company.
