Hiring Freeze
This occurs when a company is financially tight or heading toward a financial decline.
What is a Hiring Freeze?
Hiring freezes are when companies or employers put a temporary stop to the hiring of non-essential workers in an attempt to save money and cut down on extra costs. Typically this occurs when a company is financially tight or heading toward a financial decline.
There are two ways in which a company can go about implementing a halt to hiring. The first needs to fill opening positions caused by the letting go of existing employees. The second is caused by natural attrition (the natural reduction of existing employees).
The length of these freezes varies and can be very brief or long. Typically they stay at around the 3-6 month range; however, they can last up to a year or surpass that. They are often used for payroll expense growth.
Any company can partake in the freeze regardless of economic status or whether it is going out of business. Successful businesses will implement one if they experience an unexpected cost or loss.
Some reasons may be:
- Faulty product
- An unexpected turn in the economy
- catastrophes
- Other unexpected costs
Despite the freeze in new employees, companies will still do everything possible to maximize company profits with their existing staff. As per the general understanding of economic theory, the firm's primary goal is always to maximize its profits.
Companies may not stop all hiring altogether. If a company needs an essential position to be filled, it will most likely still go through with the new hire. Typically these positions are specialized and/or necessary to meet consumers' demands.
Companies still need to fulfill their basic operations during these times, mainly production, sales, and product development. This may cause issues when staff and people are limited and scarce.
Effect of a hiring freeze
Although this may be best for the company, some risks and concerns have risen.
The biggest concern in freezing employment is the strain and stress on existing employees. For example, when employees need to take a leave of absence or go on maternity leave, no one is hired in their place, so existing employees will have to take on extra responsibilities.
The overcompensating work being put in by existing employees can cause the quality of labor to decrease. In addition, the extra workload might be exhausting the employees and, in turn, causing a decrease in their performance.
Some even say that the extra work under extreme circumstances may cause a decrease in employee job satisfaction and may drive some of the workers out if they aren't being compensated fairly.
An additional consequence of the freeze could be the termination of underperforming employees. Instead of putting up with the slackers, many employers under these conditions will get rid of them to help cut costs.
Some managers might seek ways to get around it during this time. They may do this by hiring interns or part-time workers with no benefits. However, this could annoy existing employees as they may question the initial need for a hiring freeze.
The existing employees will not put up with this as they likely will not receive any compensation for their extra work. They will see it as unfair and may protest or be upset with the company.
A hiring freeze could also bring bad publicity to the company and deter other potential partners and creditors away. The general understanding of implementing a freeze in employment is that it's due to a financial strain, even if that may not be the case.
Hiring Freeze and Maintaining Performance
It is common after the announcement of a freeze that the company sees a decline in performance. Therefore, a company must put forth its best effort to keep morale and motivation to ensure this does not happen.
The productivity and motivation of staff during a hiring freeze are important for a company's long-term health and longevity. However, there are several ways a company can prevent and avoid this; the key is communication throughout the process and before it.
First and foremost, the company must prioritize maintaining composure. Employees may begin to stress once they get word of the new changes and may have fears and concerns regarding their future job uncertainty and the company's financial status.
Management should be open and honest with their team and never make promises they can't keep. It is important to keep the staff updated on the company's long and short-term goals to ease the stress.
Those in charge should also implement some form of employee appreciation or recognition program. This will help keep people motivated and give the employees something to strive for.
Keeping employees updated with the company's status and where it's at in reaching its goals could smoothen the process and ease the nerves of all workers. This would be the most effective way to go about a hiring freeze.
Employees knowing where the company is at in terms of its goals and the stages of the freeze will give workers a sense of purpose. They will feel more involved and as if they are more a part of the company's process and making a difference in hitting its goals.
It is important to understand that everyone likes to feel like they are serving a purpose. Therefore, setting goals to work towards to help improve the company is important for its success.
Recruiter's Role During Hiring Freeze
As we have mentioned, a recruiter's initial role is to halt new job postings and openings when a company is undergoing a freeze. However, a recruiter should do many other things and keep an eye on them during these times.
The recruiter should continue nurturing and staying in contact with potential and existing prospects. It is vital not to cut contact, even given the company's status, so that you keep a good rate with your connections for when the company returns to its normal state.
This is not a time to be ghosting and ignoring people. Rather you should keep communication up to and update candidates on what they can expect next. There are many ways to keep up and ensure communication continues with all our technological advancements.
A good way to do this is through the use of LinkedIn. Linkedin is a social media networking platform designed specifically for professional and business endeavors. Linkedin and other social media apps are great ways for workers to stay connected, updated, and involved.
Another way recruiters can stay busy and improve their methods is by updating and improving their recruiting software. With hiring on pause, there is no better time to dive deeply into the company's recruitment process and work to improve it.
Additionally, recruiters should take this time to prepare for the company's life after the freeze. This will help smoothen the process and ensure that you are fully equipped when the company returns to its current state.
Although the recruiters' usual primary job is stripped, they still have several accessories acts they can complete to improve the company's functionality. Time spent during a freeze should help the company's future.
Hiring Freeze Real-Life Example
When a business decides to halt employing new people to fill open positions, this is known as a hiring freeze. While a corporation may still hire people for vital tasks in this scenario, it forbids the establishment of new roles and suspends any efforts to fill non-essential ones.
Below are some of the well-known scenarios:
Twitter is a well-known and popular social networking and blogging platform where users can interact through "tweets," messages they can post, and interact with other users online or on the app.
Twitter's CEO, Parag Agrawal, recently announced that they were entering a hiring freeze. This is because they are awaiting a pending acquisition from Elon Musk.
Twitter will continue to hire "business-critical" roles. However, they will be pausing most of their hiring and cutting down on other costs.
It is still being determined whether the freeze was due to Musk's acquisition, is expected to close at the end of the year, or just because of the turn in the tech market. Other rival social media sites have also announced that they will enter a hiring freeze.
Musk's got his own goals for the company; the primary purpose of Twitter is to boost subscription counts, that is, if his acquisition follows through. This could lead to laying people off and cutting costs elsewhere.
Some speculation was that Elon Musk needed more confidence in Twitter's leadership team and may have plans to alter some major positions.
That said, the deal has yet to go through and might not. So it is still up in the air, and nothing has been made final.
For more information on the status of Twitter's hiring freeze process, visit the link embedded below.
Meta
Meta is also going through a hiring pause. Many employees now fear layoffs and job cuts are coming around the corner. Mark Zuckerberg assured them that job cuts still need to be a part of the plan. However, he cannot promise it, as projects may need to be changed.
Meta has taken a hit since TikTok has become so popular. Their plan for the freeze is to halt new employees in the engineering sector.
With the growth being down, something had to change, and a hiring freeze was seen as the favored option in this scenario. This is becoming more and more popular among social media platforms.
Job Offers in Hiring Freezes
You may be wondering what happens to the Individuals who have recently applied for jobs and have received job offers from companies that are entering a hiring freeze. Are they an exception? Are they left hanging? What do recruiters say to them?
Unfortunately, this is common and is something that most companies undergoing these circumstances must figure out.
Previously it was mentioned that if a role is essential for production and major for the company in general, the freeze may get overridden. However, it is likely to apply to more common and available roles.
A lot of the time, there is a lot of uncertainty surrounding the duration of the freeze, so in a lot of cases, it is best if the individual begins their search elsewhere for a job. This is not to say that they will not be offered the job after the freeze ends, but they don't know.
The recruiter may go about telling the candidate by saying that the position is temporarily on hold and express that there is a possibility in the future that they may be reaching back out to them for that same position.
They then may ask if that is something they want or if they want to cut contact with the company after hearing the news and the uncertainty it may hold. Each individual may weigh the pros and cons differently and must understand it's frustrating for both parties.
A recruiter could have spent months trying to find the perfect person to fill a specific role. Imagine as soon as that person is found, the company goes into a freeze, and now they cannot fill that role is annoying and frustrating.
It is important for the candidate, if they are still interested, to ask the recruiter to reach out once more knowledge is known or the freeze has ended.
The whole process can be frightful and stress-inducing for all parties. It is important to approach these times with a positive mindset and patience. Employees should be encouraging and supportive of one another.
Hiring pauses can be extremely beneficial and could be just what the company needs to help it get back up on its feet again.
To help stay organized and on top of all the company's numbers, you should check out this course on excel that is free.
Researched & Authored Patricia Brutto
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