Definition:
Hiring freeze refers to when employers stop filling vacant positions within the company. They may halt hiring temporarily or permanently. During the freeze period, the employer will stop creating new jobs.
How does a hiring freeze work?
A hiring freeze occurs when employers press the stop button on hiring new employees and filling vacant positions. The freeze can be an alternative to mass layoffs and unpaid leave or in addition to reducing the workforce. The company owner may also take other cost-saving measures such as limiting salary increases, canceling bonuses, or reducing benefits and perks.
Examples of hiring freezes
In 2022, the parent company of Facebook, Meta, imposed a hiring freeze across most teams after a decline in quarterly revenue and profits. The New York Times reported that the hiring freeze would affect engineers and some data scientists. Additionally, Meta’s CEO Mark Zuckerberg announced budget cuts and workforce reductions.
Other tech companies also instituted hiring freezes and laid off workers or reduced expenses in other ways in 2022. For example, Coinbase canceled job offers, and Amazon announced a hiring freeze and layoffs.
How does a hiring freeze affect workers?
Hiring freezes affect workers in ways that go beyond the obvious issues of fewer job opportunities and smaller teams to achieve company goals.
Impacts on job seekers:
- Withdrawal of job offers: During a hiring freeze, employers may withdraw job offers they had made to candidates that they would have honored if not for the freeze. This is generally legal. In most cases, a company can withdraw a job offer for any reason – or for no reason at all.
- Fewer opportunities: A hiring freeze at several companies may mean fewer job options if you are looking for a new position.
- Less negotiating power: If enough companies in your industry implement hiring freezes, you might find your negotiating power limited. Over time, this can lead to lower wages and slower career growth.
Impacts on current employees:
- Promotion freezes: While not every hiring freeze is absolute, many employers will also freeze promotions and transfers, as well as new hiring.
- Halted career growth: Less mobility within organizations means fewer opportunities to build your career path internally. You may also have fewer opportunities to learn new skills or work with other teams, which can negatively impact your career trajectory.
- Increased workloads: When companies stop filling vacant positions, the remaining employees often find themselves with increased workloads. This can make it difficult to meet your team’s goals and can make work more challenging and less rewarding for everyone.
How to prepare for a hiring freeze?
While you can’t always predict a hiring freeze, there are some ways to prepare for it:
- Look for signs: Employers often resort to implementing hiring freezes and other measures to cut costs during economic hardships. So, if you know your company is facing liquidity issues or undergoing restructuring, it’s reasonable to expect a hiring freeze. The same rule applies to economic crises such as recessions. The key is that businesses slow down when business is slow.
- Keep your resume ready: Regardless of the economic environment, it’s always wise to keep your resume updated and your professional network strong. Update your skills, remove outdated positions, and refine the format.
- Develop your skills: If you had to look for a job tomorrow, would your skill set be ready? Look at the available jobs in your field and note the required and desired skills. Bridge any gaps by enhancing your skills through online courses, certifications, or self-study.
- Do not
Worrying: Job searching can be stressful, regardless of your current situation. However, if you are looking for work due to a slowdown in hiring at your current employer, you are in an advanced position. By keeping your options open, you ensure that you have better choices. This is the best way to keep your career moving forward.
Hiring Freeze vs. Layoffs
Hiring Freeze Layoffs
- Sudden halt in hiring and recruitment of new employees Employees are abruptly laid off
- Vacant positions remain unfilled for a while Layoffs can be temporary or permanent
- Promotions for current employees may be postponed Large companies may be required to give prior notice
- Salary increases and bonuses may be restricted to save money Layoffs often occur as a cost-cutting measure
Frequently Asked Questions (FAQs)
How long do hiring freezes usually last?
Hiring freezes typically last for a few months (like three to six months, for instance) but can last longer during a recession or economic downturn affecting businesses. Generally, long hiring freezes will coincide with other cost-cutting measures, such as layoffs, unpaid leave, or reduced spending and workforce.
What does it mean if a job is on hold?
When employers tell job seekers that the position is on hold, it often means they are not filling the role at this time due to a hiring freeze, restructuring, an upcoming leave, or something else. However, it can also mean that the hiring manager decided to offer the job to an internal candidate or a different external candidate.
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Sources:
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts in our articles. Read our editing process to learn more about how we verify facts and maintain the accuracy, reliability, and quality of our content.
University of Washington Human Resources. “Cost-saving strategies.”
New York Times. “Meta to freeze most hiring, Zuckerberg tells employees.”
Coinbase. “Update on hiring plans.”
Amazon. “Message from CEO Andy Jassy regarding role cancellations.”
National Law Review. “Can an employer legally rescind a job offer after it has been made?”
U.S. Department of Labor. “Worker’s Guide to Notice of Closure and Mass Layoff.”
Source: https://www.thebalancemoney.com/hiring-freeze-6828717
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