What Is a Hiring Freeze?

During a hiring freeze, a company generally ceases to add new employees. If a freeze becomes lifted, however, a business may resume its original growth plans including hiring additional personnel. Various circumstances might warrant a hiring freeze, including uncertain economic times or individual events that unfold internally at a business. Employees at a company are often aware when management has placed a freeze on hiring; typically, existing personnel are expected to maintain or increase productivity during times of a slowdown.

A hiring freeze is a period of time during which employers attempt to improve the financial health of an entity by placing greater controls on compensation costs. These holding periods are not limited only to for-profit businesses. Instead, a hold for introducing new workers could occur in public organizations, such as school systems, as well as private corporations. Freezes are often temporary in nature and do eventually become lifted unless an organization cannot recover from a financial setback.

Employers could lose some employees during a hiring freeze. This could be a result of the uncertainty that is hovering over an organization or in response to an increase work burden that arises from limited staff, for instance. The implementation of a freeze on hiring, however, could prevent an employer from having to initiate job cuts throughout the organization. If employees choose to resign on their own, it could be a welcome event during times of financial hardship when compensation costs are being evaluated.

There are many reasons that could prompt a freeze in hiring. An organization that is making cuts to its budget for the year might initiate a hiring freeze until there is greater balance in a financial statement, for instance. When a hiring freeze has been issued, the duration of the circumstances may or may not be known. If a freeze is in response to budgetary issues, the length of the hold could very well be revealed. When the economy becomes troubled and times are highly uncertain, the hold on hiring could go on indefinitely.

Throughout a period where a hold has been placed on hiring, organizations might find reasons to make some exceptions. For instance, a certain number of part-time workers or employees earning minimum wages could be allowed to join a business after a freeze has started. Entities that initiate a hiring freeze are generally undergoing some financial hardship or restructuring. If adding personnel for certain tasks will improve the financial scenario, the exceptions may become warranted.