Hiring Freeze – How Employers and Workers Should Handle It

It feels as if every article we post on Tier2Tek involves some type of trend or recent development. Though not clambering to be a breaking news source, we end up on the backend of ideas due to their reluctance to lift grip on the staffing world. Every day it’s some new idea stretching across an industry or market, causing employees and job searchers to panic. And, in a way, this makes sense. The recent pandemic uprooted a lot of lives and established working conditions and the oncoming recession has businesses scrambling for preemptive control. It’s only plausible that things like a ‘hiring freeze’ take upswings in a market crushed by former danger and looming trouble.

When discussing a hiring freeze, it’s important to note that we are a bit behind in history. It’s not necessarily an oncoming trend like the Great Resignation or Quiet Quitting, but it is something that is currently happening through a majority of industries. While no longer trending news, it isn’t something that has gone away.

With the possible recession rearing its head on the horizon, we are likely to see workforce blocks and stoppages going forward. Therefore, as a staffing agency, we think it’s important to break down the topic and how to handle it as both an employer and an employee.

And we shall do that now…

Brrr. It’s a Chilly Year

Though we have heard of freezes for the entirety of our country’s history, the most recent usage of the term ‘hiring freeze’ was in 2017. President Trump worked to stop all hiring of federal employees at that time. Ultimately, the freeze worked to stop the hiring of contractors and boost the work of already-existing employees. Ronald Reagan, too, imposed similar freezes on his first day in office. Jimmy Carter imposed three hiring freezes during his presidency.

In 1982, the Government Accountability Office said freezes under Presidents Ronald Reagan and Jimmy Carter were “ineffective in managing federal employment.”

But, the term once created for presidential battles against civil service no longer stands that way. It’s been adapted by all workforces to create a general term for the stoppage of hiring.

What Is a Hiring Freeze Exactly?

Overall, the term is exactly what it sounds like. Companies temporarily stop the hiring of open roles in order to save money during tough financial times. If the responsibilities of the frozen roles can’t be allocated, the company will train the current employees to take pieces of the role, avoiding the possibility of the role responsibilities becoming obsolete or an issue for the production of the company.

We can’t afford to hire new workers, so we will get our current workers to do the job. Basically.

Art Shaikh, founder and CEO at CircleIt, told Workest of his experience with hiring freezes. “In my 20+ years in the tech industry, hiring freezes are usually planned to conserve financial resources during predicted times of economic turmoil,” said Shaikh. “[Businesses] may see lagging profits or other indicators that they will need to keep headcount where it is. Headcount is one of the few expenses businesses can 100% control.”

But, is this event currently happening? Kinda!

Let’s look at the current state of the tech industry. While hiring hasn’t necessarily stopped, it has slowed down exponentially as companies divulge in mass layoffs to prepare for the possible recession.

Excerpt from Layoff Contagion – Tech Companies Starting Terrifying Trend

In 2022, over 964 tech companies laid off over 149,876 workers globally. Though the numbers may seem skewed, surrounding an industry with millions of workers and thousands of companies, the significance is as crucial as you could possibly imagine. So critical, in fact, that WRAL Tech Wire has created an entire list for ‘Layoff Watch’ this year…

A CNBC report stated that the tech industry lost 7.4 trillion dollars over the last year. Out of panic, a few companies began making cuts. Plenty followed in line.

  • BuzzFeed cut 180 employees, about 12% of its workforce.
  • Morgan Stanley laid off about 2% of the workforce, about 1,600 people.
  • BloomTech laid off 88 employees, half of the workforce.
  • PepsiCo is laying off hundreds of corporate employees.
  • Lyft is laying off around 700 employees, about 13% of its workforce.
  • Amazon is looking to lay off up to 20,000 employees globally.
  • Coinbase announced that it would lay off 18% of its workforce.
  • DoorDash is letting go of 1,250 employees.
  • Kraken let go of 1,100 employees due to the crypto meltdown (an entirely other story).

So, while a hiring freeze isn’t necessarily occurring, it’s a natural progression from the mass firing. If a company is firing at a high rate, they are probably hiring at a low rate. It’s simple math.

According to a 2022 study by CFO.com, 51% of CFOs surveyed expect to enact a freeze soon.

Is Your Company Entering an Ice Age?

Regarding the situation, higher-ups and leaders should know if a freeze is inevitable or has already been decided upon. If you are not in a position to hear these decisions, there are a few things to look for. It’s possible that your company will not announce the decision (regardless of the superiority of your decision) because it’s not necessarily something newsworthy for employees. Telling workers you have decided not to hire new workers isn’t truly necessary.

One thing to look out for is your surrounding market and common trends. Is your sector having a multitude of layoffs like the tech industry? Are you noticing a downswing in your specific business or industry? Is the possible recession or ever-growing inflation hurting your direct market?

Secondly, look to hints in the company itself. Freezes are also often accompanied by layoffs. Is your company letting a bunch of workers go? Is an entire department being cut? Maybe they are offering hybrid positions that move current workers into roles that take on multiple roles’ responsibilities. If a freeze is happening, there are sure to be hints in-house.

In a countering point, freezes are usually used to reduce the need for layoffs. A company may stop hiring so they can keep money circulating through their current workforce. So, while we noted that layoffs usually lead to freezing, it’s not always the case.

How Long Till a Thaw?

How long with the situation last? It’s impossible to say.

Likely, your company is making these moves because of the recession (whether directly or indirectly). If that is the case, there’s no telling how long the financial crisis will last. For, we haven’t even technically entered it yet.

Ultimately, economists have all but written the certainty of a recession in pen. They’ve currently penciled in the possibility, claiming it’s well on its way, something unheard of in prior situations of the same nature.

“Usually recessions sneak up on us,” Mark Zandi, chief economist at Moody’s Analytics, told CNBC. “CEOs never talk about recessions. Now it seems CEOs are falling over themselves to say we’re falling into a recession… Every person on TV says recession. Every economist says recession. I’ve never seen anything like it.”

The Federal Reserve has been hiking interest rates since March of last year to attempt to slow down the economy. Ironically, the economy had already been slowing on the heels of a return from the 2020 pandemic. Therefore, all analytics and theorists are predicting that a classic recession is going to happen, regardless of what actions come next.

Therefore, freezes may last the entirety of that period. Or something a little less drastic, let’s call it a hiring chill, may happen, lowering the normal hiring rates.

How Should You Handle a Hiring Freeze? (Employers)

If your company (or you as an employer yourself) has decided to lurch into a freeze, there may be a plethora of swiveling concerns and questions.

Firstly, how should you handle it in-house? Should you let everyone know what’s going on?

Secondly, how do you maintain a relationship with the labor world, ensuring that your hiring isn’t stunted when things return to normal?

Let’s break down tips on how to handle the situation as an employer or recruiter.

Focus On Your Current Staff

As a staffing agency, we have often noted the necessity for transparency in the workforce. You want your employees to feel both heard and valued, and keeping information straightforward and up-to-date helps due this. Therefore, we recommend letting the company know that the situation is happening.

In regard to the stress of the recession and labor cuts, workers want to be able to trust their employers. They want to know when things are awry and when danger may be overhead. If worst cases ensue, the employee doesn’t want to be caught off guard by layoffs.

Be upfront about the current state of your company (to a degree that’s necessary). Don’t act as if the fear and stress of potential labor cuts just don’t exist. Do not overlook the recession. Keep the conversation open and current. Overall, you want your employees to feel safe in that you will give them a heads-up when things are happening.

Smiling through gritted teeth and lying will not make the recession disappear. We all know what’s happening. Be honest.

We recommend a company-wide memo or meeting letting everyone know why it’s happening,
how it will be enacted, and how long you expect it to last.

Can You Train for Frozen Roles?

If there is a silver lining surrounding the hiring loss, it’s the possibility of building and reinforcing your current team. As we have noted, hiring freezes often lead to companies promoting or cross-training employees that are already in the company. Therefore, you can make sure that the responsibilities of the frozen roles are still handled and production doesn’t take a significant hit.

When you enact a freeze, it’s crucial to look at the positions you are cutting and the positions you already have. Which ones correlate to each other? Is there a way to split the responsibilities of the role up and give small bits to some of the correlated workers already on payroll?

At the end of the day, this crosstraining or lateral promoting may cause you to need to up labor costs and give raises, but it would still be cheaper than bringing on an entirely new employee. On top of that, modern workers love the ability to learn new roles and burst through corporate ceilings in unique ways.

It’ll Increase Flexibility and Boost Morale

The new generation has seen the introduction and success of the start-up revolution. They’ve seen people get rich off of social media, make a living off of Uber, and sell their art on applications like Etsy. Therefore, their vision of what modern employment looks like is very skewed from what you may see.

Gen Z employees want the ability to grow in their place of employment (as do all ages and generations), but they do not see the employment ladder as vertically as those before them. Moving up to a managerial role with the opportunity to lead, but still be led from above, is not as much of a win as it used to be. Younger workers want the opportunity to be creative, be a leader, and collaborate on something that matters.

Overall, younger workers want jobs that implement other skills. They want to constantly learn and adapt. An employee will be more excited about getting a promotional opportunity that brings in a new skill set than just becoming a senior in the position they are already in. Therefore, having them adapt to new roles that are frozen will help boost this thought process.

Learn As a Recruiter

If your job is within an HR department or you work specifically as a recruiter, your career may be on the brink of stalling. If your job is to hire, and your employer isn’t hiring, then you may find yourself working in other roles or departments.

Overall, now is the time to spruce up your recruitment skills. Now that you don’t have to stress about the high-flying, high-intensity schedule of vetting and hiring (something we know so much about).

Luckily, we have a plethora of articles regarding both staffing and recruitment tips. You are already here, so you might as well check them out!

Furthermore, take the time to build upon other skills. Maybe you want to take a course on effective communication or leadership abilities. There are always things you can do to bolster your recruitment, vetting, and negotiating skills.

Keep an eye on market trends, new working concepts, and the wants of the working world. That way, once your company begins hiring again, you won’t be behind on all of the fast-moving trends that directly affect worker wants and employment negotiations.

No, really. There are a ton.

Ease the Ice

While lowering staffing and hiring is the most controllable way to reduce company spending, it shouldn’t be the only method in which your business strives for a better future. Therefore, if you have the need for a hiring freeze, you should be looking at other measures to help your company, too.

Unfortunately, a freeze won’t fix all of your problems. It’ll reduce company costs, but it’s likely that the freeze was caused by something else entirely. Therefore, it’s important to focus on those factors. If you had to freeze because your spending is too high, you need to work to find a way to reduce it. Lowering hiring won’t fix your problems forever.

At the end of the day, we can’t come up with a list of specific reasons your company needs to lower spending, for there are simply too many. But, whatever the reason is, if your company needs to freeze, something needs to be changed.

Sometimes the problem is that your company hires more workers than they need. In that case, a freeze is the true solution. That’s a very specific situation, though.

How Should You Handle a Hiring Freeze? (Job Searchers)

If you are searching for a job, but your desired industry is experiencing a sector-wide freeze, you may be in a state of panic.

Firstly, how will you find a job? Should you give up and go to another industry?

Unfortunately, tough times for employers create even tougher times for employees. If you don’t have a job or are looking for a different one, a hiring freeze may be the hardest obstacle to overcome.

Let’s break down tips on how to handle the situation as an employee or job searcher.

Look for Work In an Adjacent Field

Our first tip is pretty straightforward, but it needs to be noted for all of those in doubt.

If your specific field is having a decrease in hiring, don’t be afraid to expand your job search to adjacent fields. For example, if you work in financial tech, and the majority of those related businesses aren’t hiring, look for a job in another tech sector. Though it’s not a straight career path, it still helps you get to your destination eventually.

Work that uses and expands your necessary skillset will always look good on your resume, even if it’s not directly in the field you are striving toward. For example, if you want to be a journalist but have to take a job as a copywriter, it’s still writing. It still reinforces your writing skills and experience on your resume.

If you need the work, don’t be discouraged by related jobs. While we all want to move directly upward, sometimes financial situations take us upon a diagonal or curvy path. That’s entirely okay. As long as you are building your abilities and professional resume, you are still moving toward your desired destination.

Look for Smaller Businesses

When large companies are making colossal employment cuts, small and medium-sized companies are able to amass greater and more significant workforces. Therefore, those smaller employers are now adding jobs and hiring at a higher rate than before.

ADP’s latest survey of private payrolls found that large employers cut 151,000 jobs in December, while firms with fewer than 500 employees added nearly 400,000 new jobs that month.

Those less significant companies are able to pick up the layoffs of the juggernauts. Those that have been cut from their jobs are quickly finding replacement careers, even if the payment is lower. In the current economy, there isn’t much of an option.

Henceforth, if your job search is stalling in the face of bigger, frozen companies, look into small and local businesses within the field. It’s possible they are not on a hiring freeze.

Freelancing and Gigs

Also, remember that there may be larger companies looking for freelancers to fill in during the freeze. Keep an ear out for contract jobs or gigs. If you have a company that you want to work with, but they seem to be on a hiring hold, reach out to them and ask if they need any freelance work.

This won’t be a long-term answer, but it will help you stay paid, build your resume, and increase your network with companies. Once the freelancing company loosens its freeze, you may be first in line for a full-time role.

Stay Put

If you are looking for a better or higher job in your sector but are already employed, you may just want to stay put until the freeze is over. It may not be worth it to leave your current job and get stuck unemployed while companies fret over their labor costs.

We aren’t stating that you should stick to a job you absolutely despise, but you should weigh your options. If the market is currently closed or frozen, there’s no need to make hasty moves. Wait until it thaws.

If you plan on looking for better jobs but can’t because of the market, try to bolster and build your related skills. Therefore, when the time comes to find a job, you have the best resume possible. Re-up on your certifications, take courses on new skills, or see if there are any cross-training opportunities at your current workplace. Build that resume for when the hiring freeze is over.