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What Is a Hiring Freeze?

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  • Written By: Geri Terzo
  • Edited By: Shereen Skola
  • Last Modified Date: 09 November 2016
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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.

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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.

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AnswerMan
Post 2

What bothers me about a hiring freeze is the inability to hire someone for what I'd consider an essential position. Sometimes my department would need someone to handle the switchboard and perform other office duties while we dealt with clients, but we couldn't do anything while the hiring freeze was still in effect. We'd all take turns manning the receptionist desk, but that's about all we could do.

Many people don't realize how expensive it can be to hire new employees. It's not just about salaries or wages, it's also about insurance and company benefits and retirement plans. I don't blame smaller companies for instituting hiring freezes during slow economic times. I just wish they would lift those freezes a little faster when times get better.

Phaedrus
Post 1

A lot of companies and government agencies seem to have permanent hiring freezes. When I lost my white collar job a few years ago, I made all of the usual rounds and put in applications. Sometimes I'd get a call back for an interview, only to be told that the company still had a hiring freeze in place. I'd be perfect for the position, but the company just didn't have the resources to hire me.

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