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What is a Hiring Freeze? Here’s Everything You Need to Know

Employees gathered around large desk in a modern office with empty desks surrounding them due to a hiring freeze

Lately, it seems that companies are announcing layoffs and a hiring freeze left and right. This comes on the heels of one of the hottest job markets we’ve ever seen in modern times, so it’s a confusing message. You may be wondering: am I going to lose my job? How will this affect my job search?

We’ll explain what you need to know about hiring freezes and what to do if you’re faced with one at your own company or while interviewing for a job. 

What is a hiring freeze?

A hiring freeze is when a company temporarily pauses hiring and creating new positions. Hiring freezes can be initiated for many reasons: to control costs, slow down spending, overcome financial challenges, brace for an economic downturn, and more.  

A hiring freeze doesn’t necessarily mean recruiting comes to a complete halt. For instance, a company with retail storefronts can’t let its stores sit empty with anyone inside to staff them. 

Instead, it usually applies to nonessential positions and means hiring is restricted to roles that are required to keep the business running. Other jobs may be filled in alternative ways, like hiring part-time workers, freelancers, or consultants. 

Why are companies imposing hiring freezes?

Many companies are announcing layoffs in response to current economic conditions. It’s a complex situation: the economy is slowing down, debt is becoming more expensive, and inflation is rising. Just as households are tightening their budgets, companies are searching for ways to cut costs from their expense sheets. 

Companies typically instate hiring freezes as an alternative or precursor to layoffs. A pause on new hiring can sometimes help a company weather its financial challenges long enough to avoid cutting existing jobs. 

Hiring freezes also help with something called liquidity–in simple terms, how much cash a company has on hand. A temporary break in new-hire expenses can help the company quickly improve its liquidity, which is good for its overall financial position. 

Is a hiring freeze a bad sign?

It depends on the situation. 

If you’re a current employee, a hiring freeze could mean your workload is about to increase as the company strives to achieve the same output with fewer workers. This, paired with the inherent uncertainty of a hiring freeze, can hurt morale. And a hiring freeze can mean layoffs may be on the horizon. 

On the other hand, a hiring freeze can signal that the company is in good financial hands since it’s taking the necessary steps to stay afloat during tough times. It might also be a recalibration of sorts–if the company recently went through a period of huge growth, it may need to slow down hiring while growth settles back to a more normal level. 

So, it truly depends on the company and the circumstances. To illustrate, let’s look at a real-world example. 

Twitter and Facebook both announced hiring freezes in recent months. At Twitter, the news was in response to a major shakeup in company leadership. The company was awaiting a massive acquisition, and multiple senior executives had resigned. Facebook announced its hiring freeze amid several quarters of declining ad revenue. After nearly a decade of explosive growth, the company needed to trim down expenses and head counts.

They’re two companies in the same sector, but as you can see, their hiring freezes were influenced by very different factors. 

One more thing to consider is your career trajectory. A hiring freeze can present an unexpected opportunity to advance upward in the company. If a leadership position opens up, but the organization isn’t hiring new staff, this could be the perfect chance for you to step in and fill the role, demonstrating your leadership capabilities and making the case for permanent promotion.  

Give yourself peace of mind by taking these steps to prepare for a recession.

How long does a hiring freeze last?

The length of a hiring freeze can vary. A typical hiring pause lasts between three and six months for the initial freeze, then the company will reevaluate and decide to either prolong it or resume hiring. 

How to respond to a hiring freeze

After a job offer

Unfortunately, if a company announces a hiring freeze after you’ve received a job offer but before you start work, it often means the offer will be rescinded. This can happen after you’ve already given notice to your old job, putting you in a tough spot. 

First, talk to the hiring manager and HR rep. Learn as much as possible about the hiring freeze, like how long it will last and if they plan to honor your job offer after the freeze has lifted. You’ll need to decide if you’re willing to wait for an offer that may or may not materialize several months down the road.

If it’s a job you really want, consider negotiating alternative options. Some hiring managers can get around freezes by bringing on new employees first as contractors. This means you’ll be doing the same or nearly the same job you applied for and collecting a paycheck without traditional full-time benefits like health insurance and retirement. This can be a viable option to get your foot in the door at a company, though there are no guarantees if or when you’ll be hired as a full-time employee. 

After an interview

If you’re in the middle of interviewing with a company that puts a pause on hiring, the best thing you can do is maintain a positive relationship. While you may need to look elsewhere for a job, you can keep in touch with the hiring manager and let them know you’re still interested. 

Keep an eye out for news about the company so you can reach back out if you’re still job searching once the freeze ends. 

What you should do if your company puts a hiring freeze in place

Avoid hasty decisions

While things may be in flux at your company, there’s no need to hand in your two weeks’ notice or start frantically job searching–at least not right away. Consider the hiring freeze as a chance to put big decisions on pause in your own life. Delay major purchases like buying a house or a car until you have more information on how the situation will affect you.

Gather more information

Try to learn as much as possible about your company’s financial position, like its recent growth and future revenue projections. If your company is publicly traded, you’ll be able to find a lot of this information online. 

Consider also the type of product or service your company provides. Is it something essential that customers will continue to pay for, even during tough times, like electricity? Is it a luxury, like a high-end electronic that people are likely to stop buying temporarily? Or is it somewhere in between? This can factor into what a hiring freeze means for current workers. 

Strengthen your network

This is one of those circumstances where it pays to ‘always be networking.’ If your company’s hiring freeze seems to signal that more negative changes are ahead, you might begin to put out feelers within your network for potential job opportunities at other, more financially stable organizations. 

Learn how to make lasting professional connections by enrolling in Udemy’s Networking Mastery course.

Weigh your options

If you’re seriously thinking about a job change, consider the pros and cons carefully. Here are a few big things to think about:

  • How long the current conditions are likely to last
  • Whether other companies are facing the same challenges
  • How competitive is the market in your field
  • Whether you’re willing to relocate
  • Whether you’re willing to take a suboptimal role that comes with more job security 
  • Whether there are advancement opportunities within your company
  • Your personal financial position

Remember that a hiring freeze doesn’t have any noticeable effect on many employees, so your best option may be to stay put and ride it out. 

If you’re a job seeker, try to stay positive. Even the worst economic conditions don’t last forever. Consider part-time work, freelancing, and other alternative options to cover your bills while you await a more secure job market. 

You never know when you unexpectantly find yourself unemployed, so always be prepared by passive job searching and updating your resume with the help of a professional service like TopResume.