With technology becoming more and more relied upon by the day, companies have begun entrusting part of their core business functions to automation. Indeed, the meteoric rise of artificial intelligence has resulted in massive layoffs and hiring freezes, as we have seen just the past year with big companies such as IBM, Apple, and Amazon.
Are you part of the next wave of job hopefuls raring to immediately make a difference in the corporate world? In a competitive job market, this might be a challenge for you. In this article, let’s talk about the hiring freeze, how it differs from a job layoff, why companies resort to this, and what you can do as a response. Let’s go.
What is a Hiring Freeze?
A hiring freeze is a temporary policy implemented by an organization or government which aims to restrict or suspend the hiring of new employees. Usually enacted as a cost-saving measure, it aims to help the company get by during periods of financial constraint, economic downturns, budget deficits, or organizational restructuring.
For example, the global pandemic in 2020 brought forth a wave of uncertainty for all businesses. A hiring freeze, then, is put in place to control expenses (typically overhead) by limiting the growth of the workforce and reducing personnel-related costs such as salaries, benefits, and training.
What are the Differences Between Hiring Freeze and Layoffs?
Granted, both hiring freezes and layoffs are workforce management strategies. Nevertheless, there are significant differences between the two. Below are some of them.
1. A hiring freeze is a temporary measure, while a layoff is a permanent or long-term action.
While both look to control costs, hiring freezes is a temporary action that restricts or suspends the recruitment of new employees; focused on preventing new hires rather than reducing existing staff numbers. On the other hand, layoffs are a permanent or long-term action that involves terminating the employment of existing employees due to various reasons such as cost-cutting, organizational restructuring, or a decline in business.
2. Hiring freezes can be lifted, while layoffs are permanent decisions.
As noted above, since it’s temporary, hiring freezes can be lifted once the organization’s financial situation improves or the economic conditions stabilize. Conversely, layoffs are usually permanent decisions. Once employees are laid off, it is more likely that they won’t assume their old positions again, even if the situation surrounding business improves.
3. Hiring freezes are typically implemented proactively, while layoffs occur in response to specific circumstances.
When the circumstances improve, freezes are eased and the onboarding of new employees can return. Layoffs, however, are reactive and occur in response to specific circumstances, such as downsizing, restructuring, or business contraction. While freezes are anticipatory, layoffs are implemented right after the situation to prevent further financial difficulties that the company will incur.
4. Layoffs typically involve more legal implications compared to hiring freezes.
Both hiring freezes and layoffs may have legal ramifications depending on labor laws and employment contracts in a particular area. Layoffs, however, typically involve more legal complexities, such as severance pay, notice periods, and compliance with employment regulations.
Why Do Companies Implement Hiring Freezes?
Now that we’ve discussed the differences between hiring freezes and layoffs, let’s focus on the former. Why do companies implement hiring freezes?
Here’s a quick rundown of the reasons this business strategy is in place:
Budget and Cost Control
This is the main reason behind a hiring freeze: Hiring new employees involves various expenses, including salaries, benefits, training, and recruitment costs. Therefore, an organization seeking to cut corners especially during uncertain situations and regain financial stability, freezing their recruitment efforts may be a viable temporary strategy.
Uncertain Business Environment
Like the COVID-19 pandemic that brought the entire world to its knees, uncertain business environments that include economic recession or market downturn can force an organization’s hand to freeze their employment efforts. This is especially true if forecasting the business and economic landscape is harder than it used to be, as what the pandemic showed.
Companies often go through periods of restructuring or reorganization to adapt to changing market conditions. Through these restructurings, management may discover redundant roles and processes that require a hiring freeze. This, in turn, will allow the company to first assess its current workforce, identify redundancies or skill gaps, and make strategic decisions about future hiring needs.
What are the Impacts of Hiring Freeze?
When a hiring freeze occurs, such a corporate decision can impact not only job seekers like you, but also existing employees. Below are just some of the impacts of hiring freeze.
Impacts of Hiring Freeze on Job Seekers
Reduced Job Opportunities
Hiring freezes limit or suspend the recruitment of new employees, resulting in a decrease in job openings within the organization. This reduces the number of available opportunities for job seekers, making it more challenging to secure new employment.
As the number of job openings decreases due to a hiring freeze, the competition for available positions intensifies. Job seekers may face more competition from other qualified candidates, making it more challenging to stand out and secure a job offer.
Extended Job Search
In line with the first two effects above, enforcing a hiring freeze can extend the duration of a job search for job seekers like you. Given the limited job openings and increased competition, it can understandably take longer for a job hopeful to find a suitable job opportunity.
Delayed Career Progression
Finally, hiring freezes in place can ultimately affect job seekers’ career advancement. Imagine traffic jams and it’s the same with this situation. Bottlenecks in hiring can cause limited opportunities for promotions or lateral moves within the organization. And usually, positions that would typically become available are those born out of natural turnover or internal mobility, if at all.
Impacts of Hiring Freeze on Current Employees
Apart from its effects on job applicants, a hiring freeze often means that existing employees have to take on additional responsibilities or workloads. With limited new hires, the workload may increase as employees are expected to cover the duties and responsibilities of vacant positions. As a result, they can experience higher stress levels, burnout, and reduced work-life balance.
Limited Growth Opportunities
For currently employed staff, they can also experience limited growth opportunities like those still looking to get their foot in the door. With a freeze in place, promotions, transfers, and lateral moves may be put on hold, making it more challenging for employees to progress in their careers within the organization.
Low Employee Morale and Engagement
Naturally, a higher stress level, reduced work-life balance, and burnout can suck the life out of any employee. Thus, hiring freezes can impact employee morale and engagement. Existing employees may feel frustrated or discouraged if they see limited opportunities for growth or if they perceive the organization as stagnant.
How Do You Respond to a Hiring Freeze?
Given that even large conglomerates such as Meta and Amazon are not exempt from layoffs and hiring freezes, it comes as no surprise that the job search game is more stringent than ever. Hence, with the job market getting more and more competitive as a result of this, what should you do as a response to a hiring freeze? Here are some tips for job seekers trying to find work amidst a hiring freeze.
1. Expand your search.
Are you looking hard enough? While some industries or organizations may have implemented a hiring freeze, others job seekers may still be actively recruiting. Thus, broaden your job search to include different industries, companies, or geographic locations where hiring may be less affected.
2. Keep on networking.
Networking is crucial during a hiring freeze. Reach out to your professional contacts, attend virtual industry events, and engage with online professional communities. Building relationships and connections can provide valuable job leads and insights into hidden job opportunities.
3. Cultivate your skills.
Use the time during a hiring freeze to refine your skills and knowledge. Take online courses, attend webinars, or pursue certifications that can make you more competitive in your desired field. Demonstrating a commitment to self-improvement can impress potential employers once hiring resumes.
4. Take part in volunteer or freelance work.
If paid, full-time work isn’t on the cards, are you up for volunteer or freelance work? If not, consider taking on such roles. The key here is not to remain stagnant. Not only can you gain new experience; you can also expand your network despite the hiring freeze.
5. Seek temporary or contract positions.
Consider temporary or contract positions that may be available even during a hiring freeze. These opportunities can provide valuable work experience and help you acquire new skills, both of which may prove helpful toward your eventual long-term employment.
6. Build an online presence.
How do you do it? Start with your portfolio. Optimize your LinkedIn profile, update your personal website by indicating your recent work, and actively engage in relevant online communities. By establishing a strong professional online presence, you can attract potential employers and increase your visibility.
With a freeze in place, don’t remain stagnant; stay informed! Keep abreast of \industry trends, changes, and news. Being knowledgeable about the current state of the job market and the specific challenges faced by organizations can help you tailor your job search strategies accordingly.
Hire Resume Professional Writers to Help You Seek Other Career Opportunities Amidst the Hiring Freeze
Keep in mind that a hiring freeze is a temporary measure. Stay positive, be patient, and remain persistent in your job search efforts. The job market can change rapidly, and new opportunities may arise when the freeze is lifted.
With the job market offering plenty of opportunities for professional growth, it’s imperative to plan ahead and be properly equipped with the updated job search tools. Our career experts at Resume Professional Writers can provide you with job-winning application tools that will help you be more prepared to navigate the uncharted waters. Let’s keep in touch today for more career advice as well as job search tips to help jumpstart your career.