What is a Hiring Freeze

by Pranav Ramesh
March 11, 2021
What a Hiring Freeze is and How To Respond Effectively

Even the largest, most consistent businesses sometimes face unexpected circumstances. Uncontrollable market conditions, unforeseen events, and even changes in tools and technology can all give companies a reason to temporarily stop hiring. Opting for a hiring freeze can be the best short-term solution during such situations, rather than performing layoffs, until certain other factors change.

Topics Covered:

  • What is a Hiring Freeze?
  • Why Do Companies Do Hiring Freezes?
  • How Should Companies Handle a Hiring Freeze?

What is a Hiring Freeze?

A hiring freeze is a situation where, for any number of reasons, an organization decides to completely stop hiring. It is usually intended to be temporary, though the exact time frame can change, and can be a way for the organization to avoid layoffs or other cost-cutting measures.

Why Do Companies Opt for Hiring Freezes?

Companies generally opt for hiring freezes when they find themselves needing to reduce their spending. Some common reasons for doing a hiring freeze include:

    • Changes in the market Large swings in supply or demand within a given sector, market, or industry may prompt many connected businesses to practice hiring freeze. For example, if consumer demand for a given product is slowing, it is not just the company producing or selling that product that is affected. Raw materials suppliers, shipping and logistics companies, and companies that provide added services tied to the product may all be impacted. Any or all of them may have reason to do embrace a hiring freeze.
      • Unforeseen, wide-scale emergencies Instances of wide-scale change, especially when it is unexpected, often cause companies to exercise hiring freeze. Upon the global outbreak of the COVID-19 pandemic, many companies opted for a hiring freeze rather than laying off their workers owing to the prevalent uncertainty. While not every business was harmed, everyone was affected, making hiring freeze an effective strategy to stabilize their expenditures.
      • Budgeting concerns Companies will sometimes find themselves with a budget deficit, or in an uncertain situation where continuing to hire may result in a deficit. During such situations, they tend to execute hiring freeze, be it short or long-term, until the organization’s financial situation has improved or become more stable.
      • Internal reorganization Hiring freezes are commonly put into place when a company expects to reorganize internally. They refrain from filling roles whose long-term security may be in question. This gives the company the opportunity to move around current staff members, restructure teams, and integrate resources it already has. The hiring freeze typically lasts until the revamp period is complete and the business has a better understanding of what positions, both long and short-term, it needs.
      • Policy and procedural changes Hiring, like every other business practice, is constantly changing and evolving. Sometimes, that change is so large and resource-intensive that the company has to put a temporary hold on their hiring practices in the form of a hiring freeze. For example, when electronic document processing and storage became the norm, most businesses had to make sweeping policy and procedural changes to the way they handled resumes, onboarding, tax forms, etc. While many were able to overlap the acceptance of both paper and electronic resumes, others planned for a company-wide “flick the switch” type changeover. Many of these organizations exercised a hiring freeze to limit the number of resumes they had to process while undergoing this change. Some organizations are going through a similar phase right now while changing to cloud-based, AI-powered hiring platforms.

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How Should Companies Handle a Hiring Freeze?

When it becomes apparent that a hiring freeze is necessary, employers should do everything possible to communicate with their internal team in a timely, positive, and professional manner. Even though the memo or announcement is meant to be internal, there is a good chance the information may be leaked publicly. As with all internal notifications, the messaging should be on-brand for the organization and represent it well, were it to be shared externally. Some attributes to consider adding to the hiring freeze announcement could include:

      • Letterhead information (Company Name, Date, etc.)
      • A polite greeting such as “Dear hiring managers:”
      • Informative statement (Could include the date the freeze begins, whom it affects, expected end date, how exceptions are handled, etc.)
      • Explanatory statement (Could include what situations have brought about the need for a hiring freeze, steps that were taken to try to prevent it, examples of past hiring freezes and their positive outcomes, etc.)


Hiring freezes are adopted by businesses for a variety of reasons, but are typically associated with a negative situation. While this is often true, it is not always the case. In fact, putting a hiring freeze into effect may not only be the best decision for the organization, but for future and current employees as well. A hiring freeze prevents the hiring managers from unknowingly adding employees whose jobs may not be around much longer. It also may be the necessary decision a leader requires to make, to prevent escalating the situation.

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