What is a hiring freeze?

During periods of economic uncertainty, organizations look for ways to manage costs while maintaining stability. Since workforce-related expenses make up a significant portion of budgets, companies may implement hiring freezes to stay financially resilient without resorting to layoffs.

While hiring freezes can support financial stability, they also present challenges, such as increased workloads for existing teams. Understanding how they work helps leaders make thoughtful decisions that balance business needs with their people’s wellbeing.

<<Download this hiring freeze announcement template.>>

What is a hiring freeze?

A hiring freeze is when a company stops hiring new people. During a hiring freeze, companies also refrain from creating new job positions and might put filling current vacancies on hold. This helps organizations manage the workforce and control costs during challenging or uncertain times.

Hiring freeze vs. layoffs

Although you can use both hiring freezes and layoffs to cut back on costs, the two have distinct impacts on a company’s workforce and long-term stability. While a hiring freeze pauses recruiting new people, layoffs involve letting current team members go.

A hiring freeze is a preventative measure. It allows companies to control costs without reducing their existing workforce. Organizations may choose this route when faced with economic uncertainty, shifting priorities, or the need to reevaluate budgets. 

Layoffs are reactive. They reduce the number of current team members, often in response to financial challenges, restructuring, or changes in business goals. While layoffs can provide immediate cost savings, they also carry risks, including reduced morale, loss of institutional knowledge, and potential reputational damage.

Choosing between a hiring freeze and layoffs requires careful consideration. A hiring freeze can help preserve your team’s morale and keep institutional knowledge intact, making it a more measured approach to navigating uncertainty without disrupting the existing workforce.

Why do companies implement hiring freezes?

Companies implement hiring freezes because of a variety of different circumstances, including:

• Economic uncertainty: Like a salary freeze, a company may implement a hiring freeze during a time of financial instability, whether within the business itself, nationally, or worldwide. This allows them to control expenses until economic conditions improve. 
• Market condition shifts: When market conditions change suddenly, businesses must adjust quickly. A hiring freeze provides breathing room for organizations to reassess their strategies, ensuring they can respond effectively to shifting demands without overextending resources.
• Restructuring: When an organization is restructuring, they may use a hiring freeze to reassess their workforce needs (also known as workforce planning). They can evaluate current roles and responsibilities and make any necessary changes before resuming hiring new people. 
• New budgets: When new budgets are rolled out, there may be an adjustment period. Companies can freeze hiring temporarily to evaluate how their financial resources align with workforce needs. This pause ensures that roles are prioritized appropriately and spending remains balanced.
• Preventing layoffs: To ensure they stay financially stable, a business could decide to carry out a hiring freeze instead of letting go of any current team members. 
• Liquidity concerns: If a business is facing cash flow challenges, a hiring freeze can help conserve funds. This approach keeps limited resources directed toward essential operations while the company stabilizes its financial position.
• National or global crisis: During a national or global crisis like a natural disaster or a pandemic, a company may not be able to operate normally. They may use a hiring freeze to give themselves the chance to respond appropriately.

<<Download this free workforce planning template to simplify your planning process.>>

Key insights

• A hiring freeze is a strategic pause in recruitment to manage costs and maintain financial stability during uncertain times, market shifts, restructuring, and budget changes
• It differs from layoffs since it aims to control expenses without reducing the current workforce, preserving morale and institutional knowledge
• While hiring freezes help stabilize finances, they can increase workloads and impact employee morale and job satisfaction
• HR leaders can mitigate negative effects by ensuring transparent communication, supporting internal mobility, and recognizing employee efforts
• Monitoring key metrics like cash flow, employee productivity, and team morale helps determine when to lift a hiring freeze

The impact of a hiring freeze

A hiring freeze impacts both team members and the company in various ways. 

The impact of a hiring freeze on employees

A hiring freeze can impact team members in a number of ways, including:

• Increased workload: With fewer people available, people may need to take on additional tasks and responsibilities. This increased workload can lead to burnout if not managed effectively.  It’s important that companies distribute the workload fairly and provide support and resources for team member wellbeing. 
• Company culture: A hiring freeze can impact company culture if it causes burnout or if people see the hiring freeze as a sign of instability or a lack of future opportunities. Organizations can help maintain a positive culture by staying committed to team wellbeing, recognizing everyone’s achievements, providing support, and encouraging open dialogue.
• Job satisfaction: Burnout, along with the perception of limited opportunities for growth, can lead to team members experiencing reduced job satisfaction. If this isn’t addressed it could reduce the employee retention rate, increase employee turnover, and boost attrition, making the situation much worse. 

Even though a hiring freeze can be a useful strategy to resort to during a challenging time, it should just be a temporary measure, given the impact that it can have on your people. 

<<Download this employee satisfaction survey template to learn from your team.>>

Hiring freeze impact on companies

A hiring freeze affects companies in multiple ways, including both immediate benefits and longer-term considerations:

• Short-term cost savings: Halting recruitment creates breathing room for finance teams to reassess budgets and reallocate resources where they’re needed most. 
• Talent pipeline adjustments: A hiring freeze doesn’t have to mean disengaging from future talent. Staying connected with potential candidates you want to work with can keep them interested and ensure a smooth transition once hiring resumes.
• Maintaining trust and transparency: How you communicate a hiring freeze can shape perceptions both internally and externally. Frame it as a strategic decision—rather than a reactive measure—to reinforce confidence among team members, candidates, and stakeholders.

Hiring freeze advantages and disadvantages

A hiring freeze comes with both advantages and disadvantages. A business should carefully consider the consequences before deciding to go ahead with a hiring freeze.

Advantages	Disadvantages
Cost savings	Increased workload for team members
The chance to do workforce planning	Skills gap in the company
Protects people from layoffs	Decreased team member morale

Metrics to monitor when evaluating hiring freezes

Evaluating a hiring freeze requires a clear understanding of how it’s affecting your organization and when it might be time to lift it. HR leaders can track specific metrics to help them make informed decisions that balance financial stability with people’s wellbeing. Let’s explore some of the most important metrics to monitor.

• Cash flow and profit: Keep a close eye on your company’s finances. Are you seeing the cost savings you expected from the hiring freeze? Look at cash flow to ensure your business has enough liquidity to cover essential expenses. Reviewing profit margins can also help you gauge whether the freeze is contributing to long-term financial health or if it’s time to reassess.
• Employee productivity: Productivity can often take a hit during a hiring freeze, especially if workloads are unevenly distributed. Use performance data to identify whether your team is meeting goals or if they need additional support. Monitoring productivity ensures you can maintain operational efficiency without pushing your team too hard.
• Team morale: A hiring freeze can impact team dynamics, especially if workloads increase or there’s uncertainty about the future. Regular pulse surveys and check-ins help leaders stay connected to how their people are feeling. Organizations that listen to concerns and offer support proactively can keep morale strong.
• Turnover rate: Keep an eye on any shifts in turnover during the freeze. An increase in voluntary departures may signal challenges like workload strain or uncertainty. Identifying these trends early creates an opportunity to strengthen engagement, provide support, and encourage a positive work environment.
• Workforce needs: Tracking workload distribution and skill gaps helps ensure teams have the resources to stay productive. Monitoring project timelines, capacity, and key business priorities can highlight areas that may need additional support or restructuring during the freeze.
• Market stability: Keeping an eye on industry trends, economic conditions, and competitor hiring activity can help organizations gauge when to adjust their hiring strategy. Monitoring these factors ensures the company stays agile and prepared for future growth opportunities.
• Financial improvements: Tracking cost savings, budget allocations, and overall financial health helps assess whether the hiring freeze is achieving its intended goals. Monitoring these metrics ensures resources are optimized while maintaining business stability and long-term growth.

How to communicate and implement a hiring freeze

With the right approach, you can maintain trust, engagement, and focus within your team while navigating this temporary measure. Here’s how to communicate and implement a hiring freeze effectively.

1. Be transparent and proactive

Transparency is essential to build trust among your people, and this is even more important during a hiring freeze. Management should be honest about the situation and, as soon as they implement the measure, should clearly communicate why there’s a hiring freeze. It’s important to help team members understand the company’s goals and challenges, as well as the impact the hiring freeze will have on the organization. 

If there are roles or positions exempt from the hiring freeze, communicate this to avoid confusion and maintain trust. For example, a healthcare organization might continue hiring doctors and nurses to ensure patient care isn’t compromised, or a tech company might prioritize filling cybersecurity roles to protect sensitive data.

Explain how these exceptions align with the organization’s priorities. This transparency prevents misunderstandings and reinforces trust by showing that the freeze is strategic.

Communicating clearly during a hiring freeze helps ensure the business maintains a positive culture that can make a challenging time much easier. 

2. Emphasize the hiring freeze is temporary

Stress that the hiring freeze is only temporary. Letting the team know it’s a short-term solution to address specific challenges can help ease concerns.

Provide context about what the company is monitoring—such as financial improvements or market stability—and explain how these factors will influence the freeze’s duration. Reassuring your team that this is part of a broader strategy to ensure long-term stability can help maintain motivation.

3. Embrace internal transfers

If allowed during your hiring freeze, internal transfers can be a practical way to fill gaps while supporting team members’ growth. Encourage people to explore opportunities within the organization, whether it’s moving to a different department or taking on a new role that matches their skills.

This approach helps the company address staffing needs and keeps people engaged by offering them a chance to learn, grow, and contribute in new ways. Supporting internal mobility reinforces the message that the company values its people and their career development.

4. Seek team feedback

Listening to your team during a hiring freeze is more than a nice-to-have. Create regular opportunities for people to share their thoughts, whether through surveys, one-on-one meetings, or anonymous feedback tools. An internal employer brand survey can help you understand whether your team feels confident in the organization’s direction or if there are concerns you need to address.

Your company’s online presence also plays a key role in attracting future talent. Stay engaged on platforms like LinkedIn and Glassdoor to understand how team members and job seekers perceive your organization during the freeze. If feedback suggests concerns, use it as an opportunity to refine your communication strategy, highlight your culture, and reinforce your company’s strengths.

5. Recognize team member efforts during the hiring freeze

When workloads increase or responsibilities shift, make sure your people feel seen and appreciated.

Employee recognition can take many forms, from a simple thank-you email to highlighting achievements during team meetings. The key is to make it genuine and consistent. Regular acknowledgment keeps morale high and reinforces the sense that everyone’s efforts are making a difference.

6. Invest in team member engagement

Even during a hiring freeze, keeping people engaged is a priority. Offer learning and development opportunities, wellness programs, or team-building activities to reinforce a sense of connection and purpose. Small investments in engagement can have a big impact and show your people that you care. 

Hiring freeze announcement example

When announcing a hiring freeze, focus on clarity and transparency. A thoughtful, empathetic announcement should explain why the hiring freeze is happening, outline what it means for the team, and provide reassurance about the company’s direction. 

Here’s a hiring freeze template to try: 

Subject line: Update on [company name] hiring plans

Dear team,

I want to share an important update about our hiring plans. After careful review and consideration of [specific reasons, such as economic conditions, market shifts, or strategic priorities], we’ve decided to put a temporary hiring freeze in place. This will apply to [specific scope, such as all open positions or certain departments].

This decision allows us to focus on [specific goals, such as maintaining financial stability, supporting current team members, or strengthening our long-term position]. While this pause is necessary, it’s also temporary. We’re continuing to monitor the situation closely and will share updates as we move forward.

Here’s what you can expect:

1. Hiring pause: New roles will be temporarily on hold, with the exception of [specific exemptions, such as critical roles tied to operations or strategic goals].
2. Commitment to our team: This measure is designed to prioritize our current team and ensure we’re in the best position to work through [specific challenges, such as economic uncertainty or restructuring].
3. Open communication: We know this news may spark questions or concerns. Please reach out to your manager or [specific contact, such as HR or People Operations] if you’d like to discuss this further.

We recognize the hard work and dedication each of you brings every day, and we’re grateful for your continued commitment. Together, we’ll navigate this period thoughtfully and make sure we’re ready for the opportunities ahead.

Thank you for your understanding and support.

Sincerely,
[Your name]
[Your title]
[Organization name]

<<Download this hiring freeze announcement template.>>

Support your people through a hiring freeze

A hiring freeze can be a challenging time for your organization and the people who keep it running. While it’s a necessary step for managing costs or navigating uncertainty, how you handle it can make all the difference in maintaining trust and morale.

HR leaders play a critical role here. It’s not just about managing the freeze—it’s about showing your team that they’re valued and supported. Clear communication, transparency, and a strong focus on wellbeing can help your people feel grounded and informed.

Take steps to keep engagement high, even when hiring is paused. Offer opportunities for development, encourage internal mobility, and recognize the contributions of your team. These actions don’t just demonstrate care—they help maintain stability and purpose during uncertain times.

<<Use this hiring freeze announcement template for clear communication with your people.>>

Hiring freeze FAQs

Does a hiring freeze affect promotions?

A hiring freeze can impact promotions, depending on the company. Promotions usually don’t add to headcount, but they might involve salary adjustments, which could be limited during a freeze if the company can’t financially support them.

If promotions and raises are affected, communicate that clearly with your team. Explain the situation, set expectations, and provide transparency about when promotions might resume. This helps maintain trust and reassures people that their hard work is still recognized.

How do hiring freezes affect pending job offers?

Pending job offers can be impacted, especially if a hiring freeze is sudden. In some cases, companies honor existing offers and proceed with onboarding as planned. Other times, they may delay or even withdraw offers due to unforeseen changes in priorities or budgets.

For candidates with offers in limbo, communication makes all the difference. If an offer is delayed, explain why and share a realistic timeline for next steps. Being upfront about the situation shows respect for the candidate’s time and interest. It also keeps the door open for future opportunities when hiring resumes.

How long do hiring freezes usually last?

The length of a hiring freeze can vary widely. Some last just a few weeks, while others may extend for months, depending on the circumstances driving the decision. For example, a freeze tied to a specific financial goal might end once the company achieves stability.

Organizations often monitor key metrics like cash flow, market conditions, and workforce needs to decide when to lift the freeze. Regular evaluations help ensure the pause is temporary and aligns with the company’s long-term plans.