Definition
The term hiring freeze refers to a temporary policy that eliminates the filling of non-essential job openings. Hiring freezes are usually instituted as part of a larger short-term cost cutting effort.
Explanation
When an employer institutes a hiring freeze, they have made a decision to delay the filling of open positions in their organization. This policy usually applies to job openings the company classifies as "non-essential," which are those that provide a support function and not directly involved in processes that generate revenues or provide customer support.
Hiring freezes are oftentimes used to close a temporary budget gap. By not hiring new employees, the company may be able to avoid laying-off active employees. They are also used when a company is reorganizing, consolidating, or downsizing their operations. For example, active employees may be moved from positions eliminated during an organization into those vacated by former employees.
Hiring freezes are criticized for a number of reasons, including:
Allowing managers to retain low performing employees instead of dealing directly with performance issues.
The practice of hiring temporary employees during a freeze, thereby eliminating some of the potential cost savings.
Lowering employee morale; since active employees are often asked to take on additional job responsibilities until the freeze is over.
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