Should you panic if your company implements a hiring freeze?
The quick answer? No. But you also need to recognize what a hiring freeze means.
- Some companies have suspended hiring plans due to recession concerns.
- A hiring freeze doesn’t mean you’re about to lose your job, but it could be a sign that things might not be so rosy.
- Take the time to build up your job skills and add money to your emergency fund, just in case.
Inflation has been raging for over a year now, and the Federal Reserve decided it was time to do something about it. As such, he implemented interest rate hikes in an effort to slow consumer spending. The logic is that if it becomes more expensive to borrow money through loans and credit cards, consumers will reduce their spending, thereby narrowing the gap between supply and demand that causes a surge in inflation.
But if the Fed ends up implementing too aggressive rate hikes, it could cause a huge decline in consumer spending. And that could, in turn, lead to a recession.
In fact, many financial experts have been warning of an impending recession for months. And employers seem to be listening. Over the summer, a number of major companies announced hiring freezes, and in the coming months more may follow.
But should you be concerned if your company announces a hiring freeze? Here’s what you need to know.
Your work is not necessarily on the chopping block
A hiring freeze, as the name suggests, occurs when a company decides that it will not extend job openings to new people or fill new roles. Some hiring freezes can be very short-lived, lasting only a few weeks. Others can last for months.
During a hiring freeze, a company may take the time to re-evaluate its needs, especially if it is concerned about decreasing cash flow in the short term. It could also look to change things up to make better use of its existing resources and staff before recruiting new people.
If you work for a company that announces a hiring freeze, it’s natural to worry about your own employment situation. But a hiring freeze is not the same as downsizing. In the latter scenario, a company is actively downsizing. In the first case, it’s just not about attracting new people. So if you hear that your company is halting its hiring efforts, it doesn’t necessarily mean you’re about to be laid off.
But it still pays to be prepared
On the other hand, a hiring freeze could indicate that your company is worried about declining revenue, whether due to a recession or some other factor. And so, if your company says it’s holding back hiring a bit, you might want to take that as a sign that some commotion is expected.
Again, this in no way indicates that you will lose your job. But it could mean that changes are about to happen.
Let’s say your company really needs a few more people in your department, but announces that it won’t be hiring for the next 12 weeks as it reassesses its needs. This could be a sign that your workload is about to increase in the short term in the absence of having more hands on deck. Also, if you’re up for a promotion and your company announces a hiring freeze, you should take that as a sign that you may not be hit so quickly.
It is also fair to say that a hiring freeze could be followed by layoffs if financial conditions deteriorate in your business or if economic conditions deteriorate overall. And so it’s something worth preparing for the same way you would for a recession – by building up your emergency fund and upgrading your job skills to make yourself as valuable as possible.
Learning that your company is implementing a hiring freeze can be disconcerting, but it’s not necessarily cause for alarm. At the same time, it pays to keep tabs on your company’s hiring policies and any other changes that may result.
Alert: The highest cash back card we’ve seen now has 0% introductory APR until almost 2024
If you use the wrong credit or debit card, it could cost you dearly. Our expert loves this top pick, which features an introductory APR of 0% until nearly 2024, an insane payout rate of up to 5%, and all with no annual fee.
In fact, this map is so good that our expert even uses it personally. Click here to read our full review for free and apply in just 2 minutes.
Read our free review