The Folly of the Hiring Freeze

The Folly of the Hiring Freeze

In twenty years of recruiting, I have seldom seen this make sense…

In tight economic times, companies often reduce staff size to accommodate reductions in revenue or to expand shrinking margins.

As a short-term financial strategy, this move has some merit.  By eliminating a small percentage of jobs, a company can often protect the vast majority.  Plus, the jobs that are eliminated are generally the less productive workers, so by letting them go, I can protect the talent that is the essential lifeblood of my business.

What does not make sense, however, is the second strategy organizations often employee during lean times: the hiring freeze.  Basically, when a company freezes hiring, they are saying, "No matter how good the talent is on the external market, and how much it would help me, I don't even want to consider buying it."

There are several reasons that this doesn't work:

We Already Have a Shooting Guard

Imagine I am an NBA coach, and the phone rings, and on the other end is Michael Jordan, and he says, "Listen, I visited your city last week and I fell in love with it.  I want to make a comeback.  Got any openings?" And I respond with, "Wow, Mike, we would love to talk to you, but unfortunately we have a hiring freeze right now, and are going to continue playing with the team we have.  Yes, we are 15-46, but we have to meet margins, you know?  Check back with us in six months." So, Michael Jordan joins my divisional rival, and I count my margins as the team up the street counts their championship rings.

This is essentially what happens in a hiring freeze.  A company turns away top talent automatically, and hands it over to its competitors.  This can't be the optimal approach to growing a business.

Less Jobs Equals More Talent

Often during lean times, high impact or industry specific talent is available when it isn't normally available.  Think of how many crackerjack information technology professionals are available right now because the dot-com they joined last year just lost its funding, necessitating layoffs.  During lean times such as this, I have access to talent that I wouldn't otherwise.  So while the other companies are freezing their hiring, it is my opportunity to make them pay by scooping up the talent they missed out on.  Sure, I may have to scour the couch cushions to pay them, but the long-term rewards I reap will be enormous.  Because in the end, talent is everything.

It's Always Summer Somewhere

A freeze assumes that just because I am not hiring, my employees are not looking to leave.  What recruiters must realize is that turnover happens 24-7, and in many cases, when they least expect it.  The fact of the matter is, even happy employees change jobs.  So, I must be prepared, and should always be recruiting in anticipation of even my most loyal employees resigning.  Because, in fact, I never know when they will leave, and I must be prepared.

You Can't Shrink Your Way to Growth. 

I have never heard of a service-oriented company increasing its revenues by becoming smaller.  An auto manufacturer can replace people with robots and increase business.  A service company simply cannot. 

The Economy is Cyclical

Tight times or slow sales don't last forever.  I should always be filling my talent pipeline in anticipation of improved economic conditions.  Because when the market does rebound, if I don't have the infrastructure in place to support increased business, I will have to grasp for marginal talent that I would have never hired normally.

The talent you employ has brought you where you are.  The new talent you'll hire will make or break your future.  It is the most important asset a company has.  The worst thing you can do as a hiring manager is make talent decisions based on anything but the quality of that talent.  If you do, you'll miss the boat when the tide comes back in.