This is Part 2 of our blog series for People leaders, Managing Uncertainty, Engagement, and Your Own Mental Health.
Many companies are enacting hiring freezes amid economic uncertainty
After one of the busiest year-long hiring sprees in history, many companies are now scaling back in anticipation of a potential recession. And following the Federal Reserve’s fourth interest rate hike this year, some organizations are implementing hiring freezes.
The tech sector has been hit particularly hard, and employees report feeling significant job insecurity.
This puts many HR leaders in a difficult position. Just a month ago, they were scrambling to fill job openings. Now they need to reevaluate their hiring strategy and take a more cautious approach in case of recession.
Employee engagement has already become a central concern for companies amid the ongoing pandemic and global geopolitical instability. If your organization is facing a hiring freeze, here’s how to keep engagement high and burnout low.
How a hiring freeze affects employee engagement
The erratic nature of the economy during the past two years has been hard on employees and HR departments. There’s a sense of instability, which has translated into fear and uncertainty in the workplace.
Hiring freezes contribute to those feelings by sowing doubt about a company’s future. They also increase employee workloads and can send a message that layoffs are possible in the near future.
If People leaders don’t take steps to combat the effects of disengagement, it can creep into the workplace during a hiring freeze. In fact, engagement has been trending downward since late 2021 across all types of workers, hybrid, at-home, and in-person. According to this study, only 32% of employees feel engaged and 17% are actively disengaged in their work.
Here are a few ways disengagement can show up in your employees:
- Low morale and declining productivity
- Confusion, uncertainty, and fear about the future
- Sense of pointlessness: why work hard when layoffs may be around the corner?
- Increased workload, leading to stress and burnout
- Higher turnover as employees fear layoffs and choose to leave for a more stable environment
The key to keeping employees engaged
Enacting a hiring freeze doesn’t automatically mean that lower engagement follows. According to the results of Gallup’s worker survey, engagement is higher for companies that prioritize culture and wellbeing—revealing the key to keeping employees engaged during a pause in hiring.
This Gallup article states that, “Employee engagement is foundational to improving the wellbeing and resilience of a workforce because it contains elements of communication, caring, development, involvement, and collaboration. These elements set the stage for developing trust—which opens the door for addressing overall wellbeing.”
Shifting focus to prioritizing engagement
During a hiring freeze, People leaders can shift their focus from recruiting and hiring to spurring engagement and stemming attrition.
The good news is that centering company culture around employee wellbeing is one of the best ways to increase engagement.
What does a company culture look like when engagement is high and employees are thriving?
Open communication and collaborative relationships are the foundation
Communication is the basis of all healthy relationships, both at work and in the wider world.
In the workplace, to avoid uncertainty and ambiguity, open communication must constantly be happening between coworkers, managers and the people under their purview, and C-suite and People leaders. It’s just as essential to clearly communicate the company’s values and vision for the future, both internally and externally.
Communicating in these four ways can increase engagement during a hiring freeze:
- Transparent communication. Explain your decision-making process when announcing a hiring freeze, share a timeline (for example, when we hit these benchmarks we’ll start hiring again), and be real with employees. They’ll appreciate honesty.
- Articulating a future vision for the company. What’s your plan to keep growing during and after a hiring freeze? Give employees a shared sense of future goals.
- Regular updates. If employees don’t get regular status updates, it can feel like the freeze will never end, and rumors could start to circulate about layoffs.
- Give employees various feedback methods about their shifting roles and needs: one-on-one’s with supervisors and/or People leaders, anonymous forums, and team feedback meetings. The more types of communication employees can use, the better.
How to effectively reduce stagnation
Now that we’ve covered the foundation of keeping engagement high during a hiring freeze, let’s talk about some ways to fend off stagnation.
Inspiring creative thinking and ensuring employees feel heard
Once everyone is on the same page about the direction of the company, it’s time to get employees out of any potential ruts.
Being bored at work, experiencing a sense of directionlessness, and understimulation all contribute to an environment where employees feel uninspired and productivity takes a hit.
Here’s how People leaders can motivate employees and generate excitement, even while hiring is paused:
- Validate and encourage creativity. Keep employees from languishing by forming brainstorming sessions, letting employees work on passion projects, or allowing them to pursue innovative problem-solving solutions for their department.
- Invite employees to share ideas about the best ways to get their work done. Maybe there’s a creative cross-department relationship or project to embark upon. Research shows companies that listen to and act on employee feedback are three times more likely to hit or exceed their financial goals.
- Highlight or offer opportunities for current employees to take on a new role or leadership position. This study revealed that workers who have access to professional development opportunities are 15% more engaged. Consider using career development, stretch assignments, and even mentorship opportunities to engage and retain employees.
A LinkedIn report found companies that are proficient at internal mobility retain employees for an average of 5.4 years—twice as long as companies that struggle with it, whereas the average retention time is only 2.9 years.
Hiring freezes don’t have to cause stagnation among employees. Shifting the focus away from external hiring to cultivating the growth of existing employees is another way to keep employees engaged and stimulated.
Promoting and encouraging internal growth
Although growth from external hiring is put on hold during a freeze, it’s a good time to encourage existing employees to pursue development and fill needs from within.
For example, People leaders and supervisors can:
- Encourage and offer employee development programs and training.
- Show existing employees appreciation. Notice, reward, and validate initiative, innovation, and creativity on a regular, ongoing basis.
- Focus on relationship building between existing employees and teams.
- Allow time for deep work, protected from interruptions like Slack and email messages, and last-minute meeting invites. This allows employees the ability to focus projects and be more productive, giving them a sense of purpose and engagement.
It’s okay if the pace slows a bit during a hiring freeze. A slower pace can allow existing employees to develop and strengthen relationships so that when hiring resumes, the company is more resilient and ready for sustainable growth.
The connection between mental health and engagement
A hiring freeze presents an opportunity to shift your focus to the company culture. Carefully evaluate whether the way it’s built is conducive to employee mental health and wellbeing.
When employees are stressed, overworked, feeling directionless, and morale is low, one way to improve engagement is to support mental health.
- 25% fewer missed work days
- 24% increase in productivity
- 60% less likely to leave their job
Along with providing professional mental health support, People leaders and supervisors can also bolster mental healthy by:
- Encouraging employees to use their PTO.
- Implementing mental health days.
- Allowing schedule flexibility so employees can add self care (therapy, coaching, mindfulness breaks) to their work weeks. It may seem counterintuitive, but they’ll be able to bring more to the table when mental health is made central to workplace culture.
- Respecting work/life boundaries, with company-wide rules like not contacting employees outside of work hours. This is most effective when leaders provide a healthy example.
- Fostering ongoing conversations around mental health, checking in with employees during a hiring freeze, and asking how they’re feeling. With Spring Health, if your employees need professional support, they can get an appointment with a therapist or a coach in less than two days.
A renewed focus on engagement and workplace wellbeing
After a year of rapid expansion, many companies are responding to a potential recession by pulling back on hiring.
While this can cause disengagement if unaddressed, it can also be an opportunity to renew workplace culture through open communication, encouraging creativity, promoting internal growth, and prioritizing mental health.
By focusing on these areas, companies can come out on the other side of a hiring freeze healthier and more resilient than ever.
Read this blog next to learn how to navigate the current economic uncertainty and conduct layoffs with empathy and respect, while prioritizing and protecting your own mental health.