Recruiting Problem: Your firm had a bad quarter to report, so your firm’s executive team had a knee-jerk reaction to presumably appease the investment community by imposing an across the board hiring freeze. The intent was to ‘stabilize’ your firm’s work force and demonstrated your firm’s management can control costs. There’s nothing of real negative consequence from this action, right?

WRONG! This measure is absolutely wrong for several reasons.

1. Your firm has just undermined your job requisition process & management relationships. Any and all justifications are irrelevant. What ever happened to achieving your next quarter’s strategic objectives? You may have just torpedoed their attainment, if key personnel additions were expected to make this possible. Critical R&D milestone attainment premised on filling positions vital to completing projects to the current schedule will likely be in jeopardy. So much for those recent inspirational meetings with management, portraying the objectives as immutable.
===> Recommended Action: Prioritize the open req’s and re-open those vital to your strategic objectives, preserving your management team’s credibility.

2. Your firm placed cost containment over revenue and earnings growth. Reducing costs, while increasing the risk of softened revenue, given delays in new product releases (impacted from your cost custs) is not an appealing reason to hold stock in your firm. Further, if you rivals are not similarly cutting costs, your executive team may have to speak about the logic of losing market share and how and when your firm will recover it once again.
===> Recommended Action: Ensure you have the staff needed to release mainstay products scheduled for release within the next 12 months, uncapping any req holds.

3. Your employees don’t see your austerity measures in the same light. Your executive team’s action conveys to employees a message that all is not well with their firm, their leadership team has inadequately prepared themselves for the current state of affairs, and their projects are at risk of elimination. Good, reliable employees of yours will begin considering departing for better opportunities.
If you have specialized talent in niche markets, departures of any key employees can be devastating.
===> Recommended Action: Actively correct the blanket hiring freeze with the above recommended actions. Provide your management team with latitude in how to re-balance staffing and non-staffing expenses to meet a lower level of corporate-wide spending, with no sacred cows given special protection, while meeting a jointly supported set of near-term strategic milestone targets and deliverables.

Best wishes navigating through these challenging times!
Alfredo Hannenberg