Amid hiring freezes, HR leaders turn to internal mobility and upskilling

Facing lower turnover and hiring freezes, HR pros are prioritizing internal mobility and skills-based shifts in their organizations, according to a Sept. 8 report from Careerminds, an outplacement company.

Quit rates have fallen to 2%, according to U.S. Bureau of Labor Statistics data, leading HR teams to focus on internal reskilling and workforce redeployment rather than external hires.

“We’re seeing a clear shift in how HR leaders are approaching talent needs,” Raymond Lee, president of Careerminds, said in a statement. “Instead of defaulting to external hires, many are upskilling and reskilling their existing workforce. This not only helps to control costs in a tighter budget environment but also strengthens employee loyalty.”

The U.S. jobs market appears to be stalling, with only 22,000 jobs added in August and June’s numbers revised to reflect a loss of 13,000 jobs, according to BLS data. The slow pace may not be enough to stop unemployment from rising, economists said.

In fact, more CHROs said they expect to decrease hiring during the next six months, according to a report from The Conference Board. In response, half of HR leaders said they plan to invest in change management training for leaders and managers.

In the Careerminds survey of 600 HR managers, two-thirds said their employers have implemented hiring freezes, with 22% stopping recruitment across all roles and 44% limiting freezes to specific departments or positions.

Among those with partial freezes, 36% have paused hiring for all entry-level roles, leaving recent graduates in a lurch during the job search. Another 30% have paused mid-level hiring, while 25% have halted leadership hiring.

In terms of timing, nearly half of HR managers said recruitment will likely remain paused for the next 12 months. In addition, 16% projected a two-year pause, and 32% anticipated a six-month freeze.

HR managers said hiring freezes were primarily implemented due to cost reductions and budget restraints, pointing to reasons such as economic uncertainty, board pressure to limit headcount, automation replacing the need for new roles, a shortage of qualified talent, organizational restructuring, shifts in business priorities and regulatory uncertainty.

In response, HR managers said they’re reviewing career frameworks and looking for ways to keep workers engaged. For instance, 43% said they’re upskilling their workforce, particularly in digital and tech skills, risk management, cybersecurity, leadership and people management.

“By upskilling employees, we expect to see an uptick in not only retention rates across the market over the coming months but also overall employee satisfaction at work,” Lee said. “After all, upskilled employees are satisfied employees.”