May 12, 2022

Applicant Tracking Systems – An Executive’s Guide

Everything you need to know about the essential software powering your recruiting efforts

An Applicant Tracking System (ATS) is effectively the core business software used to manage your hiring. Read on to learn how you can save hours a week managing your talent pool and reduce your time to hire.

What we’ll cover

Reading time 10 minutes

What is an Applicant Tracking System?

An Applicant Tracking System (ATS) is software that organizes and simplifies your recruitment activities. It helps companies post on multiple job boards, route incoming applicants, send automated messages, filter applications, and rank candidates for open positions. An ATS is like a sales CRM for your recruiting funnel: it won’t replace your recruiting, interviewing, and hiring steps, but it will make your team more efficient at every step.

A majority (56%) of those without an ATS are either planning to acquire one or considering it

How does an Applicant Tracking System work?

An ATS follows the stages of the candidate lifecycle and centralizes everything in one dashboard so your team can stay on the same page. A typical simple hiring process might look like this:

  • Add your open job positions
  • Post your openings to your website, to relevant job boards, and share them on social media
  • Review applications as they come in
  • Schedule interviews between your co-workers and candidates
  • Communicate internally to rank and select the best candidate
  • Create formal job offers, send them out, and track responses

Your ATS is your “system of record” for your candidate data through the workflow above. This system of record allows other tools to make you even better at hiring: you might integrate Zoom for video interviews, Google Calendar for scheduling, and an HRIS to convert a candidate to an employee.

Source: TechTarget

Why would we need an Applicant Tracking System?

Suppose your candidates apply online, and you have more than one job opening. In that case, two things are true: you lose hours a week to minutiae that can be automated, or worse, you don’t do it at all. Two, your competition uses an ATS and will hire the best candidates before you even see their resumes.

The good news: you can start with a freemium ATS (such as JobScore) and start organizing your company’s candidate data in one place. You could build an improvised tool using emails, spreadsheets and maybe a simple form builder, but an established ATS will bring best practices to make you better at hiring. An ATS helps you overcome challenges in the hiring process by automating repetitive tasks, optimizing your workflow, and providing data to improve your approach. A good ATS can save you hours or even days per week and help you make better hiring decisions.

More than 90% of Fortune 500 Companies are currently using an applicant tracking system

Here are some of the acute problems an ATS can solve:

  • You needed to hire for a job opening yesterday. After publishing a job, you don’t have enough high-quality candidates.

An ATS should integrate with dozens of job boards to let you post with one click; no more creating endless job board accounts to manage.

  • You’ve created jobs on multiple job boards, but now you have to check each website for new applicants.

When an ATS integrates with a job board, it doesn’t just post your job – it collects the new applicants in one place. You have one login to see every application.

  • You can’t get jobs on your website quickly and easily.

Most ATSes provide a beautiful, modern, mobile-optimized careers site so you can add and edit jobs without making another request to your IT team.

  • Your best hires come from employee referrals, but you don’t get enough.

A modern ATS can help power an employee referral program with easy social media sharing.

  • You’ve posted on a few job boards and received resumes, but now you have to manage them in your email – or sign in to every job board to get their resumes.

When applications come in through email, a spreadsheet can’t save you from manual data entry. A modern ATS will integrate with your email and automatically bring every application into the ATS, so you can view, sort, and rank them in one place.

  • “I don’t have time to get back to people, especially when they aren’t a slam-dunk fit.”

An ATS helps you track the stage of every candidate and templatize your responses.

  • “I have no idea what is happening with our candidates!”

When your ATS integrates with your email, you’ll be able to see every conversation with a candidate in one place, so you know what is happening. Plus, reporting dashboards can give you a macro view of your pipeline so you can predict Time to Hire and other essential metrics.

The long-term benefits of adopting an Applicant Tracking System

Besides solving immediate problems in your hiring process, an ATS will make your team better at hiring.

Elevate candidate quality

The best talent evaluates your company before applying. Their impression of your job postings, careers page, application forms, and post-application communication will impact whether they consider joining your company. An ATS with even the most basic careers page branding, candidate stage management, and email templates will level up the experience and increase the quality of your talent pool.

78% of recruiters using an ATS report that it has improved the quality of the candidates they hire. Most HR professionals agree that their ATS helps them stay organized (88%) and save time (78%)

Reduce your time to hire

Hiring is relatively fast and easy when you are the only person on a hiring team. You are the bottleneck. You know where every candidate stands; you can make immediate offers when you find the right person.

When you hire as a team, the process grows more complex. Every handoff risks losing a candidate to the black hole. For example, you ask an employee to email the candidate to schedule an interview. The employee forgets, or the candidate doesn’t see the email: just like that, you’ve lost track of the candidate because you don’t have a process to follow up with the task.

Over time, you might feel your hiring velocity slow down, but you can’t quantify why. An ATS can diagnose this by providing reports on each stage, showing all communications with a candidate, and automating follow-up.

Managing the volume of applications is the most widely cited benefit of using an ATS (71%) and reducing time-to-hire is the second most widely cited benefit (60%)

Hire better talent

When your speed slows down, it can be tempting to settle for lower-quality talent just to fill a position. An ATS improves your quality of hire through small optimizations at every step:

  • More job boards mean more candidates see your postings
  • A better career page means more candidates apply
  • Employee referral programs lead to better candidates referred by your existing employees
  • You can evaluate more candidates to find the best hire
  • Fewer candidates lost in handoffs
  • Fewer candidates lost in scheduling
  • More interviewer ratings mean you get a better assessment of each candidate
  • Templated offers and emails, so you communicate better
  • Remembering your best candidates for previous jobs means you can follow up when a new position opens

These optimizations may not move the needle for your business on their own, but when used together, you’ll notice an improvement in your hiring.

Avoid bad hires

There are two types of hiring managers: those who have never made a hire and those who have made a bad hire. As you are likely among the latter, you already know the emotional and financial consequences of hiring the wrong person.

An ATS won’t eliminate all your bad hires, but it will help. In a 2015 study, Glassdoor found that organizations lacking a standardized interview process are five times more likely to make a bad hire. Meanwhile, organizations that invest in a strong candidate experience improve their quality of hires by 70 percent. A modern ATS will help you standardize your interviewing process, improve your candidate experience, and enable feedback from more stakeholders, so you don’t sleepwalk into hiring the wrong person.

In a 2015 study, Glassdoor found that organizations that lack a standardized interviewing process are five times more likely to make a bad hire than those with one.

Grow your business

Are you hiring a salesperson? An ATS can mean the difference between hitting your target revenue goals and missing them. Similarly, suppose you’re hiring for the core operations of your business, such as lawyers in a law firm or associates in an agency. In that case, an ATS can impact your maximum revenue potential and growth.

Sales Example: you have three salespeople carrying a combined annual quota of $900k, and you want to grow to $1.5M in sales. You’ll need to hire two more salespeople at your average quota. Every month you lose in hiring the next two salespeople will cost you $25k in lost sales.

Agency Example: you have a $2M services business with ten associates billing $200k per year, and you want to grow to $3M. You’ll need to hire another five associates and train them up to full utilization. Every consultant-month lost will cost you $16k in revenue.

Those organizations that say they’re good at talent acquisition (i.e., high- performing TA organizations) use an ATS at a higher than average rate: 81%. In contrast, only 65% of those with lower-performing TA functions use an ATS.

How to select an Applicant Tracking System

With hundreds of ATS options available, selecting the right one can feel daunting. After all, your goal is to hire better, not learn an entire software industry landscape.

The good news: you don’t need to commit your business to a forever ATS. Many ATS offer relatively simple data exports, allowing you to move to a new system when that time comes. (If your vendor charges you to produce a report on your data, run in the opposite direction!).

If you expect your business to grow, you’ll likely change your ATS in the future. While some vendors promise to support you at every business size, you’ll find cost, complexity, and adoption tradeoffs that make this a suboptimal choice. Instead, look for the ATS that matches your expected growth and addresses your immediate business needs – without requiring a Ph.D. to use it.

Understand the problem that needs to be solved

Consider your most acute needs and bottlenecks in your hiring process. Do you struggle to impress candidates? Do you have enough candidate pipeline? Do you lose candidates in the hiring manager feedback black hole? Do you find candidates ghosting you after accepting offers? Do you lack visibility into your recruitment team’s performance?

Understanding the critical problems to solve will get you closer to the right product. Some applicant tracking systems focus on the business with a hiring team of one. At this level, an ATS can help you reach more candidates quickly, but you might struggle to get meaningful reporting, and you won’t find many technical integrations.

Other platforms focus on larger enterprises, where you might have a team of fifteen recruiters with specialized roles. In these systems, you’ll find thousands of integrations and reports. However, for a smaller hiring team, most of these features will be superfluous and only make your learning curve steeper.

Understand your IT constraints

When considering your ATS, you must consider your IT constraints.

Do you pay an IT professional whenever you want to add a job to your website? If you do, the IT support savings might be enough to justify buying an ATS. Once you complete the initial integrations, you’ll be able to update your careers pages and jobs without technical expertise.

Larger companies will need to consider their existing technical dependencies and ensure compatibility. You may already have an HRIS or another critical tool: the integrations will play a significant role in your choice of ATS.

There are two kinds of integrations: those that work as expected and those that integrate with your HRIS. Knowing which one you need will prove invaluable.

Identify the best value for your team

Once you understand the critical problems to solve and your IT constraints, you should be able to narrow your list of options significantly.

Many companies will offer you a low price to win the contract and bet they can ratchet the price once you become dependent on them. Other companies will demo their entire product suite but then quote you a low price that doesn’t include what you need. Perhaps the most important thing here is to make sure you’re comparing apples to apples.

While it can be tempting to buy the most features, remember: the best software is the one that makes your team better at hiring.

On a more basic level, only 51% of lower-performing TA organizations say their ATS is easy to use, whereas 86% of high-performing TA firms say the same.

How much does an Applicant Tracking System cost?

You can find an ATS at every price from “free” to $100k+ per year.

In general, you can expect to pay $20-200 per year per employee, with significant jumps in cost:

  • From email support to live support
  • From minimal integrations to full integrations
  • From minimal workflows to complex advanced workflows

Another way to look at cost is to consider the alternatives.

  • Most applicant tracking systems offer a better value than not hiring at all
  • Most applicant tracking systems cost less per year than making one bad hire
  • Most applicant tracking systems cost much less per year than paying staffing agency fees

The typical cost factors in your price will be:

  • Usage: the number of hires per year or your number of users or number of employees
  • Features: either by tier or modules
  • Integrations: typically, integrations will require more expensive pricing tiers
  • Contract length: most companies will discount on longer contracts
  • Training: some companies will charge extra for training and onboarding

Every company will have a slightly different price for your needs. Sometimes you’ll find a critical feature in one system will be included at a lower-tier; another system will bundle this feature with a higher pricing tier; a third system might offer this feature a la carte. The takeaway: always compare apples to apples.

The future of Applicant Tracking Systems

The future of applicant tracking systems is actually the future of hiring.

When hiring teams first started to adopt applicant tracking systems in their workflow, the primary channel for job listings was classifieds. There was no LinkedIn, and working from home was still called “telecommuting.” In this environment, a good ATS was simply a database to track communication and people.

As hiring has evolved, recruiting platforms have evolved with it. Today, even a free ATS will get you immediate exposure to hundreds of job candidates. A modern ATS will integrate with other platforms to bring video interviews (Zoom), multi-channel conversations (email and SMS), and the global public talent pool (LinkedIn).

So what does the future of hiring look like? While we cannot guarantee the future, look for some of these trends:

  • Long-tail talent search: what started as primarily a DEI-driven initiative will become a strategic advantage as companies learn how to identify undervalued talent.
  • Internal talent acquisition: as the unique channels to find new talent dry up, companies will increasingly look to keep their existing talent longer by providing more internal job opportunities.
  • Data portability: legal trends in the EU have led to more consumer data control. Will employees receive the same treatment? In the future, recruiters may leverage their toolset, moving their database from company to company, offering temporary access to their employer in exchange for their salary.

While the past decade has seen a focus on the expansion of integrations and channels, there is a limit to how many channels you can add and integrations that will make a difference. The next decade will likely include focusing on strategic solutions to take advantage of dislocations in the employer-employee psychological contract and the office-home location separation.

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