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What Is an Applicant Tracking System (ATS)?

BY -

Emmanuel Smith

October 6, 2021

Want to grow your HR tech knowledge 🤓?

The human resource world seems to be chock full of three-lettered acronyms: OKRs, KPIs, CRMs, CEMs, etc. (Check out our informative article on the difference between OKRs and KPIs by the way)

Yet another three-lettered acronym is the Applicant Tracking System (ATS). It’s one that has made such an impact on how we conduct our hiring practices that over 99% of Fortune 500 companies use a form of Applicant Tracking System.

So what is this recruitment software? How does it work? And how can it help you as a business organization like it has helped these Fortune 500 companies? 

Read the rest of this post to find out.

What Is an Applicant Tracking System (ATS)?

An Applicant Tracking System (ATS), also commonly referred to as an applicant tracking software or talent management system,  is a centralized, computer-based tool that helps HR managers and hiring teams manage the entire hiring process for a company — from the beginning to end. These processes could include sourcing qualified candidates, parsing applications, and organizing hiring phases to make it easier for both the hiring managers and the applicants.

Most hiring managers complain about how stressful and tiring it is to hire the right fit for a position. So much so that there is a term used to tag the exhaustion that comes with hiring and managing talent: recruiter burnout

According to a Vox report, the tediousness of the recruitment process is mainly due to two reasons:

  • There are too many applicants per open position, thereby complicating the process of finding the right candidate with sufficient work history. 
  • Something economists call “skill mismatch,” where the applicants for these positions are simply not a match with the job description.  

The cumulative effects of these two factors lead the recruiter or hiring manager to always ask the question: “Which of these applicants is the right candidate?”

It is not only stressful for the recruiters but also for the applicants. While the HR team is trying to parse applications, other areas can be left lacking, like communication, leaving the applicants wondering where they stand.

Here is where recruiting software like an ATS comes into play. A comprehensive Applicant Tracking System helps eliminate this hiring fatigue by using filters based on parameters and keywords to pick the best applicants, as well as helping you structure a meticulous recruiting strategy that leads the right applicant to be successfully employed to the position in which they applied.

Typically, an ATS will handle tasks like job postings, gathering applicant data, screening job applications for best matches, and storing data for record purposes. It is essentially an all-in-one hiring package that improves the optimization of your talent acquisition process.

A recruiting preparing tasks for ATS


How Do Applicant Tracking Systems Work?

The purpose of ATS software is to streamline and automate recruiting processes by organizing applicant data in one database. Now there are several Applicant Tracking Systems, and all of them operate differently to track and organize applicant data — not too differently, we might add, because all of them have a similar mode of operation centered on these four chronological steps:

  1. Job Posting and Distribution

When there is a job vacancy, the first thing you want to do is create awareness and share to platforms where your target candidates will likely be. With just a few clicks, an ATS will create and publish comprehensive job postings on any platform you choose. 

Most automation systems will allow you to connect with the job boards or careers pages on your website. Many integrate with third-party recruitment platforms like Indeed, CareerBuilder, LinkedIn, and even social media, making it easier for eligible candidates to interact with your posting. 

  1. Application Collection, Sorting, and Data Storage

Candidates interact with your job posting by sending their resumes and cover letters (if applicable). Whichever platform the resumes come from (LinkedIn, Indeed, your careers page, etc.), the ATS will gather all of them in one database. 

Some of the best ATS software will allow you to set eligibility parameters (work experience, skill sets, etc.) so applications that don’t meet these requirements will be immediately rejected.

Every resume submitted is also stored in the Applicant Tracking System so you never lose track of top talent. 

This functionality is especially useful when you need to hire more employees, or you feel some of the applicants will be a better fit for other positions in the company. You can always go back to review resumes in the ATS software.

  1. Collaboration and Interaction

Applicant Tracking Systems make it easier for recruiting teams to collaborate and work closely together in the hiring process. The hiring manager can easily share information on preselected candidates with other team members and colleagues, assign roles, and ask for remarks on different applicants in the ATS. 

The hiring manager can decide to involve every member of the company in the hiring process at this point if he or she chooses to. This could be beneficial for small companies so the employees affiliate themselves with who they will be working with before they step foot in the company.

Applicant Tracking Systems also allow you to interact with the applicants efficiently. Most, if not all, have built-in communication channels and email reminders to help the HR team consistently keep in touch with candidates. 

The hiring manager can also schedule interviews in the ATS. Most even enable you to set up and conduct the interview within the platform. Others integrate with third-party video conferencing tools like Zoom.

  1. Onboarding and Follow-up

Subsequent to hiring the best candidate for the job, most Applicant Tracking Systems integrate with some of the best onboarding software to acclimate new hires with their roles and general workflows in the company. Depending on how it is programmed, the ATS can also send follow-up emails and materials to the new employee before their first day.

Companies also use reports generated by the ATS to review their hiring data so they can identify ways to improve their hiring processes in the future.

Two recruiters reviewing applications while using ATS software


Why You Need an ATS

As a hiring or human resource manager, we highly recommend the use of an ATS for your hiring processes. Besides making your life, and that of your candidates, a lot easier, here are some other benefits of using an Applicant Tracking System.

  1. Efficiency

Using an ATS improves the efficiency of your hiring process in so many ways. First, you know you are getting the right fit for the job opening because the software filters applications and presents only those who are qualified. 

Furthermore, an ATS saves you valuable time and energy you would have otherwise spent on sifting bad candidates from the applicant pool.

  1. Improved Cost Per Hire

According to a report by the Society for Human Resource Management (SHRM), it costs over $4,000 to hire a new employee. The analysis takes into consideration factors such as candidate assessment costs, employer branding costs, but most especially, external recruiter and headhunter costs. 

The minimum cost of an external recruiter per month is between $2,000 and $3,000. And the average cost of an Applicant Tracking System per month is around $200. 

For companies who do not need all the bells and whistles of an expensive external recruiting service, an ATS is a good investment. It will not only significantly reduce hiring costs, but it will also provide good value for the money.

  1. Compliance

In between getting the right candidate and sorting through hundreds of applications, it can be difficult for HR managers to keep track of the ever-changing recruitment laws. These laws and regulations are put in place to avoid discriminatory hiring practices. A breach in compliance regulations, intentional or not, can result in lawsuits costing millions of dollars. 

Thankfully, most of the best Applicant Tracking Systems come with a reference library containing all the information about compliance regulations and can be regularly updated to ensure HR managers get the most up-to-date information on these laws. 

  1. Improved Employee Experience

In a survey conducted by Careerarc, it was found that 60% of job seekers report having received a poor candidate experience during their recruitment phase. The two main factors contributing to this ordeal are poor communication and the tediousness of the application process.

An ATS allows you to automate important tasks like sending timely and follow-up emails to keep the job applicants well informed during the hiring process. It also makes the whole procedure organized and less stressful for both the HR professionals and the applicants.

A seamless application system can be an important factor in the success of your business because these candidates (hired or not) could become good ambassadors for your company, thereby improving your branding and position among your competitors.

Conclusion

It is evident that there are a lot of benefits of using Applicant Tracking Systems for company hiring processes. As a matter of fact, you can potentially save up to $10,000 with ATS software

Choose from the best Applicant Tracking Systems to improve the efficiency of your recruiting process.

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