It’s evident that companies large and small are digitalizing their applicant lifecycle with applicant tracking systems (ATS) to save resources and improve TAs’ efficiency. According to recent statistics, 70% of large organizations have reported using applicant tracking software, and 94% agree that this platform has had a positive impact on their hiring processes. But what exactly does an ATS mean? How can it help improve your recruitment? Let’s find it all out in this article: ATS definition, how it works, and its purpose within HR and recruitment.
What is an ATS?
An ATS (applicant tracking system) is a recruitment tool that sources, manages, processes, and catalogs job applicants' data for talent acquisition. Top ATS features include job posting, applicant tracking, resume parsing, team collaboration, career site builder, new hire onboarding, CRM, integrations, and recruitment analytics and reporting.
Companies that use a good ATS can experience numerous benefits, from improved recruiter efficiency to more positive candidate experiences and better hiring decisions.
- Data-Driven Hiring: Hiring managers can base their decisions on various data points such as hiring analytics, performance metrics, channel effectiveness, diversity recruitment statistics, and predictive insights, rather than just gut feelings.
- TA Efficiency: Automating tasks like job postings, creating job descriptions, parsing resumes, and scheduling interviews frees up recruiters to focus on strategic tasks, such as enhancing processes and boosting employee engagement.
- Positive Candidate Experience: The ATS does so through timely, personalized communication, branded career sites, and a seamless application process.
- Cost-Effective Hiring: ATS offers a cheaper alternative than employing external recruiters to handle repetitive, low-value recruiting tasks.
- Simplified Compliance: Most ATS are designed to comply with recruitment laws of where their customers are hiring.
- Quality Hires: Broad job board integrations and support for diversity hiring expand the talent pool, while AI-powered analytics and collaborative hiring play an important role in eliminating recruitment bias.
How It Works
From an employer perspective, there are 4 foundation steps to how an applicant tracking system works:
- Job Posting and Distribution: With just a few clicks, an ATS can help you craft SEO-friendly job postings and distribute them on social media platforms and job boards of your choice. You can also easily make a branded career page with an option for employee referral programs through this candidate management system to attract potential hires.
- Candidate Application Management: With an ATS in place, all applicant information is stored in a single database. Employers can also set eligibility criteria for each role to auto-reject unqualified applications. Most provide AI and automation features for bulk resume parsing, triggered emails, and duplicate detection, and many now even offer recruiting CRM tools for data enrichment and candidate engagement.
- Collaboration and Interaction: Depending on your recruitment needs, an ATS can enable collaboration among users, between employers and candidates, and even allow guest access (e.g., staffing agencies sharing certain candidate details with a client). Additionally, some enterprise-centered platforms offer native video interview tools or integrate with third-party video conferencing tools like Zoom.
- Employee Onboarding: The ATS can also be programmed to send follow-up emails and materials to the new employee before their first day, a practice known as preboarding.
Key Features
After testing hundreds of ATS options in the market, we’ve found the good ones often possess the following features:
- Resume parser (English and/or multilingual)
- Job board integrations (Free and paid)
- Branded, multi-lingual career pages
- Search and filtering capabilities
- Mobile-friendly interface
- Interview scheduling capability
- Collaboration features
- Data security and compliance
- Analytics and reporting
- Employee referral tools
- ATS integrations
ATS vs. Recruiting CRM
ATS and candidate relationship management (CRM) tools differ in how each serves different recruitment roles.
- ATS focuses on streamlining application logistics like resume collection and candidate screening. CRM, however, builds relationships with potential candidates early on, through engagement and nurturing activities before formal applications.
- While ATS interacts with candidates post-application and manages data from job applications, CRM starts engagement earlier, sourcing data from various interactions like events or social media.
- ATS is used in the later hiring stages, and CRM is used in the early stages of candidate attraction and engagement.
How ATS Has Evolved
Applicant tracking systems originated in the early 1970s to help organize resumes and applicant data. Over the decades, these recruitment software evolved from simple filing systems into sophisticated web-based platforms, enhancing job application screening and hiring processes.
Today’s ATS tools incorporate AI to efficiently craft job posts, analyze resumes, and search for potential applicants. They also offer features like automated interview scheduling and hiring chatbots, which help streamline communication, enhance the candidate experience, and free up recruitment teams from repetitive tasks.
How Much Does an ATS Cost?
ATS pricing can be as little as $0 and as much as $125,000 per year. The exact number varies depending on the features and functionality the vendor offers, how many user profiles you have, and the number of hires you’re looking to make.
When Buying an ATS Makes Sense
If you're wondering whether a small business needs an ATS, a good rule of thumb is that you have at least 20 job openings annually. Some other indicators that it might be time to invest in an ATS include:
- When you’re making multiple hires every month or every week, each requires advertising in different channels, writing job postings for each vacancy, and screening dozens of resumes from which your HR team has to schedule multiple interviews with various hiring managers.
- When you miss an application and lose out on a great candidate.
- When your applicants wait so long for news of their application that they accept an offer from your competitor.
- When your team struggles to keep up with the influx of applications and ends up making sub-par hires just to get vacancies filled.
When Buying an ATS Doesn’t Make Sense
What an ATS won’t (can’t) do is keep employees from leaving. So, if you have a hiring capacity problem, you must ask yourself this: Is your team growing, or are you churning employees?
If you’re constantly hiring, but your overall headcount stays the same, your priority should be to invest in tools that will promote employee experience and boost retention.
On another note, an ATS takes care of your hiring funnel, but if that’s the end of the road for your tech stack, you can do better. ATS and HRIS (Human Resources Information System) software go hand in hand. For optimal human capital management, candidates who are hired through an ATS should enter into your HRIS either natively or via an HRIS integration. So if you don’t have an HRIS or HRMS (Human Resources Management System), you’re better off looking at a comprehensive (hire-to-retire) HR software solution than a dedicated ATS.
You DO Need An ATS. What Now?
As Shirley Borg, Head of HR at Energy Casino, shared with SSR, “Test the system as much as possible before making a purchase. It's a costly mistake to buy unfitting software…” To find the right ATS solution, we recommend using this 5-step decision-making process:
- Identify Your Organization's Needs. Start by assessing your TA team’s requirements and pain points. Consider factors such as company size, hiring volume, collaboration needs, and integration requirements.
- Research and Compare ATS Providers. You’re spoilt for choice in this software landscape. You can narrow down your search by looking at each vendor’s specialty. Once you’ve identified the ATS vendor that can work for your company…
- Test The Tools from Different Perspectives. Set up demos and trials from your shortlisted ATS providers to get hands-on experience with their platforms. Involve TA, HR, and IT teams and evaluate tools from a candidate's perspective. This ensures a comprehensive understanding of their capabilities and suitability.
- Consider Scalability and Integration. It is best to choose an ATS that can scale with your organization's growth in terms of hiring needs and increased users in your hiring team. Also, check that your ATS integrates seamlessly with your existing HR software to avoid disruptions in your overall HR processes.
- Evaluate Customer Support. If you ask an ATS vendor, they’ll likely say they offer amazing support. To get an impartial opinion, look for user reviews or speak to existing and past customers. If they’ve moved on to a different applicant tracking software, find out why.
Don’t have the time and resources to DIY all these steps? Our HR Tech experts can help out—for free!
FAQs
What does ATS mean?
ATS stands for applicant tracking system. It is designed to assist organizations in sourcing, managing, and processing job applications.
What are some popular ATS systems?
Greenhouse, Pinpoint, and BambooHR are top popular among midmarket U.S.-based businesses, Manatal and Lever are some top ATS tools for SMBs, while Recruit CRM is a well-known option for staffing agencies.
What is the best applicant tracking system for staffing agencies?
Manatal, Recruit CRM, and Zoho Recruit are some of the best recruitment agency software options that cover applicant tracking features.
What are the best free applicant tracking systems?
Manatal, Zoho Recruit, and Monday.com are our top picks for the best free ATS.
What are the best applicant tracking systems for small businesses?
Besides free platforms like Manatal and Zoho Recruit, Workable and Dover are great ATS choices for SMBs.
What is an ATS resume?
An ATS resume, or ATS-friendly resume, is specifically designed for applicant tracking systems. It involves careful selection of file types and strategic use of keywords to ensure that the software can effectively read, comprehend, and rank the resume during the initial screening process.
Can ATS read PDF files?
Yes, most of them can scan just fine resumes in PDF, .doc, and .docx formats.
Summing Up
Let’s review what we’ve learned:
- ATS is software designed to source, manage, process, and catalog a database of applicants for talent acquisition.
- 70% of large organizations use ATS software, and 94% find it beneficial for hiring.
- Key functions of an applicant tracking system include job posting, resume parsing, and candidate management. Some also offer collaboration, video interviewing, and onboarding features.
- ATS and CRM tools differ in their roles in recruitment: ATS streamlines application logistics and is used in later hiring stages, while CRM builds relationships with potential candidates and is used in early attraction and engagement.
- The benefits of an ATS include data-driven hiring decisions, improved TA efficiency, a positive candidate experience, cost-effective hiring, simplified compliance, and quality recruits.
- ATS evolved from simple filing systems in the 1970s to sophisticated web-based, intelligent platforms today, and it will likely evolve more with the development of AI.
- ATS prices range from free to $125,000 annually, depending on features and support.
- Several positions to fill quickly, missing out on good candidates, or struggling to manage applications are clear signals you need an ATS in place.
- An ATS can't prevent turnover. Prioritizing employee rewards and recognition tools makes much more sense to enhance employee experience and retention.
- To choose the right ATS, follow a 5-step process—identify recruitment needs, research and compare ATS providers, request demos and trials, and consider scalability, integration, and support—to determine the right ATS to buy. Or easier, contact our experts for free assistance.
