Applicant Tracking System (ATS): Everything You Need to Know

How much did it take to find your last employee? We already know that employee turnover can have a big impact on a business’ bottom line, but so can hiring new employees–whether in time, productivity, or even cash. According to researchers, it can cost employers $4,000 on average fill a single open position. Multiply that by how many open roles your business has now, and it may be no small investment. So why does hiring cost so much?

Consider everything that goes into finding and hiring new employees: writing a job description, posting on job boards, keeping track of every application, paging through resumes, calling back and forth with candidates, holding interviews–the list goes on. And even when you do find your star candidate, there’s no guarantee they’ll accept. It can all start to add up quickly, especially if you have a manual hiring process.

That’s why more and more small and mid-sized businesses–along with 98% of Fortune 500 companies–are turning to applicant tracking systems (ATS) to manage their hiring process. Just making this one change can help businesses of every size double-down on efficiency, find better candidates, and get them in the right roles, fast.

We’ve put together all-you-need-to-know guide to help you do the same. Find out what an ATS is, how it works, and what types of ATS platforms are available today.

What is an applicant tracking system?

So, what is an ATS? For starters, it isn’t just one thing. It’s a type of software, or collection of digital tools on a single platform, that helps you find, interview, and hire new employees–all in a single place. Using an ATS makes it possible to manage every step of the hiring process right from the screen of your desktop or mobile phone.

An ATS also acts as a repository for all your applicant data and automates your communication with potential candidates. In many ways, it has a lot in common with a CRM, or customer relationship management system. No need to go hunt down a post-it or type up email responses to each individual applicant.

Your ATS has all your candidate information, and depending on the software, can also be used to automatically confirm a candidate’s application has been received, keep them up to date on when their application’s status changes, or prompt them to confirm an interview time.

How applicant tracking systems got started

If you haven’t used an ATS, you have likely used Monster, LinkedIn, Indeed, or another online career board to share a job posting–and that’s where ATS platforms all began. Before ATS came on the scene two decades ago, the closest thing was a fax machine and a filing cabinet. Businesses posted jobs in the newspaper, then candidates faxed in their resumes and cover letters. HR managers printed them off, tracked applicant information by hand, and kept paper files.

Then came the internet. By the mid-90s, candidates were responding to job postings on electronic job boards like Monster and interacting with hiring managers directly from their computers. Employers could reach entire new networks of candidates, making it hard to keep up with a now-worldwide applicant pool.

Recognizing how the hiring process had essentially changed overnight, “e-recruitment systems” began popping up to help employers start digitally screening candidates and store applications. These e-recruitment systems ultimately evolved into the various ATS platforms used by millions of businesses today.

Now, ATS platforms are a growing–almost given–part of how the average employee gets hired at businesses of every size.

How ATS impact each stage of the hiring process today

It’s not an exaggeration to say that having an ATS can dramatically change how you hire. On average, a small business with 8 employees can save $10,000 just by using an ATS.

Along with adding to your bottom line, using an ATS can translate to better efficiency, productivity, and quality of hires. 83% of recruiting professionals say using an ATS has helped them hire faster, and 78% say it’s increased the quality of the candidates they hire.

Here’s how an ATS makes it possible through every phase of hiring new employees:

Posting

Raise your hand if you have multiple spreadsheets sitting on your desktop for every job opening–and are dreading going through and updating every single one. With an ATS, you can create job postings for each opening and see all your open roles in one place.

Sharing

An ATS can make sure your job postings get seen. Share jobs on Facebook, Twitter, job boards, or through a direct link to start collecting applications. Some online job boards also provide custom integrations with different ATS platforms to make it easier for candidates to apply.

Applying

Cloud-based ATS platforms allow applicants can apply from any device. This is crucial, as almost 9 in 10 job seekers plan to use their mobile phones to search for jobs, but 40% abandon their application if the application system isn’t mobile-friendly. In addition to digital applications, your ATS can also help you manually upload any walk-in applicants.

Tracking candidates

No more folders or fax machines. All applications are automatically uploaded to your ATS, so you can easily take a look at the newest resumes and decide which ones you want to share with other team members. You and your team can see which candidates still need to be interviewed, and add feedback to each candidate’s application as you review.

Hiring

When it comes time to make a final decision, your ATS can help you compare candidates to previous hires and look for any red flags, like availability or job history. Once you’ve decided, you can notify candidates about next steps and send updates to all applicants letting them know the position has closed. Some ATS platforms also include integrations with your current scheduling app or time clock software. You’ll already have new employees’ information in your system, making it easy to add them to the current employee schedule.

Types of ATS

There are more than 200 types of applicant tracking systems to choose from, and they aren’t slowing down any time soon. Experts predict the ATS market will be worth well over $1.81 billion in the U.S. by 2023. Finding the right type of ATS for your business can feel like searching for a needle in a haystack.

First, there’s a difference between a stand-alone ATS and recruiting software. Recruiting software includes more than just ATS tools and functions like an actual CRM. It might also sometimes be referred to as a human capital management (or HCM) system. Keep in mind that an ATS is reactive, and only kicks in once you’ve received a candidate’s application. In contrast, recruiting software or a CRM helps you identify and pursue potential prospects or candidates who haven’t applied yet.

If you’re a hiring manager with dozens of roles to fill and looking for candidates with high-demand skills, a recruiting CRM may be a better fit. If you need to get a handle on your hiring process, processing applications, and setting up workflows, a stand-alone ATS is likely all you need.

Stand-alone ATS can either be hosted locally or on the cloud. This means your ATS is either accessed only on a desktop and installed on your computer, or is cloud-based and can be accessed from anywhere. There’s also open source ATS, meaning that the ATS software is available for anyone to use at no cost. But there’s a catch: you’ll need the technical skills to be able to manage it and write code (plus, there’s no support line to call).

What else to consider when choosing an ATS

Cost

ATS pricing can vary wildly, from zero to several hundred thousand dollars. However, the average cost for a paid ATS platform for a company of under 10 employees is about $3,000 annually. Pricing can depend on multiple factors: type of platform, number of users, level of support, the list goes on. As mentioned above, it can be also possible to get an ATS at no additional cost using open source software or as part of other employee management software you already use. Your timesheet tracking and employee scheduling software provider may provide an ATS for free.

Employee experience

If a program is hard to use, employees won’t want to use it–and that goes for any workplace software. The goal of an ATS is to make the hiring process simpler, not more complicated. If you introduce an ATS that’s too complex or difficult to work with, it’ll only slow your team down (or they’ll avoid using it altogether). When you’re considering an ATS, make sure it’s user-friendly and easy to learn.

Candidate experience

Your employees won’t be the only ones using your ATS system. All of the above also applies to your candidates. With a clunky or difficult ATS, your hiring process may discourage top candidates from applying–and you’ll never even know it. Tech issues alone can cause 60% of candidates to abandon their job applications. Your application process has an impact on your business in the long run, no question. Up to 44% of workers who didn’t hear back at all when they applied for a job said their opinion of the company worsened.

Integration

Remember: efficiency, efficiency, efficiency. Beyond ease of use for employees/candidates, make sure your ATS fits into your current tools and doesn’t add extra work. Many ATS integrate with online job boards, social media, email, and file storage tools like Google Drive or Dropbox. Before you choose an ATS, find out how it integrates into the rest of your hiring resources.

How to decide if you need an ATS

Investing in an ATS (in cost or time) is a decision you can make by asking yourself the following questions:

• How much time per week do you (or your employees) spend uploading, posting, and sharing new job openings to online job boards or social media?
• Per week, how many hours do you spend communicating with staff about candidates and in how many different forms?
• How often are you looking at resumes? How much time per week do you spend looking at resumes?
• From inputting to organizing candidates’ contact information, how long does this take per candidate?
• How much time per week do you spend following up with candidates, handling logistics, or scheduling interviews?
• What is your employee turnover rate?
• How satisfied are you with the quality of your most recent hires?

If you’re not sure on your answers to any of the questions, take a closer look at your hiring process. See if you can set a baseline on how long it takes to hire a new employee. Track how many hours you spend a week posting on job sites, communicating with candidates, organizing their information, and working through resumes.

Small business owners are the most critical part of a business’ success–yet spend 40% of their day on non-revenue-generating tasks like hiring new employees and payroll management. It may seem silly, but even typing out your business address eats up valuable time. What else could you put back into your business if even a few of those tasks were automated?

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Applicant tracking systems have come a long way from post-its and filing cabinets. Using an ATS can equal better quality of candidates, shorter hiring cycles, and more new employees on the job, sooner.