What Is an Applicant Tracking System and What Are Its Benefits?

Businesses rise and fall on the quality of their people. Your ability to attract and retain talent with the right experience, credentials, and cultural fit can make the difference between lagging behind others in your industry and creating a competitive advantage.

An applicant tracking system (ATS) can put you ahead of the game by making it easier and faster to recruit, select, and hire suitable candidates for your organization. To get the best results, you'll need to understand what an ATS is, how it works, and how to choose the right one for your needs.

What Is an Applicant Tracking System (ATS)?

An applicant tracking system (ATS) is software used to collect, store, and analyze candidate information, filter applicants, and streamline the recruiting process. ATS may offer job posting, automated screening and filtering, candidate tracking and ranking, and many more features.

Early applicant tracking systems were designed primarily to bring a paper-based process onto the computer and eventually online. Over time, technological advancements led to more sophisticated capabilities like mobile functionality, job board integrations, and social posting.

Today, it's more accurate to define applicant tracking systems as cloud-based, multi-functional solutions that streamline recruiting, improve efficiency, and create a friction-free candidate process.

How Does an Applicant Tracking System Work?

The primary function of an ATS is to help hiring managers identify and evaluate the most qualified candidates for a position.

How does an ATS work? Here is the basic process:

• Create an ideal candidate profile: Hiring managers craft a job description and post it to job boards using the ATS. The ATS will create a candidate profile based on the job description details.
• Collect applications: Applicants submit their resumes, and the ATS stores and parses the data.
• Screen and rank candidates: Using the ideal candidate profile, the ATS helps to screen candidate resumes and rank them according to how well they match the position requirements.
• Identify the best match: Hiring managers use the information stored in the ATS to identify the best candidates so they can move on to the next step.
• Automate the candidate process: Streamline the candidate process with automation features such as candidate communication, reporting, analytics, and interview scheduling.

Key Features of an ATS

AT software helps hiring managers improve efficiency throughout the hiring process. Key features of an effective ATS tool include:

• Job board integration: Create job descriptions and quickly post them to multiple job boards
• Resume screening: Parse and sort large volumes of resumes using keywords to determine which candidates best match the role's requirements
• Applicant ranking: Create a ranked list of candidates based on how well they align with the job description and role
• Interview scheduling: Coordinate team member availability, schedule interviews, and send an automated email invitation to the candidates
• Candidate communication: Update candidates, send reminders, and create personalized email messages throughout the recruiting process
• Reporting and analytics: Track and analyze critical hiring data to identify trends, predict future needs, and make better decisions

Benefits of Using an ATS

The hiring process can be lengthy and complex, especially if you have many roles to fill. AT software streamlines and accelerates this process, giving employers more time to focus on interviews and key hiring decisions. Most systems store candidate information in a centralized database where you can easily search for specific skills and credentials.

This allows you to scale your hiring volume quickly and access data-driven insights so you can respond rapidly to fluctuations in demand.

Here are some additional ways an ATS can be of benefit to your hiring process:

• Create a standardized hiring process: Whether you are hiring ten employees or 10,000, a standardized hiring process saves time and ensures consistency. Use your ATS to create hiring workflows, store interview questions, assign tasks, and send timely communication.
• Hire quality candidates faster: Reduce time-to-hire and improve efficiency by automating parts of the hiring process. An ATS can also help you collaborate more effectively within the hiring team, increase the visibility of key metrics, and identify process bottlenecks.
• Create a better candidate experience: Keep candidates engaged with regular communication, application status updates, alerts and reminders, and feedback opportunities.
• Enhance compliance: complying with hiring regulations and data privacy laws to avoid costly penalties.
• Support diversity: Depending on the quality of the software and the amount of human intervention, remove implicit bias from the candidate selection process and create equal opportunity for every candidate.

Types of Applicant Tracking Systems

Applicant tracking systems generally fall into two categories: integrated systems and standalone solutions. Integrated systems operate within an HR software platform, making it easy for data to flow from the ATS to other parts of HR, such as onboarding, payroll, and benefits administration.

Standalone systems may offer functionalities that an integrated ATS can't. For example, a solution may be designed to facilitate seasonal hiring surges and meet industry-specific hiring requirements. These systems can usually integrate with your HRIS (Human Resources Information System), but it's important to verify before you purchase.

Most modern ATS are cloud-based, which improves accessibility for remote workers, makes it easy to log in from multiple locations, and supports national and global hiring initiatives.

How To Start Using an ATS

Getting the most from an ATS starts with researching the features you need, choosing the right system, and integrating it with your existing processes. These steps take time but will help you utilize the applicant tracking system to its full potential.

Selecting the Right ATS

Start by assessing your current hiring processes and identifying your organization's requirements. Consider factors like your hiring volume, geographic reach, industry needs, and integration needs for other HR tools. Use this list to research systems and create a short list of options.

Here are some additional features to explore as you research:

• Scalability: Can the system adapt to changing hiring needs and grow with you as you scale your organization?
• Customization: Can you customize workflows, create templates, and incorporate company branding?
• Career pages: Can you create custom career landing pages to engage candidates and deliver a smooth application process?
• Data management: Can you import and export data easily? Can you upload data stored offline (for example, in an Excel spreadsheet)?
• Mobile functionality: How well does the system operate on a mobile device? Does it have a dedicated app?
• User experience: Does the system create a positive experience for hiring teams and candidates? Is it easy to navigate?

Integrating an ATS With Existing Systems

Once you have selected your ATS, you may want to integrate it with your current infrastructure. The implementation process involves understanding how you intend to use the system, configuring it to function within your IT environment and processes, and integrating it with other systems inside and outside your organization. These may include job boards, background check systems, your payroll platform, and other essential software.

Depending on the scope of your system, ATS integration may be a lengthy and complex process. Include the necessary resources and hours in your implementation budget to ensure the system is set up correctly.

How Much Do Applicant Tracking Systems Cost?

ATS costs will vary based on the scope of the system, your requirements, and any additional services included in the quote. Here are some factors to consider.

• Subscription models: Does the vendor charge a flat monthly fee, or is the cost assessed per user, per job opening, or per employee?
• Implementation fees: Is implementation included in the quote, or is there any additional cost? How many training hours are offered?
• Ongoing support: How does the vendor charge for those hours if you need more training than the initial quote includes?
• Maintenance fees: Does the quote include routine maintenance, or is it charged as a separate fee?
• Data migration: Is there a separate fee for migrating data to the new system?

Every vendor will structure ATS pricing differently. Ask for an unbundled quote so you know exactly which services are included and which will be charged as add-on fees.

Common Misconceptions About ATS

Migrating from manual processes to an ATS can be intimidating, especially if you have never used one. Don't let these common misconceptions keep you from making the switch.

• Myth: Small companies don't need an ATS. Any company that hires employees can benefit from an ATS. If you hire only a few employees each year, a simple solution can still help you improve efficiency, automate processes, and manage candidate data.
• Myth: An ATS must replace your recruiters. While an ATS can streamline the recruiting process, it won’t replace the need for human interaction and decision-making during the candidate selection process.
• Myth: AT software is always too expensive for smaller companies. Applicant tracking systems are available at a wide range of price points. There are even free versions available, although these will have fewer capabilities and limits on how many users and job postings you can add.
• Myth: Cloud-based applicant tracking systems are a security risk. While no technology that connects to the internet can be considered entirely risk-free, today's cloud-based platforms are often more secure than on-premises solutions. Data security for these systems often includes credential management, role-based access, sophisticated threat detection, and security infrastructure to protect servers and networks.

Future Trends in Applicant Tracking Systems

As technology has evolved, so have applicant tracking systems. Mobile accessibility is usually standard and AI capabilities are becoming more widely available.¹ In the near future, many ATS systems will employ AI-powered job posting assistance, predictive analytics to manage hiring needs, data-driven recruiting, and personalized customer experiences. Most of these capabilities are already available in some form, and we can expect to see additional innovations as HR technology advancements empower vendors to reimagine what is possible.

Maximize the Benefits of Your ATS

Recruiting and hiring quality talent will always require time and effort. The benefits of applicant tracking systems can ensure that you focus that time and effort on the people side of the process rather than the details of sorting through resumes, entering data, and manually posting each role to multiple job boards.

Make the most of your ATS by assessing your needs, selecting a system that aligns with those needs, and taking time to configure workflows, customize fields, and train team members to use the system effectively. Putting this effort in on the front end will help you create a streamlined, efficient hiring process that can add value and competitive advantage.

¹“AI in Hiring and Evaluating Workers: What Americans Think.” Pew Research Center, Washington, D.C. (4/20/23)