Applicant Tracking System Buyer’s Guide

Introduction

These days, talented employees are getting harder to find. The current economic growth means there are more job openings and more competition for strong applicants.

So what can your company do to attract top talent in this heated labor market?

Many businesses are now taking advantage of applicant tracking systems (ATS) to cut through the pile of resumes, improve their company brand and hire the best candidates before their competitors.

Applicant Tracking System Stats

• The global ATS market is expected to grow to $1.3 billion by 2025. Source: ReportLinker.
• 73% of employers have difficulty finding skilled candidates. Source: Jobbatical.
• Employers receive between 75 and 250 applications per job opening. Source: Officevibe.
• It costs an average of $4,000 to fill an open position. Source: Bersin by Deloitte.
• The best candidates are off the market within 10 days. Source: Officevibe.
• 69% of candidates want employers to respond faster. Source: Jobbatical.
• 60% of candidates have quit an application process because it took too long. Source: Officevibe.
• 80% of employers say the most common barrier to identifying talent is filtering through unqualified candidates. Source: MRI Network.
• 84% of organizations are using social media for recruitment. Source: Jobbatical.
• Eight out of 10 recruiters use references as a screening method. Source: Jobbatical.

What Is an Applicant Tracking System?

An applicant tracking system helps companies streamline the recruitment process by analyzing resumes, identifying top candidates and organizing interviews. A centralized database stores resumes and allows filtering by skills or job requirements. Companies can also post job openings on external job boards.

Common ATS Features

Applicant tracking systems have many common features, such as:

Applicant tracking – Companies can monitor an applicant’s progress through the hiring process. After each interview, members of the hiring team can score candidates and write comments.

A profile is created for each candidate that includes searchable info, the applicant’s resume and additional documents, communication with recruiters, comments from the hiring team, surveys, questionnaires and reference checks.

Communication tools and templates – As candidates advance through recruitment stages, the software can automatically send follow-up emails, screening surveys and scheduling requests.

Hiring teams can populate and send message templates with names, dates and other info without manual typing. The feature also lets companies monitor whether or not candidates open emails, click on links and reply to messages.

Branded career portal – Businesses can create a branded career portal on their websites. The portal provides company info, job openings, prescreening questions and a section for employee referrals.

Job posting – Hiring managers can use ATS software to post jobs directly to multiple job boards (e.g., Indeed and Monster) and social media (e.g., LinkedIn, Twitter and Facebook).

Resume collection and parsing – Resume collection allows companies to import resumes from numerous sources, including job boards, emails and social media. The resumes are automatically converted into a standard format and parsed for keywords so that companies can easily search, filter and compare candidates.

Video interviewing – Companies can conduct live or on-demand video interviews using webcams. The feature can be useful in hiring remote employees or candidates that will relocate.

Automated reference checks – An anonymous survey is automatically provided to references to rate and describe a candidate’s qualifications.

Analytics and reports – Analytics tools provide real-time data on the effectiveness of recruitment strategies. Metrics include number of applicants, candidate sources, recruitment time, resources spent and whether candidates drop out of the process. Hiring managers can also generate reports to ensure they comply with federal requirements and labor laws.

Onboarding – Businesses can use onboarding to welcome new hires. Employees fill out paperwork, set up a profile, access company resources and take training or development courses.

Top Benefits of ATS Software

There are numerous benefits of ATS software, including:

Shorter hiring cycles

Recruitment can be a time-consuming process that’s often delayed by communication and coordination issues between recruiters, hiring managers, interviewers and candidates.

ATS software can speed up the hiring cycle by centralizing important candidate information and communication into a single profile. Hiring managers can access this info quickly and even view candidate profiles side by side to compare qualifications, skills and interviewer feedback.

The software can also help diagnose bottlenecks in the recruitment process and trigger alerts when team members need to schedule interviews or provide comments. Hiring managers are immediately notified when resumes or reference checks are ready for review.

Lower recruitment costs

Hiring new employees is expensive. On average, it costs businesses $4,000 to fill an open position. This includes time spent by recruiters and hiring managers on labor-intensive administrative tasks, such as posting jobs online, reviewing resumes and emailing applicants.

An ATS solution lets companies post job openings to a company’s career portal, multiple job boards and relevant social media accounts without having to manually type info each time. The software also has tools to collect, parse and filter resumes. Scheduling and follow-up emails can be automatically sent as candidates advance through the recruitment pipeline.

Ability to attract and engage top candidates

These days, applicants have more avenues to pursue job openings. To attract and engage top candidates, companies should consider simplifying the application process and making sure they have a strong reputation.

Using an ATS platform, businesses can create an easy-to-use, branded job portal where candidates can manage their profile and quickly submit their resume. Automated communication can keep applicants informed as they advance through hiring stages.

Social recruiting is another strategy used to promote job listings to a wide audience. ATS tools let employees share open positions on their social media and refer candidates.

Data-driven hiring processes

Without proper data, businesses may be unsure whether they’re running effective and unbiased recruitment campaigns.

Companies can reduce hiring bias by providing the interview team with standardized rubrics to score and rank candidates. This increases the likelihood that candidates will be moved along through the process using objective metrics.

In addition, ATS software can provide visualization tools to help businesses understand which sourcing methods have the best success rates, so that companies don’t pay for recruiters or job boards that don’t lead to successful candidates.

Ensured compliance

Employers need to stay compliant with federal requirements and labor laws. An ATS solution can generate reports on various demographic data to demonstrate that human resources departments are complying with regulations.

Streamlined onboarding

Applicant tracking systems often integrate with more comprehensive human resources software. When candidates receive a job offer, their info can be easily converted to an employee record. This saves time and reduces administrative labor for Human Resources.

Types of ATS Buyers

The three main types of ATS software buyers are:

Small and medium-sized businesses (SMBs) – Small and medium-sized businesses generally have limited recruiting and human resources (HR) employees to handle the hiring process. Time-consuming recruitment duties can often be added on top of employees’ other responsibilities.

Consequently, SMBs benefit from an ATS system that automates administrative processes, such as job posting, resume collection and parsing, and interview scheduling. Most candidates won’t proactively search for the career websites of SMBs, so being able to post open positions to several job boards is important.

Large and enterprise-level companies – These buyers typically use internal or external recruiters to find candidates for multiple open positions simultaneously. In addition, they may have a human resources management system (HRMS) with basic ATS functionality.

Large and enterprise-level companies benefit from an ATS solution that provides advanced features and can integrate with their HRMS software. Because hiring teams may include employees in different departments and locations, collaboration features are also vital. Team scoring, visualization tools and notification triggers can help coordinate recruiting for disparate teams.

Recruiting agencies – An applicant tracking system is the main software that recruiting and staffing agencies use to do business. These firms have many candidates in the hiring pipeline for an array of companies they represent. Finding an ATS solution that keep them organized and facilitates communication between candidates and represented companies is a necessity.

How to Choose ATS Software

ATS solutions can vary significantly in features and pricing, so it’s important to do your research and investigate your options. We recommend the following steps when choosing an ATS solution.

1. Identify your company’s needs

The first step in identifying your needs is to understand how many open positions you have and how many users will access the system.

Smaller companies will generally have to recruit for fewer positions and require accesses for a limited number of users. Larger organizations will have many concurrent job openings and require access for a variety of employees.

You should also consider what type of functionality is important to your business. Will you create a career portal? Do you want to prescreen candidates with video interviewing? Will collaboration tools be useful for your hiring team?

It’s a good idea understand which key performance indicators you want to improve by investing in an ATS solution. Decreasing the amount of time it takes to hire new employees or the cost per hire are common goals.

2. Create a shortlist

Research vendors that best fit your needs. In addition to current requirements, consider the implementation process and the scalability of the ATS software.

Note that the implementation process can vary significantly. You’ll want to speak with vendors and ask about timelines and fees. Be sure to see if training is available, too.

It’s also important to think about how many candidates you want to recruit now and in the future. If you plan to grow the company, make sure the ATS solution is scalable. You should have the ability to recruit for more positions later on down the road.

Once you’ve researched these issues, you can put together a shortlist of vendors whose software matches your needs.

3. Contact vendors

Begin contacting vendors on your shortlist. You should request a demo of the solution to see how it works. Make sure to test the software with the managers and recruiters who’ll use it most often.

As discussed in the Pricing section below, ATS software can range in cost. You’ll need to factor in the number of open positions and users required. It’s important to fully understand the vendor’s pricing structure.

Some vendors also charge extra for implementation, support and training. Keep this in mind when asking for a quote. You’ll want to compare all-in prices among different vendors.

4. Get customer references

Once you’ve completed a demo of the ATS solution and have a better understanding of price and support, it’s time to get references from a vendor’s current or previous clients. If the vendor has been in business for less than five years, it’s particularly important to get references.

The vendor will give you the names of clients with positive experiences, but make sure to ask for companies that have similar needs to yours (e.g., businesses that created a career portal or that post jobs to multiple boards).

When contacting references, ask if there have been any issues with the vendor or the solution.

Pricing for Applicant Tracking Systems

ATS solutions have three common pricing structures, namely:

Pay per recruiter/user – This pricing model charges companies based on the number of employees who have administrative access to the software. Recruiters are the standard users in this pricing model, although some solutions allow access for hiring managers. Most vendors’ per user, per month pricing plans come in different tiers that offer various levels of features.

Pay per position – Some vendors charge based on the number of open job positions at an organization. This pricing plan allows for a maximum number of job openings each month, but unlimited applications and users. ATS vendors with this pricing structure are more likely to focus on posting openings across multiple job boards and may have fewer features for screening candidates, such as video interviewing.

Pay per module – Vendors that provide HRMS software often sell onboarding, training and talent management modules with the base price or for an additional fee. These modules generally can’t be purchased separately or integrated with different HRMS solutions. ATS modules that come with HRMS software often have less advanced functionality than standalone ATS solutions.

Challenges of Applicant Tracking Systems

Although ATS software offers many benefits, it also poses several challenges, including:

Implementation and integration

Implementing an applicant tracking system can be a time-consuming and complicated process. From migrating data to integrating the software with an HRMS solution, there’s significant risk of technical difficulties.

Be sure to check with the ATS vendor, as well as the vendor of your HRMS solution if you have one, to discuss installation, integration, training and support.

Poor recruiting strategies

Although an ATS solution helps streamline the hiring process, it may not be as useful if the overall recruitment strategy is bad. For example, if employers don’t offer competitive salaries or have a strong reputation, they will likely not see as many benefits from investing in ATS software.

Recruiters and management should assess their recruiting goals and develop effective hiring strategies before purchasing a solution.

Users who are resistant to change

An ATS solution is only as efficient as the people that use it. Recruiters may resist using technology to automate communications and analyze data, preferring to manually email candidates and not utilize data at all. Additionally, if interviewers are not willing to fill out team scoring or online assessments, then data can’t be properly collected.

It’s important for companies to invest in proper change management so that all ATS users are fully supportive of using the system.

ATS Market Trends

Better Buys asked industry experts for the biggest ATS market trends in 2019. Here are their insights:

Social media recruiting gains popularity

Companies are increasingly taking advantage of social media to improve their visibility and brand.  Recruiters can engage with professionals on LinkedIn, hold live Q&A sessions on Facebook and comment on trending Twitter hashtags.

As recruitment moves beyond job boards, businesses are using social recruiting to find talent through new channels and gain referrals. Employees can share links and posts for open positions through their social media accounts. Recruiters can also access more online professional and technical communities to engage with potential candidates.

Artificial intelligence helps automate even more administrative processes

Artificial intelligence (AI) will help automate resume screening and onboarding even further. For instance, resume parsing is a standard function of ATS solutions. However, this tool has had issues in the past understanding synonyms for common application words (e.g., “MBA” and “Master of Business Administration). AI can help understand searcher intent and find all relevant keywords that a recruiter wants. In addition, AI chatbots can quickly respond to a variety of questions from candidates in the hiring pipeline.

Video technology finds new uses

Video interviews are a standard feature with many ATS solutions. However, businesses are now leveraging video technology in new ways.

For example, some vendors let recruiters record and send video SMS or email messages to clients and candidates. Applicants also have the ability to send a video cover letter to introduce themselves. This allows companies to understand a candidate’s personality and nonverbal cues better before they offer an interview.

Recent ATS Blog Posts

To stay up to date on what’s happening in the market, check out our recent ATS blog posts.