Applicant Tracking System (ATS): The Complete Guide

All you need to know about applicant tracking systems (ATS): what they are, how they work, their features, how they benefit job seekers and recruiters, how to pick the best one, their drawbacks, and what they cost.

I. What is an applicant tracking system (ATS)?

An applicant tracking system is software used by companies to find and recruit employees.

An applicant tracking system, also known as ATS, is software that enables companies to find and recruit the best candidates for job openings. With the help of an ATS, recruiters can spend less time reading through piles of resumes. An applicant tracking system is designed to scan for certain keywords and criteria, ensuring that the best candidates are surfaced.

A neat aspect of applicant tracking systems is that they are not all created equal. Companies can choose an ATS based on the features that best optimize their specific recruitment process. An ATS allows businesses to stay organized and efficient with their human resource tasks. You can demo applicant tracking systems before purchasing so that you’re certain which ATS will benefit your company.

In short, an ATS is designed to better control every step of a company’s recruiting and hiring process. From application and interviewing to hiring and onboarding, these systems enhance your organization. An ATS significantly cuts the time recruiters and hiring managers spend tracking job seekers, identifying quality candidates, and hiring the right person for the job.

II. How do applicant tracking systems work?

Applicant tracking systems use algorithms to find candidates based on keywords and phrases.

Companies of all industries and sizes get tons of resumes sent to them for available jobs, often posted on third-party job boards as well. Because applying for a job can be as simple as “one click,” it’s hard for recruiters to find candidates who are actually qualified — everyone is applying to the same position. Applicant tracking systems were created to help sift through the noise.

When job seekers fill out a job application online, their resume and cover letter typically do not go straight to the hiring manager. An ATS scans resumes, cover letters and applications, and collects candidate information such as contact info, employment history, and job skills. More importantly, the ATS looks for keywords and phrases that match the job description.

III. Applicant tracking system features

There are a plethora of companies developing ATS software, and each system offers different features. To get a better understanding of what applicant tracking systems offer, here are common ATS features:

1. Sourcing

Easily find and source candidates applying to your job posting from different sources such as LinkedIn, Indeed, Monster, ZipRecruiter, etc.

2. Communication

Send emails about the status of a job and request interviews directly from the application.

3. Customized process

Customize and streamline your hiring process from application to hire. For example, you could customize a job application to include a specific set of questions to find quality candidates.

4. Advanced analytics

Get real-time insights about your entire hiring strategy.

5. Custom job site

Make sure your company’s branding is consistent across your career site.

6. Knowledge management

Keep the entire history of each application in one place.

7. Notifications

Set up notifications to engage your interviewers and gather their feedback on your hiring process.

8. Candidate nurturing

Build relationships with potential candidates at any time. Engaging with candidates can shorten future hiring cycles.

9. Job syndication

Easily publish job listings on different web platforms.

10. Cloud hosting

All your data is managed in the cloud. All you need to do is create an account.

IV. How applicant tracking systems benefit job seekers

What is an ATS-compliant resume and how can it help you land a job?

Applicant tracking systems search for keywords and specific skills in order to rank candidates. If your resume does not score among the top candidates, it may not pass the initial step of the hiring process. It’s therefore important for job seekers to optimize their resumes. Study the job posting and include terms mentioned in the description on your resume and in your application.

Here are some helpful tips for getting your resume through the initial automated process:

Formatting — Use a simple format that highlights your work history chronologically. If you download a template, make sure it is ATS-compliant.
Font — Avoid elaborate fonts the ATS can’t read. Use a plain, simple, sans-serif font in black text.
Templates — Avoid fancy downloaded templates; stick to a clean, simple design.
Keywords — Job descriptions are full of keywords that determine whether your resume is chosen. Without enough of the right keywords, your resume may not be shown to the hiring manager.
Charts, graphs and images — Most applicant tracking systems can’t decipher resumes that contain graphs, charts and images.

V. How applicant tracking systems benefit recruiters

An applicant tracking system can overhaul a company’s entire hiring process.

Switching from a manual recruiting process to an automated one has many benefits. Saving time is a huge one — employees don’t need to sift through hundreds of resumes to decide which candidates should move forward. Recruiters can also reuse previous successful applications for new jobs instead of starting the search all over again, giving them a higher-quality talent pool.

Applicant tracking systems allow for a standardized hiring process that is easy and efficient, making recruiters and hiring managers more productive. They can reduce turnover because employers hire better-screened candidates, and they help keep recruiters compliant with hiring laws by reducing conscious and unconscious bias. ATS also let teams get back to candidates faster with automated messaging and interview reminders.

VI. What’s the best applicant tracking system for your business?

The best applicant tracking system works for your budget, employees, and business needs. Keep these questions in mind:

How many people do you plan to hire? If only a few, consider a stand-alone system.
Is it easy to use? Try a demo of various systems to find the right fit.
Will it fit your needs a few years down the road? If you plan to expand, choose a system you won’t outgrow.
What is your budget? Costs vary widely (see below).
What features do you need? Features like social sourcing and automated emails may come in handy.

VII. Drawbacks of applicant tracking systems

Applicant tracking systems are selective and can pass over quality candidates.

An ATS could overlook a highly capable candidate just because their resume lacks a few keywords. Conversely, some job seekers stuff their resumes with the right keywords even when they aren’t qualified. Some systems are picky about formatting — pictures, charts, graphs and the wrong font can be misread. Career switchers and recent graduates can also struggle, since their resumes may not contain the keywords or experience the ATS scans for.

VIII. How much does an applicant tracking system cost?

The cost of applicant tracking systems can range from free to $100,000+.

Pay per recruiter — The most common model: a monthly fee per recruiter and hiring manager.
Pay per employee — Charges based on total company headcount, not just system users. Larger enterprises may pay less per employee.
Pay per job opening — Charges based on how many jobs are open, or how many applications you receive.
Flat fees — A one-time, monthly, or annual flat fee.

Also budget for one-time setup fees, onboarding fees, and add-on fees, which vary by vendor.

Other software that may help with your staffing and HR needs includes: Human Resource Management Systems, Talent Management Systems, Human Capital Management, onboarding software, recruiting agency software, staffing and temp-agency software, and HR apps.

Want to know more about turning your recruitment and hiring process into a competitive advantage? Schedule a demo with Nextal today.