Careers Business Ownership A Business Owner’s Guide to Applicant Tracking Systems (ATS) The Pros and Cons of Using ATS During the Hiring Process Share PINTEREST Email Print Getty Images/GoodLifeStudio Business Ownership Operations & Success Operations & Technology Sustainable Businesses Supply Chain Management Marketing Market Research Business Law & Taxes Business Insurance Business Finance Accounting Industries Becoming an Owner Table of Contents Expand What Are Applicant Tracking Systems? Why Do Employers Use an ATS? How Applicant Tracking Systems Work How Much Does an ATS Cost? The Pros and Cons of Using an ATS Pros of Using an ATS Explained Cons of Using an ATS Explained Special Considerations By Ella Ames Ella Ames Ella Ames is a freelance writer and editor with a focus on personal finance and small business topics such startups, business financing, and entrepreneurship. She has a background in business journalism and her work has appeared not only on The Balance, but LendingTree, ValuePenguin, EE Times, PolicyMe, AllBusiness.com, and more. Learn about our Editorial Process Updated on 11/10/20 Employers often receive an overwhelming number of applications for job openings, which can easily inundate HR departments. Applicant tracking systems (ATS) are a type of software designed to help organize and streamline the hiring process. Using an ATS is increasingly common—Jobscan reports that nearly 99% of Fortune 500 companies use one. Meanwhile, a digital recruiting survey conducted by KellyOCG and Human Capital Media found that 66% of recruiting organizations used some type of ATS for recruiting management and/or compliance. If you’re considering an ATS for your business’s hiring process, here’s what you need to know about the technology before you get started. What Are Applicant Tracking Systems? Applicant tracking systems are software used by human resource departments and business owners to help manage the employment process. The database stores, files, and sorts through job applications. With dozens of different options of ATS available, it can be daunting to choose the right platform for your business. Depending on the software, ATS can be used to complete tasks such as post openings to job boards, parse resumes, identify top candidates, schedule interviews, and predict performance analytics, among other functions. Why Do Employers Use an ATS? Many job sites boast easy application processes, and give job seekers the option to upload a resume and apply for positions with just one click. As a result, employers are often flooded with applications, many of which come from unqualified candidates. An ATS helps hiring managers organize the responses. Through the use of keywords or other target information, the system can flag top candidates and disregard unqualified applicants—saving hiring managers the task of sorting through each application. Many ATS can also schedule interviews with potential candidates, avoiding all the back and forth emails. Aside from the time-saving considerations, a main benefit of ATS is that it speeds up the time-to-hire by automating tasks that would take an HR employee considerably longer to do. A study by Capterra found that 94% of recruiters and talent managers who used some form of recruiting or applicant tracking software said that it improved their hiring process. Only 5% reported it having a negative effect. How Do Applicant Tracking Systems Work? An ATS fits with a company’s current employment site and automates many tasks of the hiring process. It compiles, stores, and sorts applications, and can prioritize top candidates, while disregarding unqualified applicants. Here are some common features that an ATS offers—tools vary depending on cost, size, and system differences: Posting job openings across multiple job boardsSearching social media profiles for keywords to find potential candidatesOrganizing applications and regulating their statusAnalyzing and rating resumesSearching resumes for keywords or pre-determined filters such as work history, education, or experienceSending interview requests and coordinating timesVideo interviewsBackground checks Automatically sending out customized emails Tracking responsesResume storage How Much Does an ATS Cost? You can expect to pay anywhere from $5,000 to $50,000 annually depending on the size of your business, and the type of system and features you’re looking for in an ATS. Some providers offer free services for individuals who process under 20 jobs a year. Most platforms fall under the $10,000-a-year range. To find the ATS that best fits your needs and budget, the Society for Human Resource Management (SHRM) offers a helpful comparison chart that lists platforms by sample clients, cost, and system features. The Pros and Cons of Using an ATS Pros Automates process to save time Speeds up time-to-hire Provides better candidate experience Makes it easier to track resumes Provides performance and data analysis Cons Resume parsing leaves room for technical issues Candidates can slip through cracks Opens door for “keyword stuffing” Major investment and learning curve Pros of Using an ATS Explained Automates process to save time: A big benefit of using an ATS is that it can save HR teams a lot of work by automating time-consuming parts of the hiring process.Speeds up time-to-hire: Another advantage of an ATS is that it speeds up time-to-hire, which saves money and helps retain top candidates. GetApp found that 86% of ATS users surveyed reported an increase in the speed at which they hire candidates.Provides better candidate experience: Using an ATS often creates a better candidate experience, involving applicants throughout the process and giving them updates on their progress. Many offer mobile-friendly platforms for increased accessibility. Some platforms support multiple languages and dialects. Makes it easier to track resumes: Resumes are stored in a database, so employers can contact applicants if they are a good fit for future positions. Provides performance and data analysis: Some ATS platforms offer predictive performance analytics. An ATS provides hiring teams with data to analyze their processes and identify what’s working and where changes need to be made. Cons of Using an ATS Explained Resume parsing leaves room for technical issues: Resumes that are uniquely formatted, or use tables or columns, can cause parsing errors in an ATS. Similarly, unique fonts, headers and footers, or non-standard sections can cause organizational problems. Candidates can slip through cracks: Qualified candidates can slip through the cracks. An ATS is designed to look for specific keywords or filters such as work experience or skills. Top applicants who don’t meet the exact criteria can be disregarded.Opens door for “keyword stuffing”: Candidates familiar with an ATS can take advantage of the platform by stuffing their application full of keywords in order to manipulate search results. In this case, you’re not necessarily seeing the most qualified applicants, but rather the ones who know how to game the system.Major investment and learning curve: Setting up an ATS is an investment, and there will be a learning curve to onboard the whole team and update your company’s current tech so that it works with the software. Special Considerations It’s important for employers to pay attention to legal considerations when using an ATS, and to make sure they abide by Equal Employment Opportunity Commission (EEOC) and Office of Federal Contract Compliance Programs (OFCCP) regulations. Business owners should ensure their ATS is reporting and collecting the necessary information to stay compliant with requirements. Using an ATS doesn’t automatically mean it will be in compliance with regulations. Make sure you’re abiding by all hiring laws at each stage of the process, and are familiar with any specific requirements that might be applicable to your industry. Those accessing an ATS must be trained to enter criteria appropriately and keep applicant data safe. Make sure to verify data security as well as the frequency of safeguard and standard updates with your ATS platform. Key Takeaways Applicant tracking systems (ATS) are a popular tool to help a hiring manager organize, rank, and store applications. They can be effective time savers, and reduce a company’s time-to-hire, which saves money and retains top talent.While an ATS can provide many benefits, it’s important to keep in mind that it’s not a replacement for the human touch during the hiring process. Automated resume parsing can lead to technical issues—those that don’t follow a standard format can cause errors or be disregarded. Applications that don’t include the right keywords or work experience can also be overlooked. This can cause top applicants to slip between the cracks. Using an ATS doesn’t automatically mean it will maintain regulation compliance. Make sure you’re abiding by hiring laws at all times, and are familiar with any specific requirements to your industry.