The Ultimate Guide To Choosing an Applicant Tracking System

Hiring and retaining the right people is the single most important factor in successfully realizing a company’s strategic objectives.

Choosing the right applicant tracking system, also known as an ATS, is critical for hiring the most talented employees, and it directly impacts your ability to realize your strategic objectives.

Jim Collins famously articulated this as:

“…I would have one priority above all others: to acquire as many of the best people as I could… the single biggest constraint on the success of my organization is the ability to get and to hang on to enough of the right people.”

The reason is that productivity gains from having high performers are massive. According to McKinsey, high performers are up to 8 times more productive than average performers.

This guide will help you understand the different benefits applicant tracking systems provide. It will explain the common core features of the systems and identify the key benefits each feature unlocks so that you can choose the best fit for your needs.

What are the benefits of an applicant tracking system?

The benefits of an applicant tracking system can generally be categorized into the three categories below.

Of these, improved hiring accuracy easily becomes the key benefit, as it affects your ability to recruit high performers, and an incredible 82% of companies don’t believe they currently recruit highly talented people.

Improved hiring accuracy

The more technologically advanced applicant tracking systems offer talent assessment features to help you predict the future performance of an applicant. This significantly improves your hiring accuracy, allowing you to better identify and select top performers.

Increased hiring speed

Applicant tracking systems automate a range of recruitment processes so you can reduce the time-to-hire, ensuring you fill open positions faster and that applicants can be informed of the hiring decision faster.

Lower hiring costs

Automating processes also helps lower the overall recruitment cost. 

Further, many applicant tracking systems also offer the ability to screen or filter out applicants. These features often screen out more than 50% of applicants based on job and/or educational experience. This significantly reduces the time spent reading resumes and, therefore, lowers the recruitment cost.

What are the different types of applicant tracking systems?

Many applicant tracking systems offer a long list of features that can be hard to understand or difficult to compare across different system providers. This can make it hard to choose the software without doing time-consuming demonstrations of multiple systems.

So, how do you confidently choose the best system for your business? 

Luckily, applicant tracking systems can generally be grouped into three categories for easier comparison based on the primary focus of the tool:

Focus on hiring accuracy

These providers have their own purpose-built talent assessment solution as a natural part of the applicant tracking system.

Note that these systems offer many process automation features, but often not as many as the two categories below.

Focus on process automation

This is the majority of all applicant tracking systems. These systems have many features focusing on increased hiring speed and lower hiring costs. However, there are typically no or few features to help increase hiring accuracy. 

Process automation and talent assessment integrations

These providers also handle process automation well, but they have spent time building integrations with third-party talent assessment providers.

If the talent assessment provider is a quality provider, then this can help improve hiring accuracy. However, given that it is a third-party integration, user experience can be impacted, and normally the talent assessment will only be applied to short-listed candidates at the end of the recruitment process.

Matching applicant tracking systems to your business

Your choice of an applicant tracking system should be based on what is most important to help your company deliver on its strategic objectives.

While strategic objectives will differ from company to company, there are some commonalities around what most companies must focus on based on the company size.

Start-ups

Start-ups generally grow their staff base relatively faster than larger companies. All staff members (including new hires) must perform and be highly motivated, as the team is small and agile, and resources are limited.

Further, they may or may not have an HR department. Therefore, benefits from process automation are relatively few, and increasing hiring accuracy is by far the most impactful strategic benefit.

Small and medium businesses (SMBs)

SMBs also grow their staff base fast, albeit not as fast as start-ups. These companies normally have part of their HR team dedicated to recruitment.

Hiring accuracy is normally still the most impactful benefit with achieving strategic objectives, but cost savings from automation also start to become meaningful. 

Enterprises

Large companies normally grow at a much lower rate than smaller companies. Further, due to the large size of the overall organizations, their recruitment teams also tend to be large, and the savings from process automation can be meaningful. 

Hence, these companies have the most to benefit from process automation and cost savings. However, increasing hiring accuracy is still critically important for these companies.  

Features of an applicant tracking system for every step of the hiring cycle

The many features that applicant tracking systems offer can be categorized based on which part of the hiring cycle it addresses. Below, we have outlined what benefits each feature category provides.

Sourcing tools

Applicant tracking systems offer a range of different sourcing features. However, the common denominator for all the features is that they help attract and source more applicants faster.  

In other words, it increases the number of applicants and allows you to fill open positions faster. This shortens the recruitment cycle and thereby lowers the cost of overall recruitment.  

It does not necessarily lead to better hiring decisions without being combined with proper tools to identify and select the top performers among the sourced applicants.  

Common sourcing features include:

1. Job board integration

This feature allows you to post a job on multiple job boards directly via your applicant tracking system. 

This means you don’t have to input the job details on each job board manually and that your job is easily shown to a large number of potential applicants. It is essentially a fast way to increase your applicant pool. 

2. Career pages

Careers pages can be offered as a service so that companies that do not have one can benefit from two significant advantages: 

• Employer branding: Career pages are one of the main tools to take your employer branding to the next level and to look more professional toward potential high-quality applicants. 
• Automatic integration: Given that your applicant tracking system creates the career page, all features will automatically be available to track and manage applicants coming from the career page.

3. Enhanced candidate search functionality

The features allow you to search for suited candidates directly from your applicant tracking system. There are two main benefits:

• Search all public candidates: The applicant tracking system will allow you to search millions of public candidate profiles by combining the data from multiple free and public candidate databases.
• Enhanced search and ranking: The system can offer better search and ranking functionality than what is available in the original databases. Further, some software integrates with AI to provide an easy-to-use interface to rank and filter candidates.   

Automated resume screening and ranking

Most applicant tracking systems filter or screen out applicants based on pre-defined screening criteria. The system normally screens out more than 50% of your applicants.

This is done by combining screening functionality with resume parsing or other functionality that allows you to identify the job and educational experience of an applicant.

The benefits are speed and lower recruitment costs, as recruiters only need to read CVs from applicants who live up to the criteria.

However, recruiters should be careful with what criteria they use to screen applicants. For example, screening criteria based on educational background are often not correlated to applicant performance. If misused, the criteria could instead introduce unconscious biases, which can reduce your available talent pool and lead to subpar hiring decisions.  

Common screening features include:

1. Screening

The ability to reject applicants before they become an active part of the recruitment based on criteria you predefined. Normally, these criteria would be based on job experience or educational background.

2. Automated resume parsing

The system identifies and makes readily available the key parts of a resume. For example, the applicant’s job experience and what is the highest educational degree. The feature is normally combined with screening.

Tracking and managing candidates

These features essentially allow you to store all applicant data in one system and use that data to manage applicants across the hiring cycle. It is the backbone of any applicant tracking system.

The benefits are not only speed and lower recruitment costs. These features essentially enable you to run a more professional recruitment. 

Common applicant tracking and management features include:

1. Data and status tracking

An applicant tracking system should collect and make readily available the applicant data related to recruitment. Further, the applicant tracking system should assign a status to each applicant that allows you to track where in the recruitment process an applicant is.

2. Automated candidate communication

You can automate communication with applicants based on best practices. This includes automatic rejection emails, interview request emails, and other hiring-related communication.

3. Applicant portal

A portal where applicants can log in and see the application status in real time.

Further, these portals can provide additional benefits for the applicants, like interview tips, resume guides, and similar information. This further improves the applicant's experience of the recruitment process.

Structured interview guides and assistance  

These features help you provide a professional and structured interview that allows you to compare applicants on a like-for-like basis.

The features range from interview guides and reports to video software that automates the interview process:

1. Interview guides

Guides that provide a common and professional structure for the interview. It ensures that all applicants are interviewed in a similar way so they can be compared on a fair basis.

2. Interview reports

These are essentially interview guides upgraded to include additional information that is valuable to assess the applicants. This includes key data from the resume, customized applicant interview questions, and talent assessment data.

3. Video interview software

This feature facilitates that the interview can be conducted via video interview software connected to the applicant tracking system. The software normally allows the recruiter to pre-record the interview, including all the interview questions. All applicants then answer the pre-recorded questions in a video format.

Talent assessment for selection

Talent assessment tests will help provide a holistic picture of the applicant's ability to succeed in the role by assessing the applicant's soft and hard skills. This helps recruiters select top performers, which is a key driver of an organization’s performance. 

It can even help transition from traditional hiring to skills-based hiring, which is currently a core focus of many organizations.

To quantify the impact on performance, McKinsey compared the productivity of the top 1% performers with the bottom 1% performers and found that they are 12 times more productive in medium-complexity jobs.

The highest hiring accuracy will be achieved when talent assessment is administered to all applicants and not just a few selected applicants. This will often require the talent assessment test to be native to the applicant tracking system and not through third-party integration.

1. Soft-skill talent assessment

Soft skills can be traced back to desired personality traits and behavior, which means personality tests can be used to assess a candidate’s fit.

The impact on hiring accuracy will depend on: 

• Test framework: It is important to choose a type of test that has a proven application in hiring. The Big 5 personality test (also known as the OCEAN test) stands out in this regard, as it has been extensively researched in a hiring context and is used for executive hiring. 
• Generic vs. role-specific: Most personality tests are generic, meaning that the same test is used for all roles. While these tests help improve hiring accuracy, it is possible to use personality tests where the test content and/or scoring is customized for the specific role.

2. Hard-skill talent assessment

Hard skills are the on-the-job skills required to succeed in the role. If the right technical skills test is offered and administered correctly, it can significantly improve hiring accuracy.

Impact on hiring accuracy depends on the following:

• Test content: Are the topics covered by the skills test directly related to the actual requirements of the job you are hiring for? The better the link, the better the hiring accuracy.
• Test validity: The test should have been created by a subject matter expert and validated by an organizational psychologist. Serious test providers can document that a psychologist has validated the test.

Final recommendations

As we have uncovered, the essence of recruitment isn’t just about automating processes but much more about precision in talent acquisition.

While process automation plays a vital role in reducing manual administrative burdens, it cannot overshadow the primary mission of recruitment: to find the ideal candidate with the appropriate blend of hard and soft skills.

An applicant tracking system doesn't just ease the recruitment process but also greatly enhances the quality of your hires. Choosing the best system depends primarily on its ability to identify and resonate with the unique needs of each role and candidate. 

Superior systems harness the power of inclusion and holistic talent assessment and not merely sifting through resumes. These help to deeply understand the skills needed for the job and align candidates who are a perfect fit.

The rise of remote work, the gig economy, and diverse workforces implies that soft skills – adaptability, communication, collaboration – are more critical than ever. An effective applicant tracking system prioritizes these skills, ensuring organizations get well-rounded individuals who don't just fit a role but enhance the broader team dynamics.

As you embark on finding the ideal software solution, it's pivotal to remember that the core of recruitment isn't automation; it's human potential.

Talent acquisition is a special skill. Discover how you can build an effective talent acquisition strategy.