Applicant Tracking Systems: Definition, Features and Benefits

In today’s competitive job market, businesses must efficiently find the right talent, no matter their size or industry. That need makes applicant tracking systems (ATS) crucial.

ATS tools transform the way companies manage their recruitment processes. Understanding how these systems work and the advantages they offer can help you make informed decisions when selecting the right ATS for your business.

Let’s explore everything you should know about ATS, including key features, benefits and how to choose the best software for your organization.

What is an applicant tracking system?

Applicant tracking systems are software applications designed to streamline the recruitment process by automating collecting, sorting and reviewing job applications. They help employers efficiently manage large volumes of resumes so they can easily identify qualified candidates.

They can also filter applications based on specific criteria like:

• keywords
• skills
• experience levels

In turn, this reduces the time and effort required for initial screening. Overall, an ATS enhances the efficiency of the hiring process, helping organizations quickly and accurately find the right talent.

How does an ATS work?

An ATS works by automating the recruitment process through these key steps:

• Resume collection. Job applications flow through predefined channels and funnel into the ATS, centralizing all candidate information.
• Parsing and storage. The ATS parses resumes to identify relevant information — contact details, work experience, education, skills and more — then stores this data in a structured format.
• Keyword filtering. The system uses keyword filters and algorithms to match candidate qualifications with job requirements, highlighting the most relevant applications for hiring teams to review.
• Workflow management. Recruiters can track the progress of each application, schedule interviews and communicate with candidates all within the ATS, ensuring a smooth and organized hiring process.

Features of an applicant tracking system

Every business could benefit from the robust features of an applicant tracking system. From automating job postings to streamlining candidate communications, the features of an ATS help employers expand their talent pool, stay organized and save precious time in the process. Here are a few key ways how.

Job postings

ATS software allows recruiters to create and distribute job postings to job boards and social media platforms, increasing their visibility. By centralizing the job posting process, an ATS ensures consistency in job descriptions and saves time by eliminating the need to post manually. Some products also include templates and guidelines to help craft more effective job postings, which can attract a larger pool of talent.

Resume parsing and screening

Resume parsing automatically extracts essential information from submitted resumes and converts it into a structured format. Screening then utilizes this structured data to filter candidates based on certain criteria. This significantly reduces the time recruiters spend manually reviewing applications, ensuring only the most relevant candidates move forward in the hiring process.

Candidate sourcing and interview scheduling

An ATS can also help identify and attract potential candidates. It streamlines the coordination of interview appointments, allowing recruiters to send automated invitations, track responses and manage calendars within the same software. This integration improves the candidate experience by providing a seamless and organized interview process.

Candidate profiles and feedback

Candidate profiles include all relevant information about applicants — including resumes, cover letters, interview notes and communication history — available in an easily accessible format. The feedback feature allows hiring team members to leave comments and rate candidates directly within an ATS, facilitating collaboration and ensuring a comprehensive evaluation of each candidate.

Built-in CRM software

ATS’s customer relationship management (CRM) component allows recruiters to maintain and nurture relationships with potential candidates, creating a talent pipeline for future job openings. The CRM ensures personalized and timely engagement with candidates by tracking interactions and candidate preferences. It also helps segment candidates, making it easier to target specific talent pools for different roles.

Integrations

Integrations seamlessly connect an ATS with external tools, including:

• job boards
• social media platforms
• HR software
• email systems
• background check services
• and more

By synchronizing data and streamlining workflows, integrations reduce manual data entry and ensure consistency across different tech.

Analytics and reporting

ATS tech allows recruiters to track key metrics like time to hire, cost per hire and candidate quality. Analyzing this data can help organizations identify trends and then make data-driven decisions to enhance their hiring strategies. The ideal ATS software offers customizable reports and dashboards that provide a comprehensive view of the recruitment pipeline and help hiring teams track their performance.

Real-time collaboration

An ATS can also empower team members to share notes, provide feedback and communicate directly within one software, ensuring everyone stays informed and updated. Real-time updates and notifications help coordinate activities and decisions quickly, reducing delays and improving efficiency. By fostering a collaborative environment, an ATS ensures that all stakeholders have a say in selecting top candidates.

Automation

ATS software can also free HR to focus on more strategic initiatives by automating repetitive recruitment tasks like:

• resume screening
• email communication
• interview scheduling
• follow-up reminders

Automated workflows also ensure consistent and timely candidate engagement. With reduced manual effort and minimal human error, automation improves the efficiency and effectiveness of the hiring process, leading to faster and more accurate candidate selection.

Benefits of using an applicant tracking system

An ATS is an indispensable tool in the hunt for top talent, but the benefits of using an applicant tracking system go far beyond the employer. Recruiters, employees and potential candidates also reap the rewards of a streamlined and automated recruiting process, including:

Improved efficiency

An ATS streamlines resume screening, job posting and interview scheduling, allowing recruiters to invest in more meaningful tasks. With centralized candidate information and real-time collaboration features, an ATS facilitates timely access to data and seamless teamwork among hiring managers. What’s more, automated workflows ensure timely communication and follow-ups with candidates, reducing delays and speeding up the hiring process.

Greater candidate outreach

With an ATS, recruiters can post openings across multiple job boards simultaneously, increasing their visibility. The built-in CRM features, meanwhile, help maintain personalized communication with candidates, ensuring timely and relevant interactions, while automated email templates and follow-up reminders keep candidates engaged and informed throughout the hiring process. By leveraging data from previous interactions and candidate preferences, an ATS allows for targeted outreach, improving the likelihood of attracting the right talent.

Enhanced candidate experience

An ATS enhances the candidate experience by providing a streamlined and efficient application process. Candidates benefit from an easy-to-navigate application process and the ability to quickly submit their resumes and information. Automated communication ensures candidates receive timely updates on their application status, reducing uncertainty and anxiety. On top of all that, ATS enables personalized interactions and faster responses, making candidates feel valued and engaged. This improved experience can help employers attract top talent and strengthen the reputation of their brand.

Customizable screening

Customizable screening allows recruiters to tailor the evaluation process to specific job requirements. Users can filter candidates by setting customizable criteria, including keywords, skills, experience levels and education. This flexibility ensures that only the most relevant and qualified candidates make the short list, saving time and resources. And, crucially, customizable screening helps maintain consistency and fairness by applying uniform criteria to all applicants.

Boosts the bottom line

Using an ATS can yield significant time and cost savings by automating many aspects of the recruitment process, reducing the need for manual effort and accelerating the hiring timeline. With centralized data management and streamlined workflows, an ATS can also minimize administrative tasks and errors, further increasing efficiency. Additionally, an ATS helps quickly identify the most qualified candidates, reducing the time to hire and associated costs while enabling better resource allocation toward strategic activities like candidate engagement and employer branding.

Data-driven decisions

ATS platforms provide recruiters with valuable insights through analytics and reporting tools, helping organizations evaluate and refine their hiring strategies. By analyzing this data, recruiters can identify trends, optimize processes and make informed decisions to improve overall recruitment outcomes. This evidence-based approach enhances the hiring process’s efficiency and effectiveness in a way that supports long-term talent acquisition goals.

Selecting the right applicant tracking system

No ATS is the same, and selecting the right applicant tracking system depends on the unique needs of your business. Still, you should consider at least these important factors before you buy.

Know your problem

First, you have to identify your specific recruiting needs and challenges. Whether your pain points include a high volume of applications, inefficient screening processes or a lack of compatibility with existing tools (or a combination of all these things), you should prioritize ATS features that address the specific issues you’re trying to resolve. Understanding your problem will ensure you choose software with functionalities that:

• improve your hiring process
• avoid unnecessary features
• optimize your investment
• ensure the ATS aligns with your business goals

Understand integrations and company tech

Selecting an ATS that seamlessly integrates with your current HR software, job boards and communication tools will streamline your recruiting process and improve the consistency of your data. By ensuring compatibility, you avoid the pitfalls of data silos and manual data transfers, reducing errors and saving hours of labor. Also, knowing your company’s tech landscape means you can choose an ATS that complements your workflow, providing an efficient, cohesive user experience for recruiters and candidates alike.

Align with organizational goals

An ATS that’s aligned with your organizational goals can help you attract and retain top talent, improve hiring efficiency and maintain a positive candidate experience, all of which contribute to achieving your business objectives. This means optimizing your recruiting process and resources by choosing a system that fits your specific needs, from scalability to data-driven decision-making. Ultimately, an ATS that matches your goals will result in a more cohesive and effective hiring process, driving long-term success for your organization.

The difference between ATS and CRM

The primary difference between an ATS and a CRM lies in their core functions and target users.

An ATS is designed to manage the recruitment process, including job postings, resume screening, candidate tracking and interview scheduling. It focuses on optimizing the hiring workflow and improving the efficiency of identifying and selecting candidates. It’s mainly used by HR teams and recruiters to streamline the hiring process and manage candidate applications.

On the other hand, a CRM system manages interactions and relationships with customers and potential customers, with a focus on improving customer satisfaction and retention. Sales, marketing and customer service teams use CRMs to track customer interactions, manage leads and nurture customer relationships.

By integrating CRM functionalities into an ATS, recruiters can nurture their talent pools and continuously engage potential candidates.

What is an ATS-optimized resume?

An ATS-optimized resume is designed to pass through an ATS by adhering to specific formatting and keyword guidelines. These resumes use clear, straightforward layouts without complex formatting elements — like tables or graphics — ensuring that the ATS can accurately parse the information. Keywords from the job description are strategically included to match the criteria set by recruiters, increasing the likelihood of the candidate’s advancement.

Applicant Tracking Systems: FAQ

What should I consider when choosing an ATS?

When choosing an ATS, consider your specific recruitment needs, including key features and functionalities, scalability and integration with existing HR tools. Be sure to assess the ATS’s user-friendliness, customization options and customer support offerings to ensure it aligns with your goals and budget.

How many job posts can I handle at one time using an ATS?

The number of job posts you can handle at one time using an ATS largely depends on the specific software and its features. Most ATS tech can manage multiple job postings simultaneously, allowing you to handle a high volume of openings efficiently. To ensure an ATS meets your volume requirements, it’s important to verify these things with the vendor.

Is an ATS a good choice for my small business?

An ATS can be an excellent choice for small businesses with sparse HR teams or no HR pro at all. The tech’s features and functionality streamline the recruiting process and automate routine tasks. It also helps ensure you can attract and manage qualified candidates efficiently, improving your hiring outcomes and allowing you to focus on growing your business.

Explore Paycom’s resources to learn more about HR automation, talent acquisition and more.