A man sits at a counter in a large workshop space. He types something on a laptop and looks down at the laptop screen with a smile. The man is young and bearded, and he is wearing a blue-gray button-up shirt. The counter next from him has a shelf holding several clear plastic boxes, and stacks of cardboard boxes sit under the counter and on metal shelves beside the counter. In the background are rows of long tables and a white wall with several large windows letting in light.
Modern ATS software has features beyond organizing information about potential hires. These systems can also schedule interviews, assess applicants, and analyze recruitment data. — Getty Images/shapecharge

An applicant tracking system (ATS) is a piece of software used by recruiters and hiring managers to collect information about candidates. An ATS helps the hiring team stay organized while storing information from applicants’ resumes, organizing prospects based on skill set, and filtering applicants based on specific needs.

As of 2023, nearly 98% of the Fortune 500 companies used an ATS in their hiring process. Today’s top applicant tracking systems can do far more than simply store information. Many of these tools include automation and artificial intelligence features that speed up the hiring process and optimize the candidate experience.

What does an applicant tracking system do?

Applicant tracking systems help companies organize and streamline the hiring process. Simple legacy applicant tracking systems work similarly to CRM software: They provide a centralized location where applicant data can be stored and shared in a consistent format. ATS software has evolved to include features that:

  • Help with scheduling screening calls, interviews, and skills assessments.
  • Improve communication between candidates and hiring teams.
  • Allow hiring team members to collaborate.
  • Provide legally compliant candidate sourcing.
  • Offer tools for evaluating candidates through assessments and score cards.
  • Promote your employer brand.
  • Measure hiring effectiveness through recruiting reports.

Today’s applicant tracking systems can manage steps throughout the recruitment process, from posting job openings on career sites and job boards to assessing employee referrals to scheduling interviews and analyzing recruitment data. This software has become invaluable to hiring teams of all sizes seeking to improve their hiring results.

[Read more: 8 Top Recruiting Tools for Hiring Managers]

What are the benefits of using an applicant tracking system?

Companies that successfully implement an ATS are able to spend less time on admin tasks related to hiring and more time focusing on finding the right fit for an open position. “[Applicant tracking systems] take a huge burden off the shoulders of hiring teams and give them time to focus on what matters — connecting with candidates and making hiring decisions,” wrote Workable.

If a candidate doesn’t use the right keywords on their resume, they risk being screened out too early to make an impression.

Implementing an applicant tracking system can help reduce time to hire, make it easy to post jobs, improve the candidate experience, and help you stay compliant with hiring laws. It can streamline interviewing and onboarding, as well as help you identify better-qualified candidates from a pool of applicants faster. “By reducing repetitive tasks, and digitizing your recruitment workflow, an applicant tracking system makes candidate experience a priority, and makes everyone’s job easier,” wrote Rippling.

What are the drawbacks of using an applicant tracking system?

Some experts warn that using an applicant tracking system can inadvertently create hiring bias that prevents well-qualified candidates from getting through your screening process.

“[N]ew research has found that the manner in which applicant tracking systems (ATSs) and other automated screening tools are configured often leads them to reject candidates who may be qualified to fill roles but who lack certain pedigrees or don’t possess profiles that exactly match an increasingly inflated wish list of skills that recruiters demand,” wrote SHRM.

Applicant tracking systems often rely on a set of keywords in order to more efficiently screen candidates for the next step in the hiring process. If a candidate doesn’t use the right keywords on their resume, they risk being screened out too early to make an impression.

Unfortunately, this dynamic leads to hiring bias that can negatively impact your business. The research found that many candidates who are rejected by an ATS are “hidden” workers: veterans, immigrants, mothers, and caregivers, among others. Companies that use an ATS and still struggle to fill roles may be missing out on a huge opportunity to tap into a ready talent pool.

To mitigate this risk, look for an ATS that looks for skills rather than pedigree. Alternately, use your ATS in the traditional sense: as a database and centralized location for organizing your candidate information. Leave the screening to your team or to a secondary platform that provides unbiased skill assessments.

[Read more: 5 Steps to Building a Talent Pipeline]

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

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