Applicant Tracking System (ATS) Explained: Here's What You Need to Know

If you've ever felt overwhelmed by the sheer number of resumes flooding your inbox or frustrated with how slow your hiring process has become, you're not alone. For many HR professionals, the hiring process feels outdated, inefficient, and exhausting. Sifting through hundreds of applications can be a nightmare, and when you're finally ready to make a decision, the best candidates may have already moved on.

At Lift HCM, we’ve seen countless companies struggle with these exact challenges. We've helped businesses transform their recruitment processes and streamline their hiring with one essential tool: the Applicant Tracking System (ATS). An ATS can simplify your recruitment efforts, allowing you to focus on finding the right candidate faster and with less stress.

In this post, we'll guide you through everything you need to know about ATS—what it is, how it works, and how it can improve your recruitment process. By the time you finish reading, you’ll have a clear path toward making faster, smarter hiring decisions with the right technology.

Table of Contents

• What is an Applicant Tracking System (ATS)?
• Key Functions of an Applicant Tracking System
• How Does an Applicant Tracking System Work?
• Types of Applicant Tracking Systems
• How to Avoid Cadidate Manipulation in an Applicant Tracking System
• Common Tactics Candidates Use to Manipulate an Applicant Tracking System (with examples)
• How To Mitigate Candidates Attempting to Manipulate an ATS
• Tips for Choosing the Right ATS
• Strengthen Your Recruitment Process with Lift HCM

What is an Applicant Tracking System (ATS)?

An Applicant Tracking System (ATS) is a software application designed to help companies streamline their recruitment and hiring processes. Think of it as your digital hiring assistant, capable of handling everything from job postings to candidate screening and interview scheduling. For employers, business owners, and HR professionals, an ATS is like having a tireless team dedicated to making your hiring process smoother, faster, and more effective.

But how exactly does an ATS help you? Imagine never having to manually sift through hundreds of applications again. Instead, an ATS organizes everything into one easy-to-navigate system, saving you time and ensuring that no great candidate slips through the cracks.

💡 Did you know?  The U.S. Department of Labor estimates that the cost of a bad hire
can reach up to 30% of the employee's first-year earnings.

Key Functions of an Applicant Tracking System

An ATS is far more than just a digital filing cabinet for resumes. It's a comprehensive solution that touches every aspect of the recruitment process. Here's a breakdown of the key functions an ATS performs:

1. Job Posting and Distribution: An ATS allows you to create job listings and automatically distribute them across multiple job boards and career sites with just a few clicks. This broader reach helps attract a larger pool of qualified candidates.
2. Resume Collection and Storage: Say goodbye to overflowing email inboxes and scattered resume files. An ATS collects and stores all applications in a centralized database, making it easy to search, filter, and review candidates.
3. Candidate Screening: One of the most time-consuming tasks in recruitment is screening resumes. An ATS can automatically scan resumes for keywords, qualifications, and experience, helping you quickly identify the most promising candidates.
4. Applicant Communication: Keeping candidates informed about their application status is crucial for a positive candidate experience. An ATS can automate personalized emails, send interview invitations, and provide updates to applicants throughout the hiring process.
5. Interview Scheduling: Coordinating interviews can be a logistical nightmare. An ATS often includes features to manage interview scheduling, send calendar invites, and integrate with video conferencing tools for remote interviews.
6. Collaboration Tools: Modern hiring often involves multiple team members. An ATS provides collaboration features allowing hiring managers, recruiters, and other stakeholders to share notes, evaluations, and candidate feedback.
7. Reporting and Analytics: Data-driven decision-making is critical in today's business world. An ATS generates reports and analytics on various aspects of your hiring process, helping you identify bottlenecks, measure the effectiveness of your recruitment channels, and make informed decisions.
8. Compliance Management: Staying compliant with ever-changing employment laws and regulations can be challenging. Many ATS solutions include features to help manage equal employment opportunity (EEO) reporting and other compliance requirements.

How Does an Applicant Tracking System Work?

Now that we know what an ATS does, let's explore how it works. An ATS typically functions in key stages, from job posting to candidate onboarding. Here's a step-by-step look at how an ATS works:

1. Resume Parsing: When a candidate submits their resume, the ATS uses sophisticated parsing technology to extract relevant information such as contact details, work history, education, and skills. This data is then organized into a standardized format within the system.
2. Keyword Matching: The ATS compares the parsed resume data against the job description and other predefined criteria. It looks for specific keywords, phrases, and qualifications that match the position's requirements.
3. Ranking and Scoring: Based on the keyword matches and other factors, the ATS assigns each candidate a score or ranking. This helps recruiters quickly identify the most qualified applicants.
4. Database Search: Resumes are stored in a structured database, so recruiters can perform advanced searches using various criteria, such as skills, experience, location, or education level, to find suitable candidates for current or future positions.
5. Workflow Automation: The ATS manages the movement of candidates through various stages of the hiring process, automatically triggering actions like sending emails, updating statuses, or prompting recruiters for the next steps
6. Integration: Many ATS solutions integrate with other HR systems, job boards, background check services, and assessment tools to create a seamless end-to-end recruitment process.

💡 Did you know? 78% of job seekers say the overall candidate experience they
get is an indicator of how a company values its employees.

Types of Applicant Tracking Systems

Not all ATS solutions are created equal. There are several types of applicant tracking systems, each catering to different organizational needs and sizes:

1. Enterprise ATS: Designed for large corporations with complex hiring needs, these systems offer extensive customization options, advanced analytics, and integration capabilities with other enterprise systems like HRIS (Human Resources Information Systems), payroll, and Performance Managament platforms.
2. Mid-Market ATS: Tailored for medium-sized businesses, these systems balance functionality and ease of use, offering a good range of features without overwhelming complexity. Some examples for mid-market ATS platforms include iCIMS Talent Cloud, Greenhouse, and Lever.
3. Small Business ATS: These systems focus on simplicity and affordability, providing essential ATS features that small businesses and startups need to manage their hiring process effectively. Some examples of small business ATS are Trakstar Hire, and BambooHR.
4. Free ATS: Some providers offer basic ATS functionality for free, which can be a good starting point for very small businesses or those new to using an ATS. Some examples of free ATS are Zoho Recruit (Free Version), and MightyRecruiter
5. Industry-Specific ATS: Certain industries like healthcare or education have unique hiring requirements. Some ATS solutions are tailored to meet these sectors' specific needs. Some examples of industry-specific ATS are HealthcareSource (for the healthcare industry), PeopleMatter (for hourly and shift-based workers in retail, foodservice, and hospitality industries), and ClearCompany (for manufactoring companies).
6. Open-Source ATS: For organizations with technical expertise, open-source ATS options allow for complete customization and control over the system. An example of open-source ATS is OrangeHRM.

How to Avoid Cadidate Manipulation in an Applicant Tracking System

Now that you better understand what an ATS is and how it works, let's explore some of the biggest concerns employers have with Applicant Tracking Systems and how to mitigate these concerns.

Although an ATS is a powerful tool, it's not without its challenges. One of the biggest concerns among employers is candidate manipulation. Some savvy applicants have figured out how to "game" the system, making it appear as though they are better suited for the job than they really are. 

Common Tactics Candidates Use to Manipulate an Applicant Tracking System (with examples)

Keyword Stuffing 

Candidates may load their resumes with job-related keywords, knowing that the ATS is scanning for these terms. While this might boost their ranking, it doesn't necessarily mean they're the best fit for the job.

Example: Here's an example of keyword stuffing in a job application when using an Applicant Tracking System (ATS). The applicant has overly repeated the word "Project Manager" and related keywords in an unnatural way:

Resume Example with Keyword Stuffing:

Objective:
Highly skilled Project Manager with 5 years of experience. Seeking a Project Manager role where I can use my project management skills to lead project teams and manage project budgets in a project-driven environment.

Experience:

Project Manager, XYZ Corp.

• Led project teams as a Project Manager for various projects.
• Managed project budgets and project timelines as a Project Manager.
• Delivered project management tasks using project management software to meet project goals.

Skills:

• Project Management
• Project Planning
• Project Scheduling
• Project Budgets
• Project Manager Software

Cover Letter Example with Keyword Stuffing

Dear Hiring Manager,

As a highly skilled Project Manager with a background in project management, I am very interested in the Project Manager position. My experience includes managing project budgets, leading project teams, and completing various projects successfully. I am confident that my project management skills, along with my experience as a Project Manager, make me an ideal candidate for the Project Manager role at your company.

What's wrong with this example?

The applicant has unnaturally repeated the keywords "Project Manager," "Project Management," and "Projects" far too often. While including keywords is essential for ATS systems, excessive repetition can make the resume seem artificial, and it may even get flagged by the ATS or harm the overall readability. Instead, it's better to use variations of the keywords and incorporate them naturally throughout the document.

White/Invisible Text

Some applicants use white font to include extra keywords that aren't visible to the naked eye but are picked up by the ATS. This tactic can result in unqualified candidates appearing more qualified than they are.

Below is an example of a comparison of the "white fonting" technique on resumes. The left side shows how keywords or entire job descriptions are hidden by turning the font color white, making them invisible to a human reader but detectable by an ATS. The right side displays the proper way to format a resume without using unethical techniques like white fonting.

Formatting Tricks

Certain resume formats can confuse an ATS, causing it to misread or overlook critical information. Candidates might exploit this by using complex formats that make their resume stand out in ways that don't reflect their actual qualifications.

How To Mitigate Candidates Attempting to Manipulate an ATS

Understanding that candidates might try to manipulate the ATS is the first step in mitigating these attempts. Here's how you can ensure your ATS maintains its integrity and helps you find the right candidates.

Use Multiple Screen Methods

Implement a multi-stage screening process. 

For example: 

1.  Initial ATS screening 
2. Manual resume review by HR 
3. Phone screening 
4. Skills assessment or job-specific test 
5. In-person or video interviews

Leverage Advanced ATS Features

• Modern ATS platforms offer advanced parsing algorithms that are better at understanding context rather than just counting keywords. These systems can detect when keywords are used meaningfully versus when they're being stuffed.
  
  
• AI and machine learning capabilities can help identify patterns of manipulation by analyzing resumes in greater depth, ensuring that the candidates who rise to the top are genuinely qualified.

Customize Your ATS Settings

• You can adjust your ATS filters and settings to be more stringent, such as by requiring certain qualifications that can't be easily faked (e.g., specific certifications or minimum years of experience).
  
  
• Implementing blind screening features, where personal information is hidden, can help ensure that candidates are evaluated solely on their qualifications, reducing the impact of manipulation.

Verify Information

• Cross-check resumes with other sources like LinkedIn profiles or during interviews.
• Implement a thorough background check process.
• Use professional reference checks effectively. Ask specific questions about the candidate's claimed skills and experiences.
• Consider using services that verify educational and professional credentials.

It's important to remember that while some candidates may attempt to manipulate the system, many are simply trying to optimize their resumes for ATS compatibility, which isn't inherently unethical. The key is to design a hiring process that can effectively identify truly qualified candidates.

Educating candidates on optimizing their resumes for ATS scanning is equally important. Advise applicants to use standard fonts, avoid complex formatting or graphics, and incorporate relevant keywords from the job description. This approach helps ensure that qualified candidates aren't inadvertently screened out due to formatting issues.

Additionally, consider implementing feedback mechanisms within your ATS that allow candidates to share their thoughts on the application process. This valuable input can help you continually refine and improve your recruitment system, creating a more positive experience for future applicants and potentially attracting a wider pool of quality candidates.

Tips for Choosing the Right ATS

Selecting the right Applicant Tracking System for your organization is crucial. Here are some key factors to consider:

• Company Size and Growth Plans: Ensure the ATS can handle your current hiring volume and scale with your company's growth.
• Ease of Use: The system should be intuitive for both recruiters and hiring managers. A user-friendly interface can significantly impact adoption rates.
• Customization Options: Look for an ATS that allows you to tailor workflows, application forms, and reports to your specific needs.
• Integration Capabilities: The ATS should integrate seamlessly with your existing HR software, job boards, and other tools you use.
• Mobile Functionality: With more candidates applying via mobile devices, a mobile-responsive ATS is essential.
• Reporting and Analytics: Robust reporting features can provide valuable insights into your hiring process and help you make data-driven decisions.
• Compliance Features: Ensure the ATS helps you meet legal and regulatory requirements in your industry and location(s).
• Vendor Support and Training: Consider the level of support and training the vendor offers, especially during implementation.
• Cost and ROI: While price is important, focus on the overall value and potential return on investment the ATS can provide.
• Security Measures: Given the sensitive nature of candidate data, strong security features are crucial.

Remember, the best ATS for your organization is one that aligns with your specific recruitment needs, processes, and goals. Take the time to thoroughly evaluate your options, perhaps even running a pilot program, before making a final decision.

Strengthen Your Recruitment Process with Lift HCM

In today’s competitive talent landscape, relying on outdated hiring processes is no longer an option. An ATS can streamline your recruitment efforts, improve the quality of candidates you attract, and save your HR team countless hours.

By implementing an ATS with Lift HCM, you’ll not only automate your hiring but also gain access to valuable insights that allow you to refine your recruitment strategy and make data-driven decisions.

Take the next step in optimizing your hiring process. Contact Lift HCM today to explore how we can help transform your recruitment workflow, making it more efficient, effective, and tailored to your unique needs.