What Is an Applicant Tracking System? A Small Business Guide
Charlette has over 10 years of experience in accounting and finance and 2 years of partnering with HR leaders on freelance projects. She uses this extensive experience to answer your questions about payroll.
Jennifer Soper is an HR Specialist and staff writer for Fit Small Business, with over 15 years of experience in accounting, payroll, and human resources.
This article is part of a larger series on Hiring.
An applicant tracking system (ATS) is a software application that helps organizations identify, select, and track job candidates throughout the hiring process. Companies of all sizes use these tools to manage their recruitment processes and improve their hiring efficiency.
Many types of ATS systems are available, but they all share some common features. Most include a database where job candidates’ resumes and other information can be stored and searched. Some even have tools for online job postings, candidate screening, and interview scheduling.
Applicant Tracking System Process & Features
An ATS functions as a database of potential employees. Applicant data can be added to that database by entering a job seeker’s name when they apply in person. However, what makes an ATS work so well is that it can be populated with candidates who applied online such as through your careers website or a job board. It also helps you manage your recruiting funnel, as it tracks data through the recruiting process—from posting the job to making an offer.
Typical ATS features support standardized HR processes for recruiting and selecting candidates. For example, you’ll likely be able to:
- Monitor your open jobs, complete with details like job descriptions
- Keep track of applicants and their resumes
- Parse resumes into standard chunks of information, like education and experience (some even use AI to screen resumes against your job requirements)
- Contact and stay in touch with job seekers, such as through email or chat
- Keep track of interviews, notes, and other relevant information as you consider each job seeker; choose to move them forward to the next interview or exit them from the process and send them a “No, thank you” letter
- Create job offers and track who has accepted
- Pass data to your HR or payroll system once you choose to hire the person
Recruiting and selecting candidates for hire typically includes processes that can be made easier with an ATS.
Most ATS systems have the same basic functions; however, some emphasize one set of features over the other. For example, they all keep track of open positions—but some will post those positions to only one, or just a few, job boards. Others, like Freshteam, will post them to many job sites.
The same is true for applicants. Some applicant tracking systems will receive applications and resumes, and others, like Zoho Recruit, will take it a step further by providing job application forms, allowing candidates to upload documents, and parsing resumes to make it easy for you to compare applicants side by side.
Here are the applicant tracking features most useful to small business owners:
- Ability to post jobs on your website, a career page, or via social media
- Simple job application process for job seekers
- Option for candidates to upload a resume and other attachments such as a cover letter
- Scheduling tools so that you can book interviews, including video interview options
- Communication tools, like text or email, so that all your notes are in one place
- Scoring and rating tools for interviewers to share their feedback on each candidate
- Reports and analytics, so that HR staff can monitor hiring performance with metrics
- Software integration, so that your final choice, once they accept your job offer, can be uploaded into your HR/payroll software to begin onboarding
Before deciding to purchase an ATS, check it out to see that they have the exact set of features your small business is looking for.
Applicant Tracking System Costs
Applicant tracking systems range in price from free to thousands of dollars a year. Some software, like Freshteam, or job boards with ATS features, like Indeed, are free. Others are designed for recruitment firms to keep track of job openings by recruiters and have billing features. Most small businesses need something more basic.
Here are options to consider and what they may cost:
- Free software: Free applicant tracking software often have fewer features than a professional recruiter may need. But for a small business, those free tools allow you to keep track of your open jobs and qualified applicants. Some software are free for a limited number of job openings at once or for companies of a certain size.
- $ – Job boards: Free job boards and paid job sites, like Ziprecruiter, often provide applicant tracking features, charging either monthly rates, per job ad, or for a fixed number of job posts or resumes. For Ziprecruiter, prices range from $16 to $24 per post per day to post a job.
- $$ – Recruitment software: Recruitment software includes not only the open positions and a database for candidates but also provides a way to post your jobs online. Some charge by company size, others by users. They range in price from $0 to $600 per month.
Most small businesses can get by with a free applicant tracking system, job board, or recruiting software that does the basics. There’s no need to pay for the complexity of a corporate system if you’re not managing hundreds of open jobs or applicants.
Pros & Cons of Applicant Tracking Systems
Most HR experts will tell you the benefits outweigh the costs—but that depends on how much hiring you’re doing.
| PROS | CONS |
|---|---|
| Better Candidates. An ATS gives you a tool to increase the number of individuals who apply to your job. It also lets you screen those candidates to find the best fit for the job. | Cost. Because they were designed for corporate recruiters and recruiting firms, ATSes can be costly. Therefore we suggest you consider using a free version or do a free trial before you commit to the expense of an ATS. |
| Faster Hires. The functions an ATS provides save you time. For example, by comparing applicant resumes side by side, you can quickly discern which you want to interview. ATS communication tools let you reach out, interview, and hire those candidates faster. | Complexity. Some ATS features are beyond what the average small business would need. Being feature-rich, it means there are often menu items and configuration options you don’t need, such as reports by recruiters or client billing. |
| Improved Employment Brand. Depending on which system you use, your ATS can help you promote your business as a great place to work. If your online application process is easy, or perhaps even mobile, more workers are likely to want to apply. | User Access. You likely won’t have a single sign-on (SSO). That means that you’ll need a separate login ID and password for each user. That’s a hassle, especially if you want to see what your hiring manager is working on or want to collaborate with others interviewing a job candidate. |
| Reduced Risk. Having your hiring process documented online can serve as a nice resource in case a rejected job seeker files a complaint that they were unfairly discriminated against. Your notes and assessment factors can help prove that you went through a robust and fair hiring process to select the best candidate. | Legal Issues. Since data in an ATS is “discoverable” in case of a lawsuit, you’ll want to be careful that your hiring practices are non-discriminatory. If, for example, your data shows that most of your applicants for a job are female and you always select only males for a given role, then your ATS data may work against you in an unfair hiring practices lawsuit. |
Businesses That Can Benefit From an Applicant Tracking System
Some small businesses won’t need an ATS if they hire infrequently or are small enough that they can keep track of open jobs and applications in paper folders. However, since there are many ATS systems available for free, it’s not a bad idea for even the smallest of companies to use one in order to have more visibility into their hiring processes. An applicant tracking system gives your business a better chance of hiring and keeping the best employees.
Here are examples of businesses that may need to consider an ATS:
- Companies that are growing fast: If you expect you’re going to need to hire more than one person a month, you may want to invest in an ATS to help you keep track of open jobs and numerous applications.
- Businesses that have a lot of turnovers: Some industries, like customer service and food service, tend to have high turnover. These businesses may want to use an ATS system so that they have a ready list of individuals to choose from when they have to find replacement staff quickly.
- Larger businesses: Most larger businesses and corporations use some form of applicant tracking system to monitor how long it takes them to hire employees and make sure job openings get filled. Small businesses with over 100 employees should consider using an ATS.
Applicant Tracking System Providers
The majority of ATS systems are designed for larger firms. However, there are some targeted toward smaller businesses. Here are three ATS providers we find good for small businesses:
Freshteam is a great option for small businesses and tops our guide for the best applicant tracking software. If you have 50 or fewer employees, the software is free, and you can post up to three job openings at once. Its paid monthly plans run anywhere from $1.20 to $4.80 per employee, plus platform fees from $71 to $203, respectively, depending on the advanced features you desire, such as resume parsing, data analytics, talent pool management, and new hire onboarding. Freshteam also offers an annual pricing discount, which drops the per employee rate to a flat $1 to $4, plus platform fees.
Check out our Freshteam review for more information.
Freshteam has a recruiting pipeline as part of its robust reporting features.
ZipRecruiter is a nice choice because it acts as a regular job board where you can post your positions to over 100 locations. With a paid plan, ZipRecruiter functions as an ATS, allowing you to sort and track candidates directly in its system. It also enables you to rate candidates and sort them into categories, such as reviewed, interview, hired, and more. Additionally, if you already use an ATS, then ZipRecruiter supports third-party integrations with a specific list of partners, including Zoho Recruit.
It’s priced from $16–$24 per post per day and offers a four-day free trial. Learn more in our ZipRecruiter guide.
ZipRecruiter acts as both a job board and an ATS.
The best way to ensure easy onboarding is to use an ATS that’s connected to HR or payroll software, so if you’ve been considering investing in HR software as well, then Zoho Recruit is a smart choice. Zoho People (its HR software) provides you with an employee database management system and helps you stay compliant with labor laws. And, Zoho Recruit connects with Zoho People, so once a candidate is hired, their data moves into Zoho People seamlessly.
Zoho Recruit is part of Zoho People’s Enterprise+ package and is priced at $9 per user, per month (billed annually). Additionally, Zoho People has a 30-day free trial available.
Read our review of Zoho People for more information.
Candidate data is parsed from the resume in Zoho Recruit.
Alternatives to an Applicant Tracking System
If your business is small and not doing much hiring, it’s pretty easy to keep track of your open jobs and those who apply for them on paper. You can also simply scan a shared Google Workspace folder, where you’ll usually have one folder for each job and another for job applicants.
Here are three options for alternatives to an ATS:
Job Boards
Many job boards, like ZipRecruiter, have the means to keep track of open jobs and the job applicants within the job board. Some job sites are free, whereas others cost anywhere from $0 to $299 per job posting. Many job boards have ATS-like features such as keeping track of applicants you’ve screened or interviewed, although they may not market themselves as a full-blown ATS.
For more information on job boards, read our article on the best job posting sites.
Online Filing System
A simple online filing system for your applicant tracking process might start with a folder titled “Recruiting,” with subfolders for jobs and applicants. Or, perhaps you maintain a spreadsheet with the names of all applicants and which jobs they’ve applied for.
Within the job applicants folder, you may want subfolders with headings like accepted or rejected. Once jobs are filled, you can move them out of the open jobs folder and put them into the filled jobs folder. Here’s what an online document structure might look like for applicant tracking:
- Recruiting
- Jobs
- Open
- Filled
- Applicants
- Accepted
- Rejected
- Interviewed
- Offer Made
- Hired
- Jobs
Paper Filing System
A paper filing system may look similar in structure to an online filing system. However, since some applicants provide confidential information, like their name and phone number, keep these files locked, as you would for any confidential HR data.
Bottom Line
An ATS system is an HR tool designed to make the hiring process easier and faster. Most companies with over 100 employees, those growing quickly, or those in industries with high turnover will need one to streamline their recruitment process. If you’re unsure whether you need an ATS, try one out first, either through a free trial or a free plan.
