Building a Better ATS: Buyers vs. Users

Few people nowadays would disagree that recruiting is a business-critical function. Accepting that maxim would naturally lead to the conclusion that the tools used to support something so important (i.e. applicant tracking systems) should lend themselves to the task. Unfortunately, these products tend to be hobbled by low expectations among users and an antiquated approach to recruiting in the organizations that use them. Buyers vs. Users Low expectations are chiefly the result of the fact the “buyers” and actual users of applicant tracking systems are two distinct groups of people. The buyers ó i.e. the people in charge of making the purchasing decision ó are typically HR or IT executives, or a combination of the two. The typical senior HR executive today came up the ranks as a generalist or as a lawyer from the employee relations side. Other specialties ó such as benefits, compensation, or recruiting ó are rarely, if ever, a path to the top. A few enlightened companies move seasoned business executives into HR, but they are the exception to the rule. Unfortunately, a pure HR background does not include much understanding of strategy and talent acquisition. An incident from my own past illustrates the problem well. At the time, I was implementing an ATS for a large company as part of an effort to deliver centralized HR services, including recruiting. The company’s employee relations team produced a 28-page flow chart of the recruiting process that they wanted supported by the ATS. The process ensured compliance at every stage, no matter how irrelevant. The senior employee relations executive put the priorities in perspective: In the event of an audit he wanted to be able to sit an OFCCP auditor at a terminal and provide irrefutable proof of compliance. Considerations such as quality of hire, talent pools, etc. did not even enter the picture. He never even bothered to ask executive management if there might be other goals associated with the implementation of the ATS. At the time I asked if he had computed the risk of non-compliance. This is a relatively straightforward equation: (probability of an audit) X (probability of being found in violation) X (dollar amount of the likely fine or loss) This equation produces a dollar amount that should be compared to the business impact of delays in finding talent or getting poor quality talent. Obviously such a calculation should not be the only justification in deciding on how to value compliance; there are higher goals and ethical considerations that supersede any financial calculation. But these numbers do help frame the debate. Businesses do these kinds of cost/benefit analyses all the time ó so why not apply the same to recruiting? The trouble is that quantifying data to decide on a course of action is not something that HR does very frequently or very well. The situation I found myself in is not atypical. More often than not an ATS is intended to serve as a compliance tool and little more. In 2003, the OFFCP audited 4% of the 192,000+ firms considered to be federal contractors. Of those audited, 1260, or 16%, were cited for violations. Do the math and you’ll see that the odds of being found in violation are about 0.7%. Consider, too, that there are no penalties for failing an audit, other than the risk of being debarred from doing business with the federal government. This is a serious consideration, but in reality it is an unlikely occurrence. Fewer than two hundred firms have been debarred since 1972. Considering that over a million firms have done business with the Federal government over the same period, the risk of debarment is 0.02%. Federal and state agencies would much rather work out a conciliation agreement than debar a firm. Even the most egregious violations don’t necessarily translate into huge risks. In 2003, twelve firms were considered for litigation stemming from systematic discrimination, but suits were only filed against five, resulting in damages of $6.2 million. Using the same formula above, the risk is about $32. Considering the cost of a high-end ATS, that’s an expensive insurance policy to protect against a rather small risk, if that’s the main purpose. If the buyer is an IT executive then the situation is even worse. Now the focus is entirely on factors like support and security. While these are not insignificant considerations, they should not precede functionality and value delivered. Then again, with no concept of value in recruiting, one can hardly blame IT executives for focusing on what concerns them most. Small wonder that ERP vendors find most of the successes for their recruiting modules at organizations where HR has abrogated the decision to IT. At the end of the day, what all this means is that buyers are hobbling users with second- or third-rate functionality. Their best recruiters are stuck with systems that provide support where it least counts. Suborning the creative talents of good recruiters to an administrative process destroys value. The better recruiters lose their ability to stretch their talents. Contact Management Functionality That Doesn’t Deliver Just one example of this limitation is the poor support among most ATS products for networking and contact management. Few ATS products, except for those targeted toward the staffing industry, offer capabilities that allow a recruiter to build and maintain a pipeline of talent. In many ways, contact management products such as ACT or Goldmine are far better as recruiting tools than your typical ATS, given how important networking is to effective recruiting. Even a free product such as Plaxo provides a more robust alternative to managing a network of contacts or candidates. The much vaunted resume database is not an acceptable alternative. There is usually no way to keep it updated with useful information and no tools beyond a search engine to tap what’s in it. Having the ability to just convert it into a skills database would at least be a beginning, but that typically requires third-party functionality. Contact management products like the ones mentioned above give users the ability to enter detailed contact information, cross-reference names, store documents, to view records of changes in the contact’s personal or business situation, and manage and view other useful information. Contact data can also be modified to suit a particular need. Reports can be generated that show the status of a relationship or activities relevant to a need. By contrast, an ATS maintains a candidate profile within rigid parameters, with virtually no ability to customize the profile. Details outside the profile are limited to notes that cannot be meaningfully reported on. The core design of an ATS has missed the point. Astoundingly, virtually all ATS products have glossed over the sourcing component, choosing to lump it in with workflow ó once again exposing the lack of business acumen in HR and IT. The significance of good support for sourcing capabilities cannot be overemphasized. Finding quality talent takes more than just having a career site or access to a job board. To state the obvious, the better candidates are almost always sought after and harder to find. An ATS, with its emphasis on process and treating candidates like so many parts on an assembly line, eliminates any ability to creatively source talent. This approach works for most entry-level jobs where little distinguishes candidates and the supply often exceeds demand, but it does not work well for jobs that require complex skills and extensive or unique experience. The supply-chain model of staffing that gets implemented with an ATS also fails because it assumes that supply will be available and delivered at the point where it’s needed. That may well be relevant for manufacturing toilet tanks or PCs, but it doesn’t apply to recruiting. This is why organizations pay search firms the big fees. The skill set required to find high quality talent is the same, whether it’s with a recruiter employed by a large organization or at small search firm. The recruiter at a search firm is not concerned about compliance and focuses instead on maintaining a network of contacts that can be tapped as needed. Hiring managers know that their in-house recruiters are forced to work within a straight jacket of regulations and compliance, regardless of the cost. Consequently, turning to a search firm is often the only option for filling critical jobs, with the less important jobs left to the in-house recruiters. What is needed in an ATS is a modular approach to functionality ó offering progressively more advanced functionality to the more talented recruiters. Better contact management is one area that needs to be addressed, but another can be simple override capabilities, that is, allowing the better recruiters to adapt a process to their needs. Of course, the compliance brigades would be apoplectic at the idea, but this is not exactly a unique concept. Accounting and financial systems all support overrides for those who know what they are doing. Every now and then that produces an Enron, but the overwhelming majority of users are not on a quest to create trouble or violate compliance requirements just because they have the opportunity to do so. In any event, for the small number of violators that exist, compliance is better enforced by management action than technology. An accident of history placed recruiting in the HR department. This was most unfortunate since HR has little understanding of or much desire to do anything with recruiting. Generalists do not aspire to be recruiters (there is not a single for-credit course on recruiting available at any accredited college or university anywhere in the country). HR is about predictability and stability: paychecks, benefits, and employee relations. HR is among the last bastions of socialism: equity and consistency is more important than speed and quality. Looked at through this lens the recruiting process represents a potential hotbed of radicalism. Left to their own devices, recruiters would simply focus on finding the best talent at whatever price the market requires them to pay, ignoring issues like compliance, pay equity, and that ultimate sacred cow, diversity. So an ATS ends up catering to the lowest common denominator instead of raising the bar. In this respect it’s not just about destroying value but also preventing value from being created. Recruiters working with an ATS are often forced to reach out to external search firms, adding to their organization’s staffing expenses, while depending on a resource that does not have any stake in the success of their organization. Providing a good recruiter with the functionality in a typical ATS is like putting training wheels on Lance Armstrong’s bicycle. There may be value in doing so for the novice or poorly trained recruiter, but they drag down a more talented professional. Anyone who has even average recruiting skills loses their ability to improve on them if they’re straight-jacketed by an ATS.

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Raghav Singh, director of analytics at Korn Ferry Futurestep, has developed and launched multiple software products and held leadership positions at several major recruiting technology vendors. His career has included work as a consultant on enterprise HR systems and as a recruiting and HRIT leader at several Fortune 500 companies. Opinions expressed here are his own.


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