Building a Better ATS?

Applicant tracking systems are somewhat unique in the level of frustration and dissatisfaction they engender among users. The churn of clients between ATS vendors ó and the inability of any vendor to establish serious profitability or grow much beyond the definition of a small business ó is indicative of the fact that the industry has a long ways to go before it emerges from infancy. Applicant tracking systems have been around for some twenty years now, but they have failed to deliver on their promise of revolutionizing recruiting. These systems were supposed to make recruiting a more effective and strategic function. Unfortunately, much of this has not happened ó and based on current trends, it seems unlikely to occur. Why hasn’t this happened? The reasons can be grouped into ATS vendors’ shortcomings in three areas: vision, expectations, and standards. Vision Vision, or the lack thereof, is the principal problem facing most ATS vendors. ATS vendors have demonstrated an utter inability to expand the definition of an ATS beyond what the name requires them to do ó applicant tracking. Applicant tracking systems are essentially process management and reporting tools. Admittedly, recruiting is a lot about process ó but automating these processes does little to improve recruiting on its own. True, applicant tracking systems bring efficiency to the process. But they don’t bring much in the way of effectiveness. Gains through efficiency can only go so far. A floor is reached quickly, beyond which any improvements in time or reductions in cost are minimal. Also, this does nothing to improve quality. The industry in general, and some vendors in particular, would have users believe that adapting concepts such as supply chain management, client relationship management, etc., through their technology improves recruiting. This is mostly hype, as even a cursory examination of the claims would establish. Case studies of the value provided by an ATS, trotted out as proof, are little more than exercises in creative writing. The “results” are based on assumptions that make most theories in economics look like hard science. Further, the concept of “value” would not be accepted in any business. One manifestation of this problem is the recent emphasis on “sub-optimization” ó a convenient excuse designed to highlight a system’s presumed value by blaming under-utilization on users. With every new release, ATS vendors simply prove that they are afflicted by the “Microsoft Office disease.” Changes in functionality are sometimes interesting but are largely designed for demo value. Functionally, they are worthless for the most part. The undisputable fact is that almost no ATS delivers functionality beyond a very small aspect of recruiting. Though this myopia on the part of vendors is hard to explain, it is very prevalent. For example, in 2000, the INS (now Homeland Security) started a pilot program to allow employers to verify employment eligibility electronically. Given the volume of hiring taking place through applicant tracking systems, it would seem that supporting this service, even at a fee, would be an obvious way for an ATS to expand its value (and the vendors’ revenue streams). Yet not a single ATS vendor participated in the pilot program. Expectations The ATS industry and its clients together are a textbook case of misaligned expectations. There’s plenty enough blame to spread around to both users and vendors. The industry is partially to blame for having created expectations that are impossible to deliver on. With software products the temptation is always to over-promise and under-deliver ó but the ATS industry has plumbed new depths in this. The industry would like users to believe that their products are a silver bullet aimed at the heart of all recruiting problems. The problem is that recruiting is a far more complex process than most realize. The principal functionality in applicant tracking systems is centered on managing workflows as if they were linear, with predictable inputs and outputs. But as any recruiter will attest, recruiting is anything but linear. The inputs do not behave like so many components on an assembly line, and the outcomes are usually far from certain. With no hope of delivering anything that even comes remotely close to the promise, the industry has little choice but to put the best possible spin on what it offers and continue the illusion that the value provided is far in excess of the reality. But it takes two to tango. Users share in the blame for the misalignment. Few users grasp just how complex an activity recruiting really is and what needs to happen for it to become an effective, strategic function. Given the tangle of laws, corporate policies, the unpredictability of candidates, communication problems, and data requirements, it is extraordinarily difficult to create technology that can allow a user to effectively navigate through the complexity. Compounding the problem is the fact that recruiting is a profession still considered by many to be more of an art form than a discipline. Technology for such needs is difficult to engineer, but that does not deter users from believing that products can be developed to satisfy all their needs. Vendors can hardly be blamed for trying to fill this void between expectations and reality with their claims. The temptation to hype the value of products is made greater by the fact that there are few significant differences between products. Just as the success of Microsoft Office has little to do with functionality, the success of applicant tracking systems is more dependent upon positioning and marketing than it is on any intrinsic value. Shootouts at industry shows don’t count. As anyone who has attended one will attest, winning a shootout has more to do with the person working an application than the application itself. And of course, as every vendor knows, there will never be a long-term study comparing the effectiveness of their product against others. Standards The industry has no standards, period. Much of the dissatisfaction of customers could be addressed if the industry were to make its products compatible with other applications that support aspects of recruiting not supported by any particular ATS. Standalone products do exist to support most activities associated with recruiting, from sourcing to on-boarding. But the lack of technology standards, particularly for data exchange, makes it difficult if not impossible for these products to work together. Just establishing a stable link to move data from an ATS into a payroll system is a struggle for many vendors, as legions of customers will attest. Despite the clamor from customers to change this situation, the industry is strangely reluctant to do anything about it. Many vendors have actually made the situation worse by creating proprietary standards, as the many flavors of HR-XML that have been developed (and mercifully discarded in some cases) prove. HR-XML is an effort with some promise, but its acceptance has been limited. Many pay lip service to the concept by getting “certified,” but do little thereafter to have their products support the standard. Certification itself is largely meaningless, since it is simple to obtain and imposes no obligations on the vendor being certified to continue support for the standard. The result of this lack of standards is that customers end up with Rube Goldberg implementations involving a host of products, if they ever hope to expand support for their recruiting activities beyond process administration. What is perplexing is that virtually all shortcomings of ATS products are well known and have been for a long time. Postings in forums, blogs, comments at user groups, and speakers at HR conferences all lament the inability of the industry to move beyond a very narrow feature set. Yet there is no evidence to suggest that the industry plans to do much about expanding what it has to offer. Obviously the situation will improve (if only because it’s hard to see how it could worsen) with the advent of web services and a likely shakeout among vendors forcing the survivors to truly differentiate themselves. In two future articles to follow this one, I will address the specific limitations of applicant tracking systems and offer a few of my own suggestions on how the situation can be improved.

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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.