Dispelled! 4 Common Misconceptions About Needing an Applicant Tracking System

If you’re like me, you’re absolutely immersed in all things startup. You watch Silicon Valley and Shark Tank; you scour Crunchbase’s latest funding rounds on a hourly basis; you even listen to Gimlet Media’s podcast “Startup” during your morning commute. Maybe you’re currently starting your own business, doing your best to check all the boxes in order to become the next unicorn—a groundbreaking idea, a scalable model, and a thriving customer base.

While startups can raise money from a number of sources, the main avenue is venture capital, or VC for short. There are hundreds of entrepreneurs pitching their ideas to VC firms each day, many trying to position themselves as the next big thing like Airbnb, Uber, or Facebook. What you might not know is that VCs aren’t always looking for the next big thing, but rather the next big team.

A stellar team is the foundation of every successful startup. Without a strong foundation, startups are more likely to be stifled by a changing environment or an unforeseen competitor. For the past year I’ve spoken with hundreds of early stage companies as a Sales Development Representative at Greenhouse. Despite overwhelming evidence that hiring an outstanding team is essential to the success of an early stage company, many of the startups I speak with think that they are too small for an applicant tracking system (ATS). They believe that recruitment software is something implemented later in the life cycle of their company. But, startups—even at their leanest size—that invest in an applicant tracking system are investing in the most important part of their success as a company, their people.

Below, I dispel 4 common misconceptions that startup companies have about getting an ATS early on. Read on to learn why you need an applicant tracking system.

1. “We can wait. The workload is manageable for now.”

By the time you outgrow your manual process, it’s already too late to evaluate and implement an automated platform. Each hire is critical to the success of your organization, and this is even more so the case when your team is only 5, 10, or 20 strong. Implementing recruiting best practices (such as an unbiased structured interview process and a company-wide recruiting culture) at the inception of your organization is essential. By doing so at the beginning, you will be well prepared to build and scale an amazing team before you outgrow your manual system. If you just raised your Series B, for example, and you’re looking to make a boatload of critical hires, you can avoid scrambling to choose the right ATS for your needs while simultaneously trying to make those hires to scale your organization.

2. “We can’t afford it.”

Yes, you can. What you really can’t afford is the cost of a bad hire. In comparison, the cost of a superior ATS is mere pennies. The U.S. Department of Labor estimates that a single bad hire can cost a company 30% of that individual’s potential first-year earnings. And CEO Tony Hsieh estimates his own bad hires have cost Zappos "well over $100 million." But money is not the only loss—The Society for Human Resource Management highlights that CFOs actually rank the negative impact on morale and productivity impacts of a bad hire ahead of monetary losses. Although it is difficult to quantify the exact cost to your specific company, the consensus is clear—the cost of a bad hire is dramatic.

The right applicant tracking system equips you with an interview plan and scorecard to help you identify, measure, and select exactly what you’re looking for in a candidate, thus minimizing the chance that you’ll make a costly hiring mistake (and many times over).

3. “We don’t have time to evaluate or implement an ATS.”

If you are the founder of a startup, then chances are that you are acting as the de facto HR and recruiting team in addition to finance, marketing, and sales. Your time is spread incredibly thin between generating new business, refining your business model, and developing the product. With that said, you spend even more time trying to find that perfect senior engineer who is going to help take your product and company to the next level.

An applicant tracking system, at its core functionality, is meant to optimize and streamline your entire recruiting process. An ATS will help free up your most valuable resource—time. It provides a centralized location for all of your recruiting efforts, enabling you to make fast and intelligent hiring decisions so that you can focus the rest of your time on growing your business. If there’s something you don’t have time for, it’s uncertainty around relying on an unproven or ad hoc hiring system, not the time to implement an ATS.

4. “We can use our own professional networks as our candidate pool for now.”

Finding the right hire can be tough. That’s why it’s essential to use every sourcing channel at your disposal. The right ATS can help you build out an effective sourcing plan: one that lays out all the channels you want to use, sets goals and budgets for each, and tracks results. Relying solely on your own professional network, or the professional networks of your team won’t allow you to cast a wide sourcing net. More importantly, relying solely on your professional network isn’t a sustainable strategy. While it might be sufficient for your first two hires, many startups that I’ve worked with find that as they grow and scale, their networks become exhausted quickly. And even if your professional network can provide a handful of qualified candidates, there is no guarantee those candidates will want to leave their current position and join your company.

Limiting your candidate pool to your own network can also limit the quantity of diverse candidates. A 2015 comprehensive report by McKinsey found clear evidence that companies with more diverse workforces perform better financially and are more productive. A robust ATS coupled with a structured hiring strategy can mitigate interviewer bias, resulting in more diverse hiring outcomes. Empowering your team with these tools is not only the right thing to do, but it will also create a competitive advantage for your company.

Final thoughts

Putting these 4 myths to bed is only the first step for startups looking to build the best teams possible to grow their businesses. The next step is to do your research and learn how to leverage an ATS in the way that Airbnb, Slack, and Pinterest have done with the right ATS. The best part of my job is I help startups hire great people, and I hope that the next company I can help to embrace the power of an ATS is yours.

If you're ready to start evaluating applicant tracking systems, start by checking out our eBook, A Buyer's Guide to Applicant Tracking Systems. Simply click the button below!

Buyer's Guide to Applicant Tracking Systems

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Jon Hellam is a member of the Sales Development team at Greenhouse. Whether he's working to advance electric vehicle legislation, or offering musicians an alternative to major studio audio production, Jon enjoys contributing to the success of innovative companies transforming existing industries. In his spare time you can find Jon acting like a tourist in NYC, even though he's been living there for over a year. Connect with Jon on LinkedIn.

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