How To Choose An Applicant Tracking System For A Business

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What SMBs Should Look for in an Applicant Tracking System

Features to Source, Track, Report, Stay Compliant, and Integrate More Effectively

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Table of Contents

I. The Looming “War for Talent” ... 1

Good News and Bad News ... 1

II. Investing in Technology ... 1

Productivity Software in Demand ... 1

The Case for Automating the Recruiting Process ... 2

III. Selecting an ATS System ... 2

Affordability ... 2

Trusting the Vendor ... 3

Usability ... 3

Integration ... 4

Sourcing ... 4

Tracking and Correspondence ... 4

Reporting ... 5

Compliance ... 5

IV. Living with Your Selection ... 5

CONTACT

www.taleo.com – info@taleo.com 1.877.818.2536 – U.S.

1.888.922.5665 – International ABOUT TALEO

Taleo (NASDAQ: TLEO) is the leader in on demand, web-based talent management solutions that empower organizations of all sizes, around the world to assess, acquire, develop and align their workforce for improved business performance. More than 1,380 organiza-tions use Taleo, including 35 of the Fortune 100, for talent acquisition and performance management, with over 1 million users process-ing 71 million candidates from over 100 countries. Requirprocess-ing no capital investment, Taleo’s software as a service and on demand delivery offers 99.9% availability.

Copyright © 2008 Taleo Corporation. All rights reserved. No portion of this document may be reproduced in any form without the prior written permission of Taleo Corporation. Taleo and all Taleo product and service names mentioned herein are trademarks or registered trademarks of Taleo in the United States, France, The Netherlands, U.K., Canada, Australia, and several other countries. All other product and company names mentioned herein may be the trademarks of their respective owners.

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© Copyright 2008 Taleo Corporation What SMBs Should Look for in an Applicant Tracking System PAGE 1

I: The Looming “War for Talent”

Good news and bad news

Amid much uncertainty about the economy, small to medium-size businesses (SMBs) are preparing to grow. In a survey of 724 SMBs in the US, UK, and Canada, 45 percent predict business will grow by more than 10 percent in 2008. Two in five expect growth to exceed 20 percent. When it comes to staffing, a full 90 percent plan to add full-time employees over the next 12 months, with 33 percent preparing to add at least one new business location.1 Given that SMBs are the true growth engines of the world economy, this survey from the Computing Technology Industry Association (CompTIA) and AMI-Partners should be welcome news.

More striking, however, is that the optimism is surfacing in the face of a skills shortage. The US Bureau of Labor Statistics says that by 2008 the number of young adult workers 25-40 years old will decline by 1.7 million. By 2010 the US will face a shortage of 10 million workers and an unemploy-ment rate of just two percent. Similar prospects await employers in other developed countries. All of this has economists and HR experts alike predicting a “war for talent.”

As more job applicants become cognizant of the demand for their services, SMBs will feel pinched. Few can offer salaries and benefits on a par with Fortune 500 companies. Instead they’ll be forced to offer qualified applicants other compelling reasons to join them, assuming they can even find these applicants cost effectively. Make no mistake: In the years ahead, the greatest challenge for SMBs will be maintaining and increasing the quality of hire while reducing the costs and inefficiencies in the hiring process.

II: Investing in Technology

Whether caused by optimism or fear, something appears to have lit a fire under SMBs. Increasing numbers now view technology as a means to cultivate and manage growth. Says John Venator, 1 The October 2007 survey of 724 small to medium-size businesses in the US, UK, and Canada was conducted by the Computing Technology Industry Associa-tion (CompTIA) and AMI-Partners. All businesses surveyed had 1000 or fewer employees.

president and CEO of CompTIA, “Historically, SMBs tended to replace technology reactively when something went wrong. Now they are proactively looking for solutions that enable them to lever-age their networks and boost productivity and efficiency.”

Productivity software in demand

Among the top technologies that SMBs have either deployed or plan to purchase in the next 12 months is productivity software, with 90 percent of the companies surveyed considering its purchase.

Table 1: Top technologies that SMBs have either deployed or plan to purchase in the next 12 months (Top six of 20 survey items)

1. Desktop PCs 98%

2. Laptops/Notebooks 93%

3. Productivity Software Suites 90%

4. Firewalls 79%

5. Single-function Laser Printers 76% 6. Accounting/Tax Software 69%

CompTIA and AMI-Partners 2007 Spending Survey

Productivity software includes applicant tracking systems, also known as ATS systems. At a time when developing personal connections with viable job candidates is seen as critical to a company’s growth, managing resumes and tracking applicants has become a losing battle. It makes little difference whether resumes are paper-based or attached to email. Recruiters often feel overwhelmed and hiring managers are kept waiting. As the company suffers, so does the applicant, who often submits a resume only to have it disappear into a black hole. Not only is such an applicant unlikely to become an employee, anecdotal evidence suggests the company may also lose them as a customer. The case for automating the recruiting process Contrast the scenario above with one involving an applicant tracking system. A good ATS system will centralize the applicant’s personal data and provide on-demand availability from anywhere. It offers role-based functionality for requisitions, applicant tracking, interviewing, offers, and

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reporting. At its best, it will enable growth, source for qualified candidates, and ensure compliance with employment regulations.

In any objective comparison with a modern ATS system, manual recruiting processes will come out the loser. In the last several years ATS systems have added functionality for the entire requisition-to-hire process. A handful have been developed specifically for the SMB market.

Of course no two ATS systems offer the same func-tionality, nor should SMBs expect the same level of support and expertise from every vendor. A goal of this paper, then, is to enumerate many of the quali-ties that SMBs seek in an applicant tracking system and prepare you to choose a system that will make your recruiting efforts more successful.

III: Selecting an ATS System

The system you select won’t be used only by your company’s employees. Many others will be impacted and should influence your decision also. These include any third-party recruiters your company employs to source and engage with candidates, and the candidates themselves. Allison Boyce, a sourcing manager at Deloitte Services LP, says that candidates take a dim view of an ATS application that “does not save after each field, crashes unexpectedly, is hard to complete thoroughly, and yet is viewed as a negative if it is incomplete.” In fact, she writes on ere.net, it’s one of the “top ten pet peeves” of online job applicants.2

If that’s one definition of failure, how do we define success? Your evaluation of ATS systems is likely to involve finding satisfactory answers to these frequently asked questions:

Can I afford an applicant tracking system? •

Can I trust the company? •

2 Boyce, A, 10 Things Candidates Hate; 10 Things They Love, http://www.ere. net/articles/db/2040478DA9C24FBF94147616200E6FC1.asp (November 22, 2007)

Will I be able to use it? •

Will it integrate with my other systems? •

Will it grow with me? •

How can I source for qualified candidates? •

How can I track and correspond with applicants? •

How can I ensure good reporting? •

How can I be sure we’re in compliance? •

Affordability

The CompTIA – AMI-Partners spending survey reveals that pricing and total cost of ownership (TCO) top the list when SMBs go in search of technology (Tables 2 and 3). It should come as good news, then, that ATS vendors are becoming more aggressive in pricing their products for the SMB market. This is especially true of hosted solutions that charge a subscription fee based on the number of users. These software as a service (SaaS) products enable you to eliminate any costs involved in storing and maintaining the software, which explains their growing popularity in the SMB market (Table 4). IT personnel reside with the vendor and ensure that you receive product upgrades as soon as they become available.

Table 2: SMB Criteria for Selecting Vendors (Top four of 15 survey items)

1. Competitive Pricing 94%

2. Delivers as Promised 91%

3. Quality Installation 87%

4. Knowledgeable Personnel 81%

Table 3: SMB Criteria for Purchasing IT Products and Services (Top four of nine survey items)

1. Total Cost of Ownership 76%

2. Scalability 69%

3. Future Integration Capabilities 64%

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© Copyright 2008 Taleo Corporation

Table 4: Technologies Now Gaining Traction with SMBs

1. Custom Software 31%

2. Web Services and Applications 28% 3. CRM/Sales Force Automation 23%

4. Software as a Service (SaaS) 20%

5. IP Telephony 19%

6. Storage Area Networks 19%

7. ERP/Supply Chain Software 18% 8. Open Source/Linux Applications 18%

CompTIA and AMI-Partners 2007 Spending Survey

Unlike a larger and more complex Enterprise Resource Planning (ERP) onsite implementation, a hosted ATS installation is typically measured in days or weeks, depending on the size of your company, your organizational skills in advance of the installation, and the clarity of your internal recruiting processes. Studies by talent management consultant the Newman Group reveal that most companies are happy with their ATS systems, but a few companies have tried and abandoned one or more systems. One way to avoid disappointment is to try before you buy. Some vendors will allow you to demo their product as part of a free trial before paying user fees. If you’re uncertain whether to invest in an applicant tracking system, this is one way to test the waters.

Trusting the vendor

All things being equal, SMBs would prefer to go with a leader. Brand leadership was cited by 57 percent of CompTIA’s respondents as a criteria for purchasing IT products and services, with 91 percent saying that a vendor must deliver as promised. Market leaders have staying power and are more likely to offer a battle-tested product. This is especially important to SMBs, who expect to squeeze more years from their technology and thus require a vendor to remain in business longer. Ask the vendor to provide you with their customer satisfaction metrics together with online availabil-ity and installation success rates. Can they deliver

99.9 percent availability? Do they offer fail-safe data centers with redundant speed, high-volume internet bandwidth?

A good vendor can advise you on best practices, while an excellent one will help you with content assessment.

Where do trust and market leadership rank on your scorecard? You’ll know the moment you rec-ommend a vendor to your boss and HR colleagues. Usability

In a sourcing and recruiting survey completed in April 2007, the Newman Group reports that 40 percent of nearly 600 respondents claimed their ATS system doesn’t effectively support their hiring processes.3 Almost half said that their system couldn’t manage search firm submittals, collect interview feedback, or create an email campaign to candidates in the database.

A lack of flexibility in defining workflows, captur-ing applicant data, and trackcaptur-ing applicants as they move upwards through the organization is preventing many users from deriving greater value from their ATS systems. These deficiencies become even more glaring if a business is sufficiently large to have multiple business units or be operating in more than one country.

You want a system that can be configured to work within your established processes rather than force you into making compromises. You should be able to customize fields, forms, and workflows easily, and use personalized email templates to communi-cate with groups or individuals. Ensuring compli-ance has to be a snap, especially if you contract with the government.

3 2007 Sourcing and Recruiting Survey, developed by the Newman Group. The survey was completed in April 2007 by nearly 600 respondents, 70 percent of whom are directly involved in corporate staffing as recruiter, sourcer, or staffing management. The remaining respondents were HR generalists (7 percent), HR executives (8 percent), consultants (6 percent), search firm recruiters (10 percent) and vendors (1 percent).

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“Optimizing the use of an ATS goes hand-in-hand with optimizing recruitment operations,” the Newman Group says. “To be truly effective, ATS systems must not only support existing internal systems, they must go beyond a support role to work in harmony with existing processes and sys-tems (such as HRIS) towards achieving a common functional goal.”

Integration

The larger your business, the more likely you are to have HRIS and financials applications you’ll need to integrate with. An industry-specific ATS system – and there are a few, even at the SMB level – can pay off if you do a lot of niche recruiting with specialized job requirements. Accreditation could be one such requirement.

Application programming interfaces (API) into other third-party applications, including external recruiters, Microsoft Outlook™, job boards, and

social utilities, will increase your access to job candidates and provide even more convenience. Nearly two-thirds of SMBs surveyed by CompTIA and AMI-Partners listed integration as a priority when purchasing IT products and services. This was their third most important criteria, lagging only TCO and scalability.

Scalability

An ATS system should function as efficiently for an organization of two-thousand as for a company of twenty (or even one, if you’re a recruiter with many clients). As you grow, your ATS system must keep pace with you. This is especially true for SMBs that spin off separate business units or recruit overseas. In either case multi-language and multi-currency functionality become mandatory. Sourcing

Where does it hurt most? When asked to identify the cause of their greatest pain, 55 percent of respondents to the Newman Group survey cited sourcing. This is more than double the percentage

of the second highest vote-getter, candidate qualification and screening.

At a time of 5 percent unemployment, with the first wave of Baby Boomers just beginning to retire and skilled talent in high demand, it’s no wonder that recruiters need help with sourcing. Many of the established methods of finding candidates – job boards, career fairs, employee referrals – remain viable, but yields are falling. Too often everyone is chasing the same small pool of job seekers.

A good ATS system will integrate candidate assess-ment tools and direct job board postings, and even predict which job boards will be most effective. It can root out passive job seekers by tapping into social utilities such as LinkedIn® and Facebook®.

And because it’s online and on-demand, it accom-modates applicants on their terms, with a maxi-mum of privacy.

Use an ATS system to begin building a candidate database. By the time the skilled labor shortage peaks several years from now, you’ll have a list of qualified job applicants you can engage in conversation.

Tracking and correspondence

Successful recruiting often occurs over time and includes multiple conversations. The ability to access and refer back to those conversations gives recruiters and hiring managers a leg up on securing the best candidates.

Candidate management tools will enable you to create candidate profiles and send branded emails within personalized templates. As more people in the organization become responsible for find-ing and developfind-ing talent, the number of people touching the ATS system may increase sharply. Workflow must be easily configurable.

Reporting

You may be convinced your recruiting is paying off, while your boss remains skeptical. How do

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© Copyright 2008 Taleo Corporation

you know who’s right? A good ATS system can tell you. It offers both standard reports and the ability to compile custom reports easily. Standard reports should reveal the number of requisitions filled, the time-to-fill, and the cost-per-hire. You should be able to slice and dice the ad spend on your various media and learn which job fairs are providing the largest number of qualified applicants.

Other metrics your boss and you should be able to access include the number of completed applica-tions, the number of candidates in the database, the number of referrals, source tracking of candidates, and the cost per candidate.

The most effective ATS systems provide real-time views on any candidate, requisition, or user. Look for complete drilldown capabilities and take a long view on recruiting. In an ere.net column titled, “12 Best Recruiting Practices to Copy,” recruiter John Sullivan says that Dell is a company to emulate, and explains why. “By looking at the number of new hires that become top performers within 12 to 18 months, they are hitting the nail right on the head. Great recruiting is not about hiring a large number of people or hiring them cheaply; it’s about hiring individuals who become top performers and who stay with the organization.”4

Compliance

Added to the mix in today’s hiring challenges are concerns about privacy and transparency, anti-dis-crimination statutes, and the need for a diversified workforce. Because reducing risk and promoting best practices are priorities, your system should be able to accommodate EEO, Affirmative Action, and Sarbanes-Oxley reporting requirements. It should offer built-in controls for references, certifica-tions, and clearances. Ideally it will be role- and user-based, capable of filtering data to ensure that confidential or potentially prejudicial information is seen only by the appropriate company contacts, whether administrator, recruiter, or hiring manager.

4 Sullivan, J, 12 Best Recruiting Practices to Copy, http://www.ere.net/articles/db/ BE9093B73CEB740C0E6CC480A08C7FE7.asp (September 25, 2006)

IV: Living with Your Selection

At a time when SMBs are looking to enhance their productivity and recruiters are challenged to meet aggressive recruiting targets, an ATS system can quickly pay for itself. By boosting the quality of hire cost effectively, a good ATS system provides human resource professionals and senior managers with a smarter way to streamline the hiring process and create higher net returns for the company. ATS systems are as varied as the job candidates they process. Like the candidates, they have both strengths and weaknesses. This paper wasn’t meant to provide an exhaustive checklist of

features and functionality, but to identify important areas that merit your closest scrutiny.

Many users may access your applicant tracking system, but few will be entirely at ease with the technology from day one. Remember that each person who comes into contact with the system will need some level of training. A certain amount of intuitiveness and ease of use will pay big dividends. As you complete your assessment of the various ATS systems, ask yourself if the system under consideration will make you and your colleagues a little more effective, or a lot more effective, and choose wisely.

About Taleo Business Edition

More than 1,300 small and midsize organizations worldwide use Taleo Business Edition™— the leading solution for eRecruiting. HR professionals, recruiters, staffing agen-cies, and business owners choose Taleo Business Edition because they can fill jobs faster with better candidates, less paperwork, and reduced cost while meeting their compli-ance and reporting obligations.

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