How to budget for your first ATS

At many small- to mid-sized organizations, budgeting for an applicant tracking system (ATS) is often a challenge. Company leadership may not understand why an ATS is necessary, since your HR team already has other paid tools or free solutions that seem to be working fine.

Gaining budget approval for your first applicant tracking system often requires a change in the way you discuss your needs with company leadership. Rather than asking directly for budget for a new tool, many HR professionals find it's easier to focus their discussion on how an ATS helps your organization meet its hiring goals, lower costs, and improve the candidate experience.

When it comes to budgeting for an ATS and getting buy-in from leadership, there are three steps to take that will guide the conversation and get the “yes” you need from leadership to make your purchase.

1. Look at what you're spending now — both in time and budget

Before asking leadership for a budget increase, take a close look at what you're currently spending on hiring, both in time and money.

When recruiters calculate their cost-per-hire, they typically include the cost of frequently used tools — like job boards, their HRIS, or their productivity suite. However, an accurate calculation of this metric includes both internal and external costs, such as:

  • Outsourced recruiters or agencies, which can sometimes cost as much as 20% of an employee’s salary

  • The salaries of anyone involved in the hiring process, including recruiters, HR team members, interviewers, and leadership

  • The cost of tools like a CRM, your productivity suite, and subscriptions to job boards

  • Time spent on all tasks, including the management of multiple tools, manual postings to job boards, and logging/sharing candidate feedback

The cost-per-hire metric is then broken down by adding together these costs and dividing by the number of hires in a specific period, as shown below:

Track your applicant to hire ratio, not just your number of applications

Before you have a conversation with leadership about an ATS, aim to calculate your current cost-per-hire and gather as much data as possible about what you’re spending your budget on. This data should include how much time you and the rest of your team are spending on tasks that can be automated with an ATS. Having this information available will make it much easier for you to make your case for an ATS.

2. Compile relevant data into a presentation

Now that you've collected data on your current hiring costs, use it to put together a short report or presentation for leadership. A data-driven presentation will show exactly how an ATS will positively affect your organization's recruiting efforts, whether your goals are to hire faster or to improve the experience of candidates.

When giving a presentation about your need for an applicant tracking system, it's much more effective to say something like, “We're spending $2,000 per month and 15 hours per week on 10 tools, and we can reduce this by $500 and 5 hours per week with an ATS” than it is to make a broader statement about time and costs. Additionally, a data-driven presentation shows you've taken the time to do your research and care deeply about both your job and the organization — making you an even more invaluable part of the team.

One final thing to keep in mind as you compile your research: As Google staffing manager Jeff Moore says, it's easy to conflate what matters to recruiters with what matters to leadership. Along with time and cost savings, your discussion of an ATS should show how the software will help leadership meet the goals that are important to them. For example, if leadership is aiming to fill a number of vacancies quickly, you might say “an ATS will help us meet your goal of filling these 12 vacancies in 3 months,” then highlight relevant features like candidate rediscovery or employee referrals.

If you're not exactly certain what leadership's current hiring goals are, don't be afraid to ask. Your budget request is much more likely to be approved if the data you present is relevant to what’s top of mind for leadership.

3. Have a conversation with leadership

Finally, with your research compiled and your presentation created, request time to have a conversation with leadership about your need for an ATS. If you can frame the discussion around benefits to your organization rather than simply asking for money, you'll find you're much more likely to receive a positive reaction.

Here are a few more tips you can use to make this conversation as effective as possible:

  • Highlight the impact on your organization: Leadership teams often care very deeply about how candidates perceive their organization. One IBM survey showed that a positive candidate experience creates an overall positive opinion of an organization and even rejected candidates felt more likely to re-apply or recommend the company to other job seekers. An ATS is crucial for helping candidates apply faster and more easily, but it can also ripple outward and improve your overall reputation.

  • Be specific about what you'll use regained time for: As mentioned in this post, saying something to leadership like, “I'm spending too much time scheduling interviews” isn't necessarily productive. However, if you speak to what you could be spending your time on after acquiring an ATS, leadership is much more likely to understand your needs. Something like “with the 5 hours a month I'll get back, I'll be able to research and overhaul our benefits by May of next year” shows you're thinking of ways you can better use your time — and that you understand your company's needs.

  • Invite leadership to a call or demo: Skye Wang, a member of Hire's Sales and Partnerships team, says that one of the best ways to get approval for an ATS is to show leadership exactly what you're asking for. If your CEO is on the fence, even a short conversation with an ATS provider is often enough to convince them that an ATS will have major benefits and is well worth the cost.

Use these tips to get the budget you need for your first ATS

At many organizations, asking senior leadership for an increased budget to put towards an applicant tracking system won't be effective. But if you approach the conversation from a different angle, with a focus on how the software will meet hiring goals or improve the hiring experience for your candidates, leadership is much more likely to approve your budget and help you get the new ATS your organization needs.

About Hire by Google

Hire is a recruiting app by Google that uses AI to make the hiring process faster and simpler. Because it is designed specifically for G Suite users, with Gmail, Google Calendar and other G Suite integrations, Hire streamlines administrative tasks so that your team can hire the best people, faster.