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: