Recruitment Software for Startups: A Beginner’s Guide

Published by:
Andy Babbage
December 8, 2022
13
min read

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This guide is intended for people in startups considering whether they need to start using recruitment software. Maybe you are unsure of the value, or are confused by the plethora of different types of software available, or think it might cost too much.

This guide will run through the basics and arm you with the knowledge to not only make a yes/no decision, but also choose recruiting software which helps to solve the actual challenges you are facing as an organisation.

At Applied we believe deeply that predictive and inclusive recruitment can transform an organisation and power growth; so choosing the right system to power the right process is critical and goes far beyond just saving money and time.

Here is what we are going to cover:

  • What is recruitment software?
  • What are the different types of recruitment software?
  • At what stage should you get recruitment software?
  • Why? What challenges will it help me to solve?
  • Do startups need a specific type of recruitment software?
  • What should I look for in recruitment software?
  • How much does it typically cost?

A note: As this is a beginner’s guide to hiring, this guide is specifically targeted at start-ups which are at pre-seed stage up to series A, rather than delving into scale-ups beyond this, where the hiring needs are usually quite different.

What is recruitment software?

At face value, the name is self-explanatory, however a quick google search will probably leave you totally confused by the vast number of options and flavours out there. If you are in a startup, you are most likely doing lots of things for the first time, with recruitment being no exception, so this lack of clarity is not helpful! An Applicant Tracking System (ATS) is what most people mean when they look for recruiting software:

Applicant Tracking Software (ATS)

An ATS helps to run your recruitment process by typically:

a) Helping you to build and host an open job role with an associated application process

b) Allowing candidates to apply to that job online.

c) Helping you to assess those candidates through several rounds (CV review, interviews etc.)

d) Communicating with the candidate throughout the process and when they are successful or otherwise.

Many ATS’s do a lot more than this, and can span further along the recruitment process in both directions, helping with sourcing at the pre-application stage or onboarding the new recruit, and more.

Some ATS’s also incorporate different parts of the HR tech stack into themselves (or are themselves incorporated into a larger part of the HR tech stack).

Confused? The bottom line is, at startup stage, you are probably looking for an ATS.

But where does it fit in the HR tech stack?

Before we move on, let’s quickly cover the other pieces of adjacent software, in case they are applicable to your context or just to help sort the noise as you search for what you need.

The diagram below gives a high-level overview of the different aspects of the recruitment software stack. It has been mapped against the typical stages of the recruitment cycle.

Recruitment tech stack diagram

Customer (Candidate) Relationship Management (CRM)

Much like your sales team’s CRM, these candidate management systems are used for keeping track of candidates who you have spoken to, usually before they have applied for a role with you. This is of most use for doing active sourcing, where you are having coffee chats with people, looking to get them to apply for your roles. These systems also do bulk email cadences and sequences, which means that you can scale keeping a large volume of candidates ‘warm’ and receptive to your roles.

Startup need: For most startups, software specifically for candidate relationship management won't be necessary. But, if you are hiring niche or hard-to-fill roles, then this may be helpful just for providing a canonical database of all of your interactions with candidates during active sourcing. The scalable email cadences might be something you need down the track, once you hit scale.

Candidate pools

There is a plethora of candidate marketplaces out there, where candidates self-sign up and detail their skills and requirements for a role. This pool of candidates are then marketed in bulk to organisations (i.e. we have 500 female software engineers, based in the UK, aged 21-30) for an access fee. Very hit-and-miss, but there are ones out there that have good reputations.

Startup need: No, they are expensive to use and can be hit and miss. The exception might be for niche roles, where there is a candidate marketplace with a very good reputation.

Assessments

These are usually numerical or verbal reasoning tests which are timed and multiple-choice, used to assess things like cognitive ability or ‘personality traits’. The quality of these assessments is highly variable and their scientifically proven validity ranges from ‘something there’ to ‘snake oil’, so be wary if they seem too good to be true. They are usually used as a pre-round before the CV review, in order to cut down on the amount of work.

Startup need: No, they are expensive and bring most of their value when helping to deal with high volumes of candidates (i.e. in grad recruitment rounds at brand name companies).

Pre-employment checks

Software that will help you to get feedback from candidates’ submitted referees, making it easy and speedy to collect this data in a structured way. May also do background checks like ID checks, criminal, right to work etc.

Startup need: No, these systems are geared toward large enterprises dealing with high-volume roles. In a startup, you can just request and then call references.

Onboarding

Software that helps you to keep new recruits warm between an offer and when they start with your organisation, and beyond. Usually centred around scheduled email cadences, custom timelines/processes and checklists.

Startup need: No, a good HRIS will usually have enough functionality for you in the early stages.

HRIS

Human Resource Information Systems act as your central record of all employees where you can save personal details, contracts, benefits, performance reviews, annual leave and often much, much more. They often have processes or checklists that you can tailor to run your onboarding, reviews and KPI planning/tracking. Very useful, once you hit enough people to make it cost-effective.

Startup need: Yes, once you start to hit 20+ people.

Supplementary tools

There is a whole host of supplementary tools available that can be inserted throughout the recruitment process. An example is a gendered language decoder for your job descriptions (JD), which will help to make your JD's more inclusive and convert candidates at a higher rate. Another example is software with pre-built templates for your careers website, which help with your employer branding. These tools are sometimes incorporated into other parts of the HR tech stack as features.

Startup need: Usually not as standalone tools, but are nice to have if they come with your ATS.

At what stage should you start using recruitment software?

For a startup, we recommend that you should think about getting recruitment software if you are hiring at least 3 people in a year. Below this level, and you are recruiting so infrequently, that the process can be handled well within spreadsheets and a certain amount of diligence. Getting recruitment software at these low levels of recruitment, would most likely mean the business case is borderline at best.

Hiring at 3 people per year or more, is an ideal time to get recruitment software as it will not only help you reap the benefits (see next section) but it is also an ideal time to instil a culture of hiring excellence within your organisational culture.

Getting great people into your organisation is the most important thing you will do, particularly at those early stages of a startup, so having a system that defines and guides a best-in-class inclusive and predictive recruitment process is key.

In addition to the above hiring volume criteria, if the following startup-specific problems start to crop up in your recruitment process, then it may also be the right time to invest in recruitment software.

  • No candidates applying for your roles - you put a role live and all you hear is crickets,
  • Not knowing enough about a role to hire for it - you’ve never hired a marketer before, where do you even start and what skills do they need to have?
  • Not knowing the best process - is it two or three interview rounds? Why and what do you ask in them?
  • Having no time to invest in recruitment - way too busy doing your day job (which is already 3 jobs in 1)
  • Recruiters are too expensive - not even in the realms of possibility at this stage

If you are experiencing these problems, then remember them for later, as matching your recruitment software to the challenges you are looking to solve, is key to making a good choice. Good recruitment software can not only solve the above, but also give you the confidence to progressively build on hiring rounds and cement hiring excellence into your company culture.

Why? What challenges will it help me to solve?

The first thing that usually triggers people to search for recruitment software, is that they are becoming overwhelmed by the workload of running a recruitment process. Therefore, recruitment software traditionally helps to tackle the following challenges:

  • Keeping in touch with applicants promptly throughout the process, by automating email sequences.
  • Tracking the progress of applicants through rounds diligently, by doing this automatically.
  • Scheduling interviews - coordinating complex interview slots across multiple calendars, by integrating with calendar software and finding ideal slots automatically.

These challenges are, however, only the tip of the iceberg when it comes to the benefits of recruitment software. The above challenges are important to solve, however they only consider the cost/resource side of running the process.

What is often missing from most people’s consideration when choosing software, is the revenue side of the equation, created by the outcome of the hiring process; great talent who stay, thrive and propel the company’s growth.

Without considering recruitment software that will help you achieve this, you are only really looking at software that is a glorified excel spreadsheet, or a set of flashy pipes which make things run smoothly, but don’t help you find that elusive, game-changing talent.

Good recruitment software, will therefore help you solve the following long list of challenges, in addition to the basic value drivers above.

  • Testing candidates on the skills actually required to do the job enables you to find people who will excel at the job.
  • Using assessments that are research-proven to be predictive of performance on the job, to identify top talent.
  • Removing bias from the recruitment process enables a diverse talent pool and inclusive process.
  • Using a process, language and assessments that showcase your organisation’s values, inclusiveness and culture.
  • Increasing first-year retention, by getting candidate buy-in early and using assessments close to the job, so that they know what it entails.
  • Improving candidate experience by de-stressing assessments and providing personalised, automated feedback.
  • Using data from previous hiring rounds to ensure future rounds are as effective and inclusive as possible.
  • Helping with job advertising spend allocation, by showing the most effective channels from previous hiring rounds.

Do startups need a specific type of recruitment software?

Yes, or rather there are types of recruitment software that startups definitely don’t want. Other than the non-ATS software listed in the HR tech stack section above, startups generally don’t want to invest in 1 or 2 of the 3 broad types of ATS below:

1. Cheap and cheerful eye-candy

This type of software often looks pretty good and gives a nice, efficient hiring process. The problem is that you’re paying for a glorified spreadsheet, as they don’t add any value other than saving you some time. This software will not help you hire better, predict the best hires, showcase your inclusivity or help to embed hiring excellence into your culture. Sometimes this is fine and maybe this is what you can afford right now, but just be aware that you’re only uncovering about a tenth of the potential value of your entire recruitment process.

2. All the bells and whistles (seemingly)

Usually behemoths that have a lot of functions, but often a) none of them particularly well and b) take ages to setup and then c) are hard to dislodge or upgrade. Beware of a system that has a recruitment module tacked on to the side of it, as this is usually an afterthought at best. This software might be useful once you are at scale and have the resources to invest in it; in the meantime look for specialised recruitment software, as that function is so important to your future success.

3. Predictive, inclusive recruitment

Software that guides you to continuously hire better, by focusing on the largest value drivers; finding top talent that can flourish in your organisation. This software gives you the time-saving, efficiency and flash of item 1, with all of the features you actually need from item 2 and then provides a deep foundation on how to recruit well. This foundation is what will drive a culture of recruitment excellence and is the main benefit of embracing the right recruitment software at this stage

What to look for in recruitment software?

Instead of searching for a specific feature list, you recommend that you look for one that drives the most value for you. In terms of philosophy or emphasis, we highly recommend that you look for a platform that focuses on:

  • Finding the best talent first, using predictive assessments.
  • Encouraging an inclusive recruitment process to build diverse candidate pools.
  • Continuously improving recruitment by using data from previous roles to determine what is working or otherwise.
  • Implementing a flexible process that best showcases your values and gives a good candidate experience.
  • Saving you time and resources through automation done right and ethically.

How much does it typically cost?

The cost of recruitment software really varies. Sometimes it can be very cheap (or even free) and other times it can be very expensive. Within reason, you generally get what you pay for, as long as you have the time, resources and need to make high-end systems work for you.

Generally, the closer recruitment software gets to the sourcing portion of the recruitment process, the more expensive it is. This is because recruitment agencies and executive search firms typically charge at least 20% of first-year salary to find and then place candidates with you. Hence, anything that can reduce reliance on recruiters can take a chunk of this 20% commission. This includes job boards, which are overpriced and often cost more than $200 per job posting.

Conversely, as there are so many cheap and cheerful ATS’s out there, delivering just on the time efficiencies with very few other value drivers, this portion of the recruitment process has been commoditised somewhat and devalued. Approximate price estimates are given for each of the 3 broad categories of ATS below:

Applicant Track System ROI (chart)

The final takeaways

Hopefully, some of the murky world of recruitment software has been illuminated with this guide. We hope that this has made your decision easier and if it is a ‘yes’ then, armed with the right knowledge you will have your sights on the right kind of recruitment solution.

If nothing else, we hope that you will take away the following key points:

  • Strive to make hiring excellence a cornerstone of your company culture. Investing in recruitment software that enables this is critical.
  • Find software that enables you to hire better, focusing on the larger value drives of predictivity and inclusivity first, then efficiency as a foundation.
  • Showcase your company’s values and inclusivity when hiring; good candidate experience will flow naturally from this.
  • Use the data from your hiring rounds to continuously improve going forwards.

 

Applied is the all-in-one recruitment software purpose-built to reduce bias and reliably predict the most qualified candidates.

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