Managing the employee lifecycle—from hiring to retirement—requires multiple tools that streamline different HR functions. Two of the most commonly used systems in HR technology are an applicant tracking system and HR management software. While both play essential roles in workforce management, they serve distinct purposes.
An applicant tracking system is designed to optimize the hiring process, helping recruiters source, track, and evaluate candidates efficiently. On the other hand, HR management software provides a broader set of tools for handling everything from payroll and benefits to compliance and performance management. However, these two systems often overlap, leading to confusion about their roles and how they fit into an organization’s HR tech stack.
This article explores the key differences between an applicant tracking system and HR management software, their areas of overlap, and how businesses can leverage both for a seamless employee management experience.
What is an applicant tracking system?
An applicant tracking system is a specialized tool designed to streamline the recruitment process. It automates various hiring tasks, making it easier for recruiters and HR teams to manage job postings, screen resumes, schedule interviews, and communicate with candidates.
Key functions of an applicant tracking system
- Job posting and distribution: Companies can publish job openings on multiple job boards and career sites with a single click.
- Resume parsing and candidate screening: AI-powered tools analyze resumes and rank candidates based on qualifications and job requirements.
- Applicant tracking and workflow management: HR teams can move candidates through different hiring stages, from initial application to final offer.
- Collaboration tools: Hiring managers and recruiters can leave feedback, rate candidates, and make hiring decisions within the system.
- Interview scheduling: Automated scheduling tools sync with calendars to simplify interview coordination.
- Compliance and reporting: An applicant tracking system stores hiring records to help businesses meet equal employment opportunity (EEO) and other regulatory requirements.
An applicant tracking system primarily focuses on recruitment and talent acquisition. Once a candidate is hired, their information must be transferred into HR management software for payroll, onboarding, and long-term employee management.
What is HR management software?
HR management software is a comprehensive system that helps businesses manage the entire employee lifecycle, from onboarding to payroll, benefits administration, and performance tracking. Unlike an applicant tracking system, which focuses solely on hiring, HR management software provides a full suite of tools for managing employees after they join the company.
Key functions of HR management software
- Onboarding and employee records: New hire data is stored and managed, ensuring a smooth transition from recruitment to employment.
- Payroll processing: Automated payroll calculations, tax withholdings, and salary disbursements help ensure timely and accurate payments.
- Benefits administration: Employees can enroll in health insurance, retirement plans, and other benefits through self-service portals.
- Time and attendance tracking: HR teams can monitor work hours, vacation days, and leave requests.
- Performance management: Goal setting, employee reviews, and feedback tools help track employee performance and career growth.
- Compliance management: HR management software helps businesses stay compliant with labor laws, data security regulations, and industry standards.
This system serves as the backbone of an organization’s HR department, handling everything from employee data management to workforce planning. However, it often lacks the specialized recruitment tools that an applicant tracking system provides.
Key differences between an applicant tracking system and HR management software
While both an applicant tracking system and HR management software support HR functions, they have different primary focuses.
Purpose and functionality
- An applicant tracking system is designed for hiring and recruitment, helping businesses attract, assess, and onboard candidates efficiently.
- HR management software handles post-hiring HR functions, such as payroll, benefits, compliance, and employee performance management.
User base
- An applicant tracking system is primarily used by recruiters and hiring managers who need tools to manage job postings, screen candidates, and schedule interviews.
- HR management software is used by HR teams, payroll specialists, and benefits administrators to manage long-term employee data and workforce operations.
Integration requirements
- An applicant tracking system often needs to integrate with HR management software to ensure a smooth transition from candidate to employee.
- HR management software may have built-in recruitment tools, but they are often less advanced than a dedicated applicant tracking system.
Where an applicant tracking system and HR management software overlap
Despite their differences, an applicant tracking system and HR management software often have overlapping features, especially in large enterprises that require a seamless hiring-to-employment transition.
Employee onboarding
Once a candidate is hired, their information must be transferred from the applicant tracking system to HR management software for onboarding. Some HR management software platforms include basic applicant tracking features to bridge this gap, but they often lack advanced recruitment automation.
Compliance and reporting
Both systems store important HR data that helps businesses comply with employment laws and industry regulations. An applicant tracking system tracks hiring records, while HR management software manages compliance with wage laws, tax regulations, and employee classification rules.
Workforce analytics
Businesses rely on data to improve hiring and workforce management strategies. An applicant tracking system provides insights into recruitment metrics such as time-to-hire and candidate sources, while HR management software offers broader workforce analytics related to retention, turnover, and employee satisfaction.
Choosing the right system for your business
When deciding whether to invest in an applicant tracking system, HR management software, or both, businesses should consider the following factors:
- Hiring volume: Companies with high hiring needs may benefit from a standalone applicant tracking system, while smaller businesses might find built-in recruitment features in HR management software sufficient.
- HR complexity: Organizations with multiple HR functions, such as benefits administration and compliance management, typically need a robust HR management software solution.
- Integration capabilities: Businesses should ensure that their chosen systems integrate seamlessly to avoid data silos and manual data entry.
- Scalability: A growing company may need both an applicant tracking system and HR management software to support future hiring and workforce management needs.
The future of HR technology: ATS and HRMS working together
As HR technology continues to evolve, more platforms are offering integrated solutions that combine applicant tracking system capabilities with broader HR management functions. Businesses can expect to see:
- AI-driven recruitment tools that integrate seamlessly into HR management software.
- Automated data transfer between applicant tracking systems and HR management software to reduce manual data entry.
- Enhanced workforce planning tools that use recruitment and employee data to forecast hiring needs.
Conclusion
An applicant tracking system and HR management software serve distinct but complementary roles in modern HR operations. While an applicant tracking system focuses on recruitment and hiring, HR management software provides a comprehensive solution for managing employees after they join the company.
For businesses looking to optimize their HR processes, investing in both systems—or choosing an integrated solution—can ensure a seamless experience from candidate selection to long-term employee management. By understanding the key differences and overlaps between these tools, organizations can build an efficient, data-driven HR tech stack that supports their workforce goals.