Applicant Tracking Systems, AI, and the Future of Recruiting

In this episode, we sit with the pioneer of Applicant Tracking Systems, Art Pereless, and discuss the future of recruiting using AI.

Art is the creator of ATS On Demand, an applicant tracking system for small businesses that streamlines the whole hiring process from start to finish. Learn more about ATS solutions for your small business here. If you’re looking for more of an enterprise system, please check out Pereless Systems here.

Transcript

Fletcher:

I’d like to introduce Arthur Pereless, he’s the CEO of Pereless Systems. You have an enterprise applicant tracking system product that you sell to the market and been doing that for almost twenty years now, as well as small to medium size business applicant tracking system product as well, ATS On Demand. So basically Art, you’ve been in the applicant tracking system business since the dawn of time, right?

Arthur Pereless:

Yes. Like you, I have. That’s a true statement.

Fletcher:

That’s a pretty cool accomplishment, and I can’t tell everybody how big of a fan I am of applicant tracking systems. I mean, once upon a time I was starting a recruiting business and I was interviewing all these people and I was printing out all these resumes and I was like, writing “A”, “B”, “C” on them and I had piles and I was like, trying to email people and call people, and then I tried to manage my inbox and I just was a complete mess, and then I discovered the applicant tracking system and my life has never been the same. And Art, you’re probably partially responsible for that.

Arthur Pereless:

Well, I hope so and you know, we definitely have been a pioneer in this industry for, we’re going on our twentieth year here at Pereless Systems and really what started the company was for the fact that there were so many broken channels in recruiting like you’re talking about now. So, if you could think about the beginning days or just recruiting in general back in the ’90s and the early 2000s it was very segmented, where you didn’t have a one piece user interface where you could go ahead and do multiple tasks with regards to candidates and recruiting in general, so.

Fletcher:

Yeah.

Arthur Pereless:

I think really when the light bulb went on was just, you know, I’ve always had a software background, and then understanding that HR was such a huge piece of any company based on the fact that you have the people that are going to be servicing your clients, whether its engineers, customer service, sales …

Fletcher:

Yeah.

Arthur Pereless:

Hiring these folks, making the right decisions, attrition is a bottom line killer. You know, if you hire people and then two weeks later they don’t work out, I mean, that’s just a big cost to the bottom line.

Fletcher:

Sure.

Arthur Pereless:

Our key goal at the beginning was to build a central user interface that would allow companies to manage all the processes within recruiting and not have to go in and out of Outlook and all these different applications to do their jobs. So we wanted to help them streamline the process, be more effective, and make better hires.

Fletcher:

The applicant tracking system has definitely, and there’s many of them out there obviously, has helped fulfill that kind of contact management role. And some of them do it better than others, but it’s beginning to evolve, especially because data analysis and the need and the use of human match bricks, right? Ultimately, is fast becoming much more popular and extremely valuable. It’s always been valuable. So, the other day we were talking about this. There’s a couple of metrics that CEOs and CFOs are really demanding from their applicant tracking systems nowadays, for a lot of good reasons. What are those?

Arthur Pereless:

Well, if you look in general there’s a lot of mandates within the government that we have to fulfill with regards to affirmative action.

Fletcher:

Basic complying stuff.

Arthur Pereless:

Yeah, its complying stuff. So it allows them to be very proactive in those reports so they can get to senior management and have their logs completed. But there’s just such a bigger piece here, which is that, you know, CEOs and CFOs today are demanding that, just cost evaluation of all of their different units. Whether its sales, HR, and I think where that fits in is that, you know, this bottom line killer of attrition.

Fletcher:

Yeah.

Arthur Pereless:

We’re turning over employees. Let’s just say a company needs a salesperson. Someone just left the company, we have vacant sales area. Before our competitors get in there, we need to get that wrapped back up and have our people in there. So really, what we’re trying to do is like, you know, break people for these positions that will last the test of time.

Fletcher:

Yeah. Every day that salesperson isn’t selling is money the company is losing, right?

Arthur Pereless:

Of course, of course. And then, like I said earlier, you know, if you look at attrition, think about turnover costs. We train these people for X amount of time. We provide them computers, we provided this, this, and this. And now, after X amount of time they leave, well we’ve got to go back and redo this whole thing. So, really making important decisions based on hire is at the forefront of a lot of companies and they’re really trying to utilize new great tools. The screening tools that your company provides, the AI, artificial intelligence that’s coming out now, its groundbreaking and I think the revolution …

Fletcher:

A lot of profile matching, right? With the resumes …

Arthur Pereless:

Oh, of course. Yeah.

Fletcher:

And LinkedIn profiles, and social profiles. That AI is going out and looking at your best people and then comparing your future people against them, right?

Arthur Pereless:

Basically, yeah. So this new revolution, I mean, you hear it all over the TV, AI, its driving me nuts but the idea of artificial intelligence, machine learning, being able to look at trends over time with complete data sets and making important decisions is the key to the future and I just think that companies that are involved in this now are maturing this process and building it into their process work flows and its just, it just makes so much sense. Look, I hear so much about AI, its going to replace all of these different types of people but really, I don’t think that’s the case. I think its just going to award people the fact that they can go ahead and have much more data and work through that. You still need to …

Fletcher:

They can be more efficient, ultimately, right?

Arthur Pereless:

Exactly, exactly. Cause you know what? When you have 300 resumes that you have to go through at any given time, lets just say for an admin assistant job, this allows you to just do a kind of a hyper match based on the key elements of the job versus the key elements of the person that’s applying for the job.

Fletcher:

Yeah. I was telling you my own personal story in my own recruiting life, right, is I could print out lots and lots of resumes, and this was back maybe six or seven years ago, I started a search firm, and I remember I’d get like 500 resumes in a 30 day period. Right? Now today, maybe not as much but you’re still getting, you know, 150, 200, 250 resumes for an open job like an admin assistant or a sales position. So having to manually screen through there, a human … First of all, I have my own bias, too, right? Like, I look at that resume.

Arthur Pereless:

Very subjective.

Fletcher:

Yeah, very subjective. And now, sometimes that subjectivity is to my advantage and sometimes its to my disadvantage too, right?

Arthur Pereless:

Of course.

Fletcher:

And that’s where the AI piece and the computer part, the machine learning part comes in, can help me maybe see past some of my own bias as a recruiter then, right?

Arthur Pereless:

Yeah, and I think, you know, look. Artificial intelligence is going to mature over time, but I think the higher talents, the companies like yourselves, companies like ourselves that have built in prescreening questions and then you do skill assessments on the side. I also look at that as intelligence, because it is the forefront of understanding how qualified someone is.

Fletcher:

Yeah.

Arthur Pereless:

So I think its just a natural effect that these products integrate so seamlessly with our products or any products out there, and it just makes it easier for the recruiter or the company to go ahead and make really informed decisions.

Fletcher:

Yeah.

Arthur Pereless:

And AI will come in and it will take the handshake from those products and follow it through to the ultimate goal, is to really track these people through the lifecycle of their employment.

Fletcher:

Are applicant tracking systems helping to measure the cost of hiring? So, how much I’ve invested in advertising recruiters, recruiting hours, sourcing hours, other tools … All these other, you know, these hard costs that are directly associated with hiring. And then, are they also helping track the cost of turnover, like we talked about? Cause that’s a lot of, that’s an opportunity cost oftentimes. I mean, there’s some hard costs, right? Training, hours that are spent where the person is completely unproductive or is only producing at a lower level, and those kind of things. Are we able to track those things now?

Arthur Pereless:

That the beauty of the single interface, being able to pull all this data into these real hardcore metrics that say, “Hey, look, I can spit out reports if you tell me exactly what our costs to market is for advertising and other [inaudible 00:10:30].” You could build a bucket.

Fletcher:

Yeah.

Arthur Pereless:

First and foremost, you could never do that before. But I think some of the great things is that, you know, time to fill. How long is it taking us to fill a position-

Fletcher:

How much does that cost you? Having it open? Right?

Arthur Pereless:

What’s that?

Fletcher:

How much does it cost you to have that position open, right?

Arthur Pereless:

Exactly, so companies are starting to put metrics around that. I think benchmarking is key. So, a company doesn’t have this type of technology. I think the best thing to do is, if you’re looking to go this way, is to, first of all, benchmark where you are now. And then look, once you employ a software program, how much more efficient you are and looking at those numbers. I truly think that the market has opened up tremendously. There’s so many great partners out there, like your company you hire. Based on the fact that, you know, people see a need for certain niches in this ATS face and it allows them to now plug and play through APIs, different products they’re going to help augment their whole process.

Fletcher:

And that’s a big thing that companies like yours are doing, right? You’re opening up the APIs and you’re bringing in a lot of partners to help enhance your overall tools so when somebody is using your tool now, they have access to these other tools like the assessment tools or background checks or onboarding, or you know …

Arthur Pereless:

Exactly.

Fletcher:

You become the whole [inaudible 00:12:08], right?

Arthur Pereless:

Correct. And there’s a slew of partners out there in every area that you can imagine, so. Really it comes down to the client’s preference, right?

Fletcher:

Sure.

Arthur Pereless:

We’re a ATS and if the client says, you know, “We’re using this background check vendor,” well, if we don’t have a current integration with them we will go ahead and look to build a bridge to that company. And with regards to the assessment [inaudible 00:12:40] its the same way. And the WOTC, tax credits. I mean, there’s just so many variables that you could really assist companies in with regards to, not only recruitment, but really attacking at a bottom line in this whole area, so I just think its a win-win for everybody.

Fletcher:

Yeah, yeah. To put a pin in this, Gallup came out with an interesting study. They just put a bunch of pieces of interesting information together, but we all know and we’ve all seen the cost of turnover of an employee is 1.5, 2.5 times your salary. The BOS shows that 26 percent of all people in companies work forces are turned over. So on average, you lose a quarter of your workforce every year, average company does.

Arthur Pereless:

True.

Fletcher:

And if the average person is paid 50 thousand dollars a year, it adds up to like 2.2 million dollars per company per year that are losing in costs of turnover, of rehiring and retraining their workforce. On a hundred person company, right?

Arthur Pereless:

Yeah.

Fletcher:

And when you spread that across all the companies in the United States, its like over a trillion dollars are lost to these things.

Arthur Pereless:

I think that’s what catches the eye of the CFOs and the CEOs of these companies, just saying, “Wow, this is a tremendous area that we can go ahead and make better.”

Fletcher:

Yeah. Yeah, and then tools like an applicant tracking system and obviously assessments and a lot of these other complimentary tools and the AI that’s coming out here for matching and screening candidates, finding candidates. It is all making a difference in lowering those costs. And then, from a human element standpoint, all of these things are helping make a better experience for the candidate, right?

Arthur Pereless:

Oh, sure.

Fletcher:

If you can eat up the time to hire, I mean, that’s less time that I’m out of a job, right? You know, that I’m not getting a paycheck. The quicker that I’m going through that hiring process … I’ve only been hired once where I actually went through a traditional hiring process, but you remember that time where you’re like, okay, I’ve got the interview, you know like, when am I going to get a call back, and when will we get scheduled the next time. Well, the old days, or even still today a lot of companies are having these problems, it takes 2 to 6 or 8 weeks to go through the hiring process. That’s not the recruiting process, that’s the hiring process.

Arthur Pereless:

Sure. And look, I will say one thing. You know, an applicant tracking system is only as good as its users. If your old system’s an ATS On Demand we really strive to educate our clients, not only in process but in controls, because I think process goes along with utilizing a software application.

Fletcher:

Yep.

Arthur Pereless:

Everybody has to be on the same page. It’s like world class symphony. You know, the horns, the strings, everybody comes together. That’s all based on hours and hours of- Not hours and hours, but you know, of training, proper training, and being able to build into one complete process. You can’t have multiple processes in one company. It won’t work.

Fletcher:

And you guys are supporting your clients with what’s needed to help them implement and get the most out of a tool, right?

Arthur Pereless:

Exactly, and you know, I think a lot of software products get thrown by the wayside and its not that they’re bad products, its that the training and the support was never fully integrated into the whole process. And I think that’s the experience that we’ve learned over twenty years of business and I just think its- I can’t say enough about it.

Fletcher:

Yeah.

Arthur Pereless:

If you don’t train your people and build processes around them its not going to work.

Fletcher:

We see the same thing on the assessment side. I mean, you know, you’re from an applicant tracking system provider, you’re a little more integrated in that whole system, the whole process of hiring. We’re a little less, you know, just one piece of that whole puzzle, right? But even there, right, the training and the support, the proactive, and helping people get the most out of their tools. So that’s really cool that you talk about that and that’s something that, you know, whatever tool you choose, seek out help from your vendors or, your know, make it an initiative to really [inaudible 00:17:32], you know?

Arthur Pereless:

Yes, absolutely. Make it an initiative. Yes. Make an initiative that in that RP, whatever you’re doing, that that is a forefront item that speaks to, okay, you know, that’s great, the software’s here but we really need to build that software around our process. And having that-

Fletcher:

Make it become a part of your way of life, right? I think about my experience, once upon a time my way of life was resumes in my inbox and printing and silly systems on my desk and just the nightmare, right? And then one day I discovered-

Arthur Pereless:

Especially when [inaudible 00:18:12] leaves the company its all sitting on a hard drive.

Fletcher:

Yeah, exactly. But when I adopted the applicant tracking system a long time ago, I made that become part of my way of life. No, it took work, right? It took a lot of effort.

Arthur Pereless:

True that.

Fletcher:

I remember it taking effort. I’m like, “Man, I really got to figure this out. I got to learn how to-” You know, and it wasn’t complicated but it took effort to change my habits.

Arthur Pereless:

Sure. You know what? Some people are, you know, they buck that system. But I think companies that make it informative, and then they also, I think a key point is always including the people that are using that software and getting their feedback.

Fletcher:

Yeah.

Arthur Pereless:

Because it then includes them into the whole process. If you just come out and say, “This is how we’re doing it.” No. Because you know, people have different styles of how they do things, or work arounds. Well, work with them. Let companies like ours help them manage through some of their challenges and, you know, make it a win-win for the company, because there’s nothing worse than installing a program and then maybe six months or a year later having, saying, you know, we’re going to abandon this.

Fletcher:

Yeah. Because nobody’s using it, or they’re only using it as a fraction of its capabilities, or things like that.

Arthur Pereless:

That’s a great point, too. A fraction its capabilities. Another thing I will say about companies in the software space, that they have of annualized all of the different products that are accompaniments of one product.

Fletcher:

Or features, the features. Yeah.

Arthur Pereless:

Sure.

Fletcher:

Yeah. I mean, you know, you may not need to use all 100 percent of the features or the plugins but most people could make a world of difference in their cost of hiring, their retention, that 2.2 million dollars that most companies are losing, right? They could make a huge difference if they took advantage, 60 percent, 70 percent of those features, right?

Arthur Pereless:

Yeah, exactly, and being aware of all the products that are out there that can facilitate the process. Like example, tax credits.

Fletcher:

Yeah, that’s an interesting- I never even thought about that.

Arthur Pereless:

There’s a strap on product that allows you to now go ahead and work with tax credit companies. So like, maybe a company that’s in the service industry will now be able to employ some of the unemployable.

Fletcher:

Yeah.

Arthur Pereless:

Maybe they’re people that’ve been incarcerated, and it allows them to be enriched by the government to get them off the social programs. And I just think that is something that needs to be talked about and you know, sums it up.

Fletcher:

Yeah, that’s true. And that’s where assessments I think are valuable too, especially, we look at behavioral assessments. I mean, some of those people that maybe they don’t have experience or the skills necessarily on paper, you know, to do a particular job, but they have the right potential. And you know, companies like Elon Musk’s companies, and also Amazon, and a lot of these big companies these days, they’re looking for people that have the right … They’re wired to have the potential, they have the right tools internally to be great at the jobs that they need to fill. And they’re not so worried about people’s skills, training, and experience anymore because those people are already employed. They’re not available on the marketplace, but these other people are just as good, right?

Arthur Pereless:

Exactly. I think you hit the nail on the head there because companies like yours, companies that are in this state of building questionnaires that are allowing the candidates to go in there and answer specific questions, and then building a model around them.

Fletcher:

Yep.

Arthur Pereless:

Is very interesting, because it allows companies to be a little more strategic in what they’re looking for. And you’re right, maybe someone doesn’t even have all of the attributes that you’re looking for.

Fletcher:

Opens up the talent market, right?

Arthur Pereless:

Sure.

Fletcher:

And so now you can hire folks that are maybe previously considered unemployable, and get those tax credits, and get a great employee.

Arthur Pereless:

Sure. Hey, the past is the past and if you know, people are willing to change and they make moves into this and want to, you know, get involved, then its there.

Fletcher:

Yeah, yeah. I mean, folks like your company can really help people harness and take advantage of somebody’s ideas and really leverage that. I didn’t even think about the tax credit part. You just opened my whole eyes to that. So many companies probably are eligible for them already. They have a super diverse work force, but they haven’t been tracking it.

Arthur Pereless:

Look at our veteran community.

Fletcher:

Yeah.

Arthur Pereless:

You know, our veterans have given so much to this country and we need to give back, and that’s what these tax credit companies are doing. They’re allowing veterans to also participate in this whole revolution.

Fletcher:

Yep. Yeah.

Arthur Pereless:

And I just think its really …

Fletcher:

Yeah. This whole economic growth. So that’s really interesting. Today we talked about, you know, how, you know, some of the technology, how its changing in the applicant tracking system world from you, a veteran, the guy’s been there from the ground floor when the beginning of applicant tracking systems basically. We talked a lot about some of the different costs of hiring and the hidden costs, and the ways that the data that an, you know, an applicant tracking system can help you collect will help save you or make you lots and lots of money in your business. So this has been a really, even just for me, being in this world I think I know so much about it. I learned a lot today. What are two or three things that people can implement tomorrow in their business, simple things that they can do that will help them leverage technologies like ATSs in their business?

Arthur Pereless:

First and foremost, you have to take a good clear look at your business model and see where efficiencies are lost. I don’t care if its CRM, which I sold in my earlier days, as a sales [inaudible 00:24:45], to ATS systems. Look at places where you’re really spending a lot of time and labor and look at how you could probably increase efficiencies through that, utilizing some type of software product. At the end of the day-

Fletcher:

So identify the inefficiencies, kind of step 1.

Arthur Pereless:

Yeah. Just so, say we need the ATS system or we need a CRM, because then you just throw something in that’s not, you know, strategically looked at.

Fletcher:

Yeah.

Arthur Pereless:

So I think its, you know, first of all you have your key group of people that are looking at these inefficiencies, and then you obviously look at multiple products that are going to meet your needs or not meet your needs. They can be market leaders, but please, don’t deny companies that are not name brands, because some of the times those not name brands are the most ingenious companies you’ll ever meet.

Fletcher:

Yeah.

Arthur Pereless:

They’re fighting at the bottom of the food chain, and they’re willing to give and work with you and a lot of times that speaks volumes, so, you know. Brand names are great, but also, please don’t discount the small guys because they are there.

Fletcher:

Higher level service oftentimes, right?

Arthur Pereless:

Sure.

Fletcher:

As we talked about earlier, that implementation piece can be so difficult, right?

Arthur Pereless:

Oh, tremendous.

Fletcher:

If your partner’s not really truly there for you then its difficult. I had an experience with that, you know, deploy the software, won’t name any names, was relatively large, you know, name brand software provider and they were actually very willing to help, but their workforce was not very competent.

Arthur Pereless:

Sure.

Fletcher:

Their own workforce wasn’t very knowledgeable about their product, right?

Arthur Pereless:

Yeah, and I think that just speaks volumes. What I would say is, you know, once again, what’s that team? Figure the inefficiencies and start looking at products being able to go ahead and demonstrate a bunch of … Demo a bunch of products, and then always keep in mind that, hey, we’re going to need help. Kind of on a [inaudible 00:27:10] basis with process, controls, and best practices.

Fletcher:

Yep.

Arthur Pereless:

And when they do that, and you put it together, and then they unify and everybody’s trained in the process that they really want to go for and that follow best practices, you’re just going to have a wonderful, wonderful solution and results.

Fletcher:

Awesome, awesome. I want to just give you the opportunity to let everybody know how they can find you, find your company, so ATS, Applicant Tracking Systems On Demand is your kind of small business …

Arthur Pereless:

Yeah, so, I’ll be [inaudible 00:27:48].

Fletcher:

Yeah.

Arthur Pereless:

Yeah, so, Pereless Systems. P-E-R-E-L-E-S-S systems.com, and then ATS On Demand. So we have our enterprise, which is Pereless Systems. Kind of a, get all the feature functionality at a very cost efficient price, plus your [inaudible 00:28:09] within that and have a team of experts that will be on you 24/7 should you need it. And I think customer service is paramount here. Its really the foundation of this company. And then ATS On Demand is a company that we built for kind of small to medium sized scale [inaudible 00:28:31] products, but allows companies to pay as they grow. Hey, lets get them into a world class application, but lets not bang them over the head because we have to grow as they grow.

Fletcher:

Yeah, yeah, awesome. Helping the smaller mid-size businesses harness the power of these great tools at a, you know, more affordable cost.

Arthur Pereless:

Exactly, and I mean, I think nothing could be said better than that, so, you know.

Fletcher:

Awesome. So Art, its been fantastic chatting with you today. You know, everybody, I encourage you, if you’re, you know, thinking about improving your systems, you haven’t looked into applicant tracking system yet, that you reach out and, you know, check out one of these two products that Art has put together over the years. And really appreciate having you on today.

Arthur Pereless:

No, thank you very much. It’s been a nice time. Thank you, man.