If you've applied to more than a handful of jobs online, your résumé and cover letter almost certainly passed through an applicant tracking system before a person looked at them. This piece of software sits between you and the hiring manager on nearly every application for employment at a mid-size or large company today. Understanding what it actually does — and doesn't do — is the difference between formatting your resume to work with the technology instead of against it.
What Is an Applicant Tracking System?
ATS stands for Applicant Tracking System — a type of application software companies use to collect every application submitted through their careers page, organize the information into a searchable database, and give recruiters and hiring managers tools to filter, sort, and rank candidates. Platforms like Workday, Greenhouse, Lever, iCIMS, and Taleo are among the most widely used in recruitment today.
Think of it less as a gatekeeper deciding yes or no, and more as a filing system built around one job description at a time. The recruiter is still the one making the final call — the ATS just determines what they see first and how easy your information is to find inside a large pool of applicants.
Why Companies Use Applicant Tracking Systems
Companies use applicant tracking systems mainly to save time. A single job posting can pull in a high volume of applications within days, and reviewing each one by hand isn't realistic once a company grows past a certain size. Implementing an ATS lets a team streamline hiring, keep candidate information in one searchable place, and track candidates through every stage of the hiring process instead of managing spreadsheets and email threads.
This is why the software isn't limited to Fortune 500 companies — it's used by companies of all sizes, from small startups posting jobs on one or two job boards to large corporations running recruitment across multiple platforms at once. Any employer who wants to save time and money on hiring, and give hiring managers a faster way to find the best candidates, tends to benefit from using one.
How Does an Applicant Tracking System Work?
When you submit an application, here's roughly what happens behind the scenes:
- Parsing: The ATS reads your résumé and cover letter — a process called résumé parsing — pulling out sections like work history, education, skills, and contact details as structured information.
- Structuring: That extracted information gets mapped into fields in the system's database, so a recruiter can later search something specific, like "5 years Python," and pull up matching candidates instantly.
- Keyword and skill matching: An algorithm compares your application against the keywords and required skills in the job description, often producing a match score.
- Ranking and analytics: Recruiters typically sort by this score, using the system's built-in analytics to rank candidates, filter by years of experience, or flag required qualifications before scheduling an interview.
Some newer platforms also use artificial intelligence to go a step further — comparing a candidate's full work history against the role, not just matching individual keywords. The core idea stays the same though: automate the sorting so a human only reviews the applications most likely to be a fit.
Why Resume Formatting Matters for an ATS
Parsing software reads documents differently than a human eye does. A layout that looks clean and organized visually can still confuse a parser if it relies on tables, columns, text boxes, or graphics to organize information — because most parsers read left to right, top to bottom, and can't always interpret content placed inside those elements correctly. A simple, well-structured Word document usually parses more reliably than a heavily designed one.
| ATS-Friendly | Risky for ATS |
|---|---|
| Single-column layout | Multi-column or table-based layout |
| Standard fonts (Arial, Calibri, Georgia) | Decorative or script fonts |
| Standard section headers (Experience, Education) | Creative headers (My Journey, What I Bring) |
| Text-based contact info in the body | Contact info only in header/footer |
| .docx or standard PDF | Image-based PDF or design software export |
Who Actually Uses an ATS Day to Day
Recruiters and hiring managers are the main users, but human resources teams rely on the same system to manage onboarding once a candidate becomes a new hire, and to keep a record of qualified candidates for future openings. A typical workflow looks like this: a job description goes up on one or more job boards, applications come in, the ATS ranks candidates based on the job description, hiring managers review the shortlist, background checks happen for finalists, and the system tracks each candidate's status until someone is hired.
Many teams also use the same platform's analytics to measure metrics like time-to-hire or candidate experience — how smooth or frustrating the application process felt from the applicant's side — which is part of why an ATS is treated as core hiring technology rather than a one-off tool.
Where Cover Letters Fit Into This
Not every ATS parses cover letters as closely as it parses a résumé, but many do — especially for keyword matching. A cover letter written in plain paragraph form, free of graphics and unusual formatting, gives the system clean text to work with when submitting an application. Naturally including terms from the job description in your cover letter can also reinforce the match signal the ATS is already building from your résumé.
The Keyword Mistake to Avoid
Knowing that an ATS matches keywords, it's tempting to stuff a résumé or letter with every term from the job posting, sometimes in invisible white text. This tactic rarely works the way people hope. Many modern systems flag unnatural keyword density, and even when they don't, a human recruiter reading a keyword-stuffed letter notices something is off immediately. The better approach is using the same terminology the job description uses, in context, only where it's genuinely relevant to your skills and experience.
How to Check if Your Resume Is ATS-Friendly
A quick, free test: copy the full text of your résumé and paste it into a plain text editor like Notepad. If your work history, dates, and section headers still appear in a clear, logical order with nothing missing, that's a good sign an ATS can read it the same way. If content is jumbled, missing, or out of order, that's exactly what a parser is also likely to struggle with — and worth fixing before applying for a job through a company's careers portal.
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Generate Your Cover Letter FreeFrequently Asked Questions
What does ATS stand for?
ATS stands for Applicant Tracking System — software companies use to collect, organize, and screen job applications before a recruiter reviews them directly.
Does ATS reject candidates automatically?
Most modern platforms don't reject candidates outright. They rank and filter by keyword match and formatting readability, and recruiters usually review top-ranked results first — meaning poorly formatted applications are simply less likely to be seen.
Do small companies use ATS software?
Many do. Platforms like Workday, Greenhouse, and Lever are used across companies of nearly every size, since they simplify managing applications regardless of company scale.
Can I check if my resume is ATS-friendly?
Yes — paste your résumé text into a plain text editor. If sections, dates, and job titles still read in a clear, logical order, an ATS can likely parse it correctly as well.
Does an ATS handle anything after I'm hired?
Sometimes. Many platforms extend into onboarding, helping human resources teams manage paperwork and workflow for a new hire once an offer is accepted — though this is separate from the résumé screening step most applicants are trying to get through.
Related: How to Write an ATS-Friendly Cover Letter in 2026 · Cover Letter Mistakes That Get You Rejected