The 8 Best HR Software for Startups (and Why You Should Care)

Andrew Buck September 7, 2021

If you’re running a startup, you may not have a dedicated HR team yet. 

All your team members are juggling multiple roles, and no one has enough time to allocate to creating and implementing HR processes. 

But managing human resources is a vital part of any business regardless of size. It helps you stay compliant with local labor laws, retain your best employees for the long-term, and optimize your team’s performance. 

And if the stars align and your startup takes off, you’ll need HR taken care of sooner than later.

The good news is that you don’t need to dedicate an entire team to these basic HR processes. There are several software solutions that can get the job done for startups and small businesses – particularly remote startups.

In this article, we’ll delve deeper into why your startup needs HR processes, why it can be a challenge for small businesses, and how some of the best HR software solutions can help you get the most out of your team.

Further reading: the best remote work tools to supercharge your remote startup

Why HR Processes are Vital for Startups

Often startups and small businesses run on limited bandwidth. It’s common for each employee to wear multiple hats. 

And in a fast-paced environment where everyone is moving full steam ahead, HR processes can be perceived as less important, bureaucratic work that would slow things down. 

Alternatively, you may be thinking that you’ll implement an HR team once you grow to a certain level. 

But HR processes are vital for all startups, regardless of size, for the reasons we’ll discuss here. 

You don’t need to dedicate a lot of time or resources, like an HR team. But you should at least create processes to manage various aspects of your team, like recruiting the right people, managing their compensation and benefits, and tracking their absence calendar. 

The good news is that you can do all of these things quite efficiently with the right HR software (the best ones are listed below).

Reduce Employee Turnover

Your team members are your most valuable assets. Managing all the vital aspects of their employment will make it a more rewarding experience for all parties involved. 

It will reduce turnover, and you’ll be able to retain your best performers who learn to work together as a team and accomplish great things together. 

Here are a few ways that implementing HR processes can reduce expensive and disruptive employee turnover.

  1. Onboarding SOPs

Usually, it’s the HR team that is responsible for creating onboarding SOPs (SOP is short for Standard Operating Procedure) for new employees.

This might include specific training, helping them feel welcome and part of the team, providing them with access to relevant material, files, etc., and more.

If your startup doesn’t have a dedicated HR team, you still need to have basic onboarding SOPs in place. 

Here are some things to consider.

For remote teams, especially if you’ve never met your new employee in person, it might be worth it to take the time and do a quick video call on Zoom. 

A face-to-face interaction (even online) will help break the ice and make your new team member feel like they’re part of the crew. It’s also a good opportunity to answer any questions, etc.

If your new team member has access to everything they need from day one, and they feel like they’re completely plugged into the team, they’re much more likely to perform well. 

That will build their confidence, improve job satisfaction, and ultimately reduce employee turnover costs for your business.

  1. Management Training

As your team grows, you’ll need to fill new leadership roles to lead and manage the next batch of employees. 

If you track which team members are really stepping up when it’s needed the most, or who is the best when it comes to project management, you’ll have an easier time identifying your future leadership team.

You can allocate time and resources to provide these leaders with the management training they need to become future leaders in your organization. 

Implementing such a process will also ensure that you always have new emerging talent coming up the ranks in your organization, and you can motivate employees by letting them know there is a clear path of progress available for them if they consistently perform at a certain level.

  1. Fair Compensation

In the long run, your employee retention will be directly proportional to your team’s perception of how fairly they’re compensated. 

With some basic HR processes in place, you can assign each team member tasks and goals, and also measure how well they’re performing. When you track and measure performance, you can compensate each team member according to their results.

You can also identify employees that are falling behind, and you can provide them feedback and the opportunity to improve. 

It creates a sense of transparency and fairness within the company as each employee knows that they’ll be compensated according to their results. They will take ownership of their tasks and perform at a high level. 

Ultimately, you’ll end up with a team that is engaged, enthusiastic, and highly motivated, all of which can go a long way to reducing turnover.

  1. Managing Employee Leave

As your team grows, you’ll need to create processes to track and manage employee vacation days. 

Managing your team’s leave calendar is vital to maintaining a balanced workload for your staff and maximizing productivity. 

If too many people take time off at the same time, then you can end up short-staffed and risk missing deadlines or experience delays with launch dates. 

On the other hand, if your team never takes a day off, then you run the risk of them getting burned out, which will impact their performance and morale. 

Managing your team’s vacation calendar with a leave management system will allow everyone to take enough time off to stay fresh without affecting productivity. 

An optimal work-life balance for your team will boost morale and reduce turnover.

Regulatory Compliance

One of the big things is regulatory compliance, depending on where your company and team members are based. 

If you run a remote startup with employees in different states or countries, regulatory compliance can be something that you need to carefully consider and plan for. 

For example, there aren’t too many regulations in the United States when it comes to paid leave, at least at the federal level. 

But there are a handful of states that mandate that you provide a minimum number of paid sick days to your team members. And if you have employees in Europe, then you might need to provide them with weeks worth of paid leave each year. 

An HR software will allow you to create and implement time off policies in a way that is in alignment with all local labor laws, and prevent any unexpected and expensive legal issues down the road.

Managing Employee Performance

Measuring and tracking employee performance isn’t just good for fair compensation. It is also vital to identify who in your team excels at what. 

Having an HR process that controls each project, and tracks what tasks are assigned to which team member will allow you to figure out which team members are best suited for what tasks/project types.

It will let you identify opportunities for improvements more easily. 

Assigning tasks to people that are a good fit for them will improve their performance, and ultimately your products and services. 

It will also improve team morale, boost confidence, and reduce employee turnover.

Why HR Can Be Challenging for Startups and Small Businesses

We’ve covered why HR processes are important for startups and small businesses. 

But let’s take a look at some of the challenges that these companies face when trying to implement human resources management. 

These challenges can be even more significant for remote startups with limited communication between team members in several different locations. 

In the next section, we will list several HR software products that can solve some of these common challenges, particularly for remote startups.

No Dedicated HR Team

As we talked about earlier, many small businesses and startup teams don’t have the bandwidth to maintain a dedicated HR team. 

It’s usually the case that the Founder, or other senior team members, wear multiple hats as they progress with product launch, marketing, and other critical tasks. 

HR processes often get pushed to the backburner. 

The good news is that you don’t need a dedicated HR team, especially as a small business or startup with a handful of employees. 

There are plenty of tools that can help you get the job done, as long as someone in your team checks in on HR tasks periodically. 

Prioritizing Performance

When you have limited resources, you want to dedicate as much of it as possible towards tasks that would move the needle the most. 

That might include things like product development, inbound/outbound marketing, PR outreach campaigns, etc. 

When most of your team’s resources are focused on these tasks, other necessary but less urgent things like HR management often take the back seat.

Limited Compliance Resources

If you neglect HR processes, whether it’s employee compensation and benefits, or providing the minimum required paid sick days in your area, you could unexpectedly find yourself dealing with expensive compliance issues. 

As we mentioned before, it is absolutely essential that you familiarize yourself with local labor laws in any jurisdiction where you have employees.

As a startup or small business, the last thing you want to do is to dedicate precious time and resources towards avoidable legal issues. 

Once you are up-to-par with the regulations, you can use an HR software tool to stay on track with them and make sure you’re compliant at all times.

The 8 Best HR Software Tools for Startups

We’ve explained why HR can be a challenge for small businesses and startup teams, but also why you need to pay attention to some HR processes even with limited bandwidth and resources. 

Now let’s take a look at some of the best software services that can help you handle HR processes without a dedicated HR team. 

These tools can help you stay compliant with labor laws, reduce turnover, and also manage, track, and optimize your team’s performance.

1. Zenefits 

Zenefits makes HR easy for startups and small businesses that can’t dedicate staff or teams to manage tasks like onboarding, payroll, and benefits tracking. 

It makes things simple and easy for your entire team by syncing HR, payroll, and scheduling, all within one platform. 

Zenefits claims that their customers spend 90% less time on payroll and benefits, and 50% less time on onboarding after they start using the service. 

That means less time spent on less productive tasks, and more time dedicated to product development, marketing, PR, etc. 

Here are just a few of the HR functions that you can accomplish with Zenefits. 

2. Flamingo

Flamingo is a simple Slack app, which similarly makes your HR workflow simple. With Flamingo, staff can plan and request leave right from your company’s online headquarters. Managers can approve or deny leave in the same place, sending a quick response to the employee.

Flamingo creates an easy to view vacation calendar, so those in charge can quickly see who is available, and who has vacation days or other leave types scheduled.

Improper leave management not only saps managers’ or HR staffs’ time, it can also result in scheduling conflicts, short-staffing, loss of productivity and unhappy staff.

If you’re on Slack, it’s a no-brainer to add Flamingo to your workflow.

Click here to learn more and give it a try.

3. Bamboo HR

If you like to gather and organize employee performance data so you can use it later to make decisions, then Bamboo HR might be useful for you. 

Bamboo HR will help you gather data throughout your employee’s life cycle at your company. Whether it’s recruitment, onboarding, compensation, or implementing company culture. 

Here are some of the key benefits of Bamboo HR for a startup or small business.

4. Namely

We get it. Running HR for a mid-sized business isn’t for the faint of heart. Namely is here to give you the tools to make your life easier and your employees happier.

Namely is better suited for slightly larger teams. 

If your team is around 50-100 people, you might still only have a couple of people that are dedicated to HR, and a tool like Namely can make their lives a lot easier.

Here are some of the key benefits for small businesses that the Namely customers enjoy the most.

5. Gusto

Gusto focuses on simplicity, and makes it easy for you to onboard new hires, pay them, track their benefits, and provide any necessary support to your hardworking team.

Onboarding can be a breeze with Gusto because of their customizable checklist. Here are a few examples of what’s offered. 

You can handle payroll with Gusto as well. Once you set up an employee within the system you can do the following with a few clicks.

Gusto helps you manage health benefits for your team. If you already have benefits set up, Gusto can help you move everything over into their system, so it’s all in one place for your convenience. 

You can set up the following benefits in Gusto.

6. Pingboard

Pingboard is all about empowering your employees. Another tool that is suitable for larger teams, especially remote teams with employees across several different locations. 

Pingboard facilitates networking within your organization in a way that promotes employee engagement and a sense of belonging. 

Pingboard helps you be transparent and eliminate silos, leading to more empowered, efficient, and better-working teams. Learn how our beautiful employee directory, org chart, and integrations help everyone from leadership on down have the context to work better together.

7. Polly

Polly is an HR tool that integrates with Slack and Teams to collect instant feedback from your remote team employees across various locations. 

Easy to use with features that allow you to create feedback templates in a matter of seconds, Polly is an instant engagement tool that makes meetings more lively, and it makes your employees feel like they have a voice within the organization.

Some of the key solutions that Polly offers startups and small businesses are the following.

8. HeyTaco!

Sometimes, it’s about having a little fun. It can go a long way in building team morale and creating a sense of togetherness. 

And that’s where HeyTaco comes in.

HeyTaco is an HR tool that helps you build stronger and happier remote teams. It helps your team celebrate successes, recognize each other, and have a little fun.

These things can be invaluable especially for remote teams where team members can miss out on the small interactions that you’d find in a traditional office setting. The water cooler hangout, so to speak.

It May seem too simple to be effective, but it adds a layer of fun to work interactions, and ultimately boosts employee morale, and makes it a pleasant experience to work with each other. 

Here’s how it works. 

Final Thoughts on HR Software for Startups

If you have employees, or if you plan on growing your team in the near future, then HR processes are critical.

You already know that recruiting the right people can make all the difference in the world. 

But once you hire them, there are still key areas of human resource management that need attention – things like onboarding, optimizing performance, tracking compensation, and managing the employee absence calendar. 

If you don’t have the resources for a dedicated HR team, then review some of the software options we have listed above. They can be a significantly cheaper and simpler alternative that covers your bases when it comes to HR processes for your startup or small business.

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