When things were good, HR handled the hiring process, payroll management, and employee management for fast-growing startups.
As fundraising markets slowed down, priorities changed. The same department then took charge of firing and severance packages.
Scaled companies have the same problems, but the adage that “the bigger they are, the harder they fall” doesn’t ring true here. Whenever there’s a paradigm shift, it’s the newer, smaller companies that get burned.
And what did HR managers say as they weathered the storm?
“Thank goodness we chose the right HR software.”
HR software is a platform that manages the employee lifecycle from the second they seem like a viable job candidate to when they move on with their career. It’s the Swiss Army Knife for HR professionals — it handles recruiting, onboarding, payroll management, performance reviews, offboarding, contracting, and document management.
In startups, a complete HR solution can:
Streamline administrative tasks
Automate parts of the recruitment process
Organize people and payroll data
Facilitate data sharing and collaboration
Deliver performance metrics and analytics in a cohesive dashboard
Enhance employer branding
Create an accessible and user-friendly online community for existing employees
Store contracts, documents, and other important files for current and past employees
Manage regulatory compliance
Give real-time responses to pressing HR issues
All these features enable operational efficiency and higher employee engagement for growing small businesses.
In an ideal world, your HR software solution covers every aspect of human resources. Here are the main things we looked for when evaluating the best HR software solutions.
Most companies can expect between $4,000 and $20,000 to leave their pockets every time they make a new hire. Processes like candidate sourcing, interviewing, and onboarding take significant resources to execute (especially if the role stays open longer than a few weeks).
Startups need HR software that releases as much of the burden as possible. For that, they need to look for:
An applicant tracking system (ATS). An ATS can post job openings on multiple job boards, segment and track applications and CVs, create candidate pipelines, send automated follow-ups, and store interview information from each candidate.
Digital contracts. Online onboarding tools like standardized contracts and e-signature save organizations time and money, make compliance easier, and eliminate the risk of a costly error.
Employee self-service portals. A self-service portal allows employees to check their salary information, update contact details, track vacation days, and access company policies all in one place.
Today’s HR teams need the right systems to manage employee data and payroll, generate reports, and administer benefits. The best HR platform should offer time tracking, cloud document storage, expense management, automated payroll processing, and benefits management.
These tools make it easier for HR professionals to track different employee types (contractors/freelancers vs. salaried employees) and provide clear payroll breakdowns and deductions for each employee.
HR solutions also need to include performance management and engagement tools to track commissions, bonuses, and their associated performance metrics.
From a $1,000 mistake on an I-9 to a $500,000 mistake for Affordable Care Act noncompliance (or worse, a multimillion-dollar GDPR noncompliance fine), the risks of failing to comply with legal requirements are real for any employer.
Your HR solution needs to put compliance on autopilot. It should provide ongoing tax compliance updates based on laws that apply in the local area where employees are located. And it has to have features like automated W-2s and I-9s, management for 1099 workers, employee verification processes (including background checks and E-Verify), and data security protocols.
Any company with employees needs HR software, even if its owner is the most knowledgeable human resources professional in the world.
Aside from the extremely high (and rising) costs of HR noncompliance, tax intricacies, and glaring problems associated with manual employee data management, startups need HR software because scaling a company and its workforce creates huge friction.
We’ve seen it too many times to count. Startup founders are quick to add salespeople, marketers, and engineers to their teams while the HR function lags.
Without a way to fully manage human resources, small issues like missed payroll deposits and forgotten issues quickly devolve into toxic company culture, misaligned departments, and costly legal battles — just one of which could eat up the remaining cash runway they needed for expansion.
So, yes. Startups need HR software. They can’t live without it.
Gusto is literally so easy a founder who knows nothing about human resources could get it right on the first try. But it’s agile, adaptable, and robust enough to work with any company’s HR needs (and scale with them). Gusto is hard to beat, especially for remote teams and startups that use contractors.
New Hire Paperwork: Automated employee onboarding process, offer letter templates, e-signature, standardized I-9s and W-4s, and state new hire reporting make it easy for small businesses to grow and manage their workforce with just a few clicks.
Automated Payroll, Taxes, and Filings: Whether you work with W-2 employees, 1099 contractors, or international teams with multiple pay rates and currencies, Gusto automatically runs payroll, takes care of taxes, and files all the necessary paperwork. When it finds tax credits you qualify for, it’ll even apply them and save you money.
Digital Pay Stubs With Lifetime Access: Employees can access digital pay stubs with real-time data, and view their deductions and taxes in the same place. Even after they’ve left the company, they can still access their digital pay stubs for a lifetime.
Time and Project Tracking: Companies can use Gusto to track hours worked, generate project reports, and get an accurate picture of their labor costs.
PTO and Benefits Administration: Gusto’s PTO and benefits administration tools make managing leave requests, handling vacation tracking, and complying with benefits regulations within its simple UI.
Applicant Tracking: Gusto’s higher tier includes a comprehensive ATS, allowing companies to post job openings on multiple job boards and track applicants all in one place. That way, employers can enjoy a fluid hiring process from start to finish.
Contractor Only (Free for six months): Gusto’s program is free to contractor-only startups for the first six months — a huge cost savings for startups building out their HR function.
Simple ($40 per month + $6 per month per employee): Automated payroll, employee benefits, basic integrations (accounting, banking, expense management, etc.), and all the features a small business needs to manage basic HR tasks.
Plus ($80 per month + $12 per month per employee): Comprehensive benefits, payroll, and human resources tools, talent management, performance reviews, time and project tracking, and team insights.
Premium (Custom pricing): Compliance notifications, a dedicated customer success manager, and access to Gusto-certified HR experts.
Deel is a payroll and compliance platform based in San Francisco. Over 15,000 businesses from startup to enterprise use it to grow their international teams.
Employer of Record (EOR) Collaboration: Companies work with Deel as an employer of record, managing their payroll taxes, compliance regulations, and employee onboarding.
Contracts and Automated Billing for Freelancers: Working with independent contractors across the world is easy with Deel’s automated billing and contract management system.
Multi-Currency Support: Businesses can pay employees in any currency worldwide. Deel handles currency conversion and international payroll automatically with its foreign exchange system.
Country-Specific Employee Benefits: Automatically configure employee benefits to comply with the laws of the country where they are located. Deel also includes tax, compliance, and labor law advice specific to each national market through Deel Shield.
Organizational UI: People directories, org charts, and customizable profiles make it easy to set up new employees and keep everything up-to-date throughout their tenure while providing a more personalized experience.
Send Equipment Anywhere: Deel can send equipment, documents, and other items to any employee worldwide. It even takes care of customs duties.
Freelancers ($49 per month): For startups that manage a global team of freelancers.
EOR Collaborators ($599 per month): For fast-growing companies with high-performing teams in multiple different countries or jurisdictions.
Local Collaborators (Free to start): All the features a startup needs to manage local payroll in areas they have branch offices, and it starts out as free HR software.
Rippling is a workforce management system that handles HR, IT, and finance tasks from one simple dashboard. It automates repetitive HR tasks and enables one fluid HR motion in a user-friendly interface.
Global Workforce Management: Every nuance from international payroll to country-specific employee benefits is covered with Rippling’s comprehensive HR system.
Employee Engagement Tools: Rippling’s learning management system fully streamlines onboarding and training processes. Pulse makes it easy to design and send out employee surveys and gauge their mental health and satisfaction.
Integrations: Rippling integrates with over 1,000 different cloud-based services and products like Airtable, Asana, Dropbox, Microsoft 365, Slack, Zoom, etc., so startups can keep all their information in one place.
Talent Management: Rippling’s recruiting platform allows startups to post job openings on multiple job boards, track applicants, and organize everything in one central location.
PEO Services: Rippling provides professional employer organization (PEO) services, allowing companies to outsource their payroll and HR tasks to a trusted partner. This is a game changer for startups that don’t have the resources to manage their own HR.
Due to the customizable nature of the Rippling platform, all Rippling plans require a custom quote from sales.
Lattice is the best HR software for employee engagement — its platform is centered around communication and employee performance, so all your HR processes can be managed beyond the basic tasks.
OKRs and Goals: Lattice’s OKR framework makes it easier for startups to set goals and track progress. It also provides real-time data on employee performance, making it a great tool for developing better strategies and processes.
Compensation Package Management: Benchmark data and customizable compensation packages make it easier to create competitive offers for new employees, an especially valuable feature for startups building out sales teams.
Real-Time Feedback: Lattice enables employees to share feedback and sentiments immediately, which startups can gather and analyze to improve their internal processes and company culture. Startups can also calculate their NPS score without leaving their HR systems.
Performance Reviews and Reporting Automation: Startups can use Lattice to generate a performance report for any employee at any time, making it easy to track progress and keep up with changes. They can use this information to structure their 1:1s and performance reviews right in the platform.
Performance Management + OKRs and Goals ($11 per user per month): All the key features an HR team needs to monitor its employee database for performance and goal-setting initiatives and put employee recognition on autopilot.
Engagement (+ $4 per user per month): Automated surveys and employee feedback mechanisms to refine company processes.
Grow (+ $4 per user per month): Additional features for employee development and career growth opportunities.
Compensation (+ $6 per user per month): Commission and bonus disbursement, automated approval workflows for upper management, comp package reviews, and equity/profit share management.
ADP takes a traditional approach to human resources, but it has always been one of the best HR software solutions available. This award-winning HR software is flexible, secure, and integrated, so a startup can use it for its first hire and keep it around when it makes its 1,000th.
All-in-One Product Suite: Everything an HR team needs to manage its day-to-day is right in front of them with Workforce Now. Payroll, onboarding and offboarding, hiring tools, and benefits administration are all under one roof and accessible whenever small businesses need to make an update or pull employee data. Plus, they’re automated.
Embedded ZipRecruiter Access: Hiring managers and startups growing their teams can take advantage of ADP’s ability to post job openings on ZipRecruiter. This saves them time and energy on every job posting, eliminates plenty of back-office headaches, and dramatically reduces time to hire.
Integrations: HR teams can integrate Workforce Now with their existing financial systems, CRM, and other solutions they already use to keep everything in sync.
Employee Self-Service Portal: Employee self-service is integrated straight into Workforce Now, so employees can access their data and manage their own profiles from any device.
Insights and Intelligence: As the biggest name in HR software, ADP delivers market intelligence other solutions on this list can’t. With robust analytics, human resources insights, and reporting options, startups can make data-driven decisions that improve the entire process.
All ADP Workforce Now paid plans are available on a customizable basis via a quote from the sales team.
Deputy is a scheduling and time-tracking software, so it’s the best HR software for startups with a mobile or hourly workforce. Thousands of businesses worldwide use it, and its intuitive design makes it easy to access from any device.
Scheduling: Employee schedules can be set, automated, and easily reconfigured any time a someone needs to change their availability. Startups can also use the Deputy app to communicate with employees about scheduling issues in real-time.
Native Time Tracking App: Whether it’s a mobile device or desktop, managers, employees, and contractors can easily log their time with Deputy’s intuitive native apps. Deputy can even be downloaded and used without a data connection for field workers who need to track time on their phones.
Labor Compliance Tools: Everything from payroll tax compliance to on-call regulations is handled with Deputy’s comprehensive labor compliance tools. Startups don’t have to worry about whether their policies comply with local laws because Deputy takes care of it all.
Shift Swapping and Vacation Requests: Employees can submit vacation requests and shift swaps in the Deputy app, where managers can approve or deny them from anywhere in the world.
Scheduling ($3.50 per user per month): A centralized application and employee information database to help businesses manage their hourly workforce.
Time Tracking ($3.50 per user per month): Mobile tracking via the Deputy app to ensure every employee is compensated fairly and startups meet labor compliance laws.
Premium ($4.90 per user per month): All the features of scheduling and time tracking rolled into one.
Enterprise (Custom): Training matrices, automated reporting, artificial intelligence analytics, and custom roles and permissions for large and complex businesses.
All plans come with a 31-day free trial.
Culture Amp is designed for employee professional development and engagement. It’s the ideal platform for startups who want to define their company culture and employee experience by putting them first.
Engagement: Culture Amp’s HR software predicts employee turnover, delivers powerful insights to HR managers, creates focus areas, and guides action planning based on employee data and feedback. Employees can use the same platform to rate their own experiences. Meanwhile, Culture Amp monitors engagement across all employee activities.
Performance: Managing team performance through automated goal-setting and tracking, 1:1 workflows, and employee-manager feedback mechanisms ensure communication works both ways. Throughout the process, managers understand their employees’ workflows and can provide tailored coaching that leads to performance gains.
Development: Employees can set their own development goals and receive tailored training to meet them. That way, management can develop employees into the best versions of themselves.
All Culture Amp plans are quote-based, so interested customers need to contact sales directly.
Zenefits has a well-rounded service that would be suited for small to midsize businesses. The features are strong in benefits administration, payroll and talent management.
Onboarding: With pre-defined checklists for onboarding processes, Zenefits makes it easy for a startup’s human resources team to get new hires up-to-speed quickly. Plus, an automated workflow reduces paperwork and any manual processes to help startups save time.
Leave Management: With Zenefits, employees can request time off, managers can approve them, and everyone is on the same page with up-to-date leave information. Employers can also set up a Leave of Absence policy and store it in Zenefits, which can automatically approve or deny any request based on preset contingencies.
Employee Database: Everything from employee data to payroll information is stored securely in Zenefits, so startups can quickly access important employee documents. The platform also stores critical employer documents and helps startups comply with their legal requirements.
Payroll and Taxes: Zenefits automates payroll and tax calculations, so startups don’t have to worry about manual processes or inaccurate calculations. The platform also integrates with the most popular accounting software solutions, keeping all payroll information updated. Best of all, startups can access analytics data showing them payroll cost trends.
Essentials ($8 per user per month): All the basics from one of the best HR software out there, including onboarding, scheduling, tracking, benefits management, and access to the Zenefits mobile app.
Growth ($16 per user per month): Business intelligence that enables startups to look granularly into their people and processes.
Zen ($21 per user per month): Engagement surveys and a centralized online hub for employee collaboration.
Paylocity is a cloud-based human resources and payroll software with the tools required for an end-to-end operation. Companies with well-defined HR functions choosing between ADP and Paylocity might prefer the latter’s modern, easily configurable interface.
Payroll: Expense management, automated direct deposit, integrated tax services, and garnishment just scratch the surface of what Paylocity does well. The payroll software integrates with most major accounting systems, simplifying the process of joining financial data.
Time and Attendance: Employees can check in or out, request time off, and easily track hours in real time—all without paperwork. Managers can approve or deny requests, compile timesheets, and finalize schedules from anywhere.
Human Resources: Document management and employee self-service eliminate the headaches associated with onboarding and open enrollment. The platform also tracks performance, maintains records of employee reviews, and keeps tabs on compliance issues.
Talent Acquisition and Onboarding: You can use Paylocity to create a job posting or use its ATS integration to source talent from external job boards. Candidates can upload documents, fill out forms, schedule interviews, and register for onboarding processes — all within the cloud-based software.
The pricing of Paylocity’s HR software is quote-based, so interested customers need to contact sales directly.
Justworks eliminates the busy work associated with HR services and payroll. The software is designed for entrepreneurs, freelancers, and small businesses who need a reliable HR solution without the overhead of traditional systems.
Online Payroll: Justworks handles all aspects of employee benefits deductions and tax withholdings and allows off-cycle, vendor, and contractor payments at no additional cost. For small businesses and startups that need a streamlined approach, there’s also the option to integrate a powerful time tracking tool, making the payroll process truly seamless.
Benefits: Justworks collaborates with reputable providers to offer top-tier benefits for startup employees, including comprehensive medical, dental, and vision insurance, 401(k) savings plans, and other appealing perks for your small business.
HR Systems: Justworks lets startups access professional HR consultation, effortlessly onboard online, manage PTO, use pre-designed reports, and more through a fully-integrated HRIS system.
Compliance: Justworks makes staying on top of compliance a breeze. It sends automated reminders whenever important documents need to be filed, and there are also tools available to help startups make sure they comply with local labor laws.
Basic ($59 per user per month): Payroll, compliance, benefits, and HR tools.
Plus ($99 per user per month): Access to medical, dental, and vision benefits.
For most startups, Gusto has everything required to run an efficient HR operation. The software is intuitive, feature-rich, and (most importantly) simple, making it an ideal all-in-one solution for most startups’ needs.
Deel is well-suited for a startup scaling abroad. No other tools on this list can handle several companies, employees, and business units across multiple countries like Deel can.