Best HR Software for Startups

The Milestone Team March 4, 2024
best HR software for startups

Where would your startup be without HR? Your team would be less likely to stick around, less efficient, and could even cross into tricky legal territory. HR is vital to the success of any business. But for your HR to succeed, you need to invest in the right software and HR tools.

In this blog, we cover how to look for the best HR software and how outsourced HR for startups can help. 

Which HR Software Is Best for Startups?

The best HR software for startups enables your team to complete essential HR tasks more efficiently than before. The “more efficiently” may seem obvious, but if you’ve worked with software before, you know that increased efficiency isn’t always the result. Steep learning curves and an ever-growing tech stack can work against your team instead of for it, leaving you with frustrated employees instead of better results.

Which HR Software Is Best for Startups?

What the right HR software should do is consolidate the amount of platforms your team has to deal with. After all, there are a lot of necessary roles for your HR team to fill, including:

Providing Monthly HR Support:

  • Employee onboarding and offboarding
  • Employee/employer relations
  • Exit interviews
  • Employee handbook development and distribution
  • HR compliance monitoring
  • Benefits, COBRA, 401K, and leave administration
  • Unemployment claim administration
  • Annual personnel file audit
  • Labor law compliance

Spearheading Strategic HR Initiatives:

  • Total rewards management
  • Talent acquisition and retention
  • HR assessments
  • Providing learning and development opportunities
  • Performance review coordination
  • Employee engagement surveys
  • Stay interviews
  • New manager playbook creation
  • Quarterly business reviews
  • Fostering a productive and inclusive company culture
  • PEO unbundling

Performing Payroll Services:

  • Payroll administration
  • State and local registrations
  • System selection and implementation

While it’s important to keep your tech stack to a manageable amount of programs, a comprehensive HR software solution will still need multiple programs to function. There are a lot of options on the market, and there isn’t a one-size-fits-all fix. That’s why our experts are ready to help you make sense of your options and choose the right HR software for startups and small businesses to improve your current situation. Find out more what is the role of HR in a startup company?

What Are the Biggest HR Challenges for Startups?

The biggest HR challenges for startups have to do with assembling the best people for the job and doing so with limited resources. People are everything in your organization, which is why there’s an entire profession dedicated to helping your people succeed. But finding the right professionals to add to your team—and getting them to stick around—isn’t always easy.

Startups offer potential employees a chance to be a part of the next big thing and contribute meaningfully to the early success of a business. However, job seekers also have the option to work for established corporations with competitive salaries, health care packages, and PTO. In times of economic uncertainty, it can be even harder for startups to attract talent when competing with established businesses (according to Harvard Business Review).

What Are the Biggest HR Challenges for Startups?

That’s why it’s so important to have HR team members who know how to make your startup stand out to job seekers. There are a lot of knobs to turn, and HR professionals can adjust the following to connect with more candidates:

  • Compensation
  • Benefits Packages
  • Perks
  • Job Posting Platforms
  • Outreach Methods

The job isn’t done once a new hire has signed their offer letter, however. In a highly competitive market, employee retention is another challenge that startups have to contend with. In fact, major publications like U.S. News & World Report recommend that employees switch jobs every one to three years. That’s bad news for businesses. According to LinkedIn, it can cost anywhere between 33% to 300% or 400% of an employee’s salary to replace them.

Your HR team is responsible for pursuing initiatives that encourage your team members to stay with your organization. To do so, your HR professionals will manage:

  • Company Culture
  • Employee engagement tools
  • Performance Feedback
  • Compensation Increases
  • Advancement Tracks
  • Professional Development Opportunities

If your team doesn’t have the resources to recruit and retain top talent, it’s time to look for new HR solutions. Reach out to our experts to see how fractional or virtual HR services can supplement your current efforts.  

What Do Small Businesses Do for HR Software Solutions?

All too often, small businesses with limited resources leave critical HR tasks to leaders and other team members who specialize in other fields. You wouldn’t hire a roofer to fix your car, so why leave recruiting to your CEO? As we mentioned, limited resources are typically what restricts a small business’s ability to properly invest in its HR systems. However, outsourced HR solutions can give your organization the best of both worlds: best-in-industry expertise at a cost that makes sense. 

What Are the HR Priorities in a Startup?

The HR priorities in a Startup are:

  • Recruiting and retaining top talent
  • Managing payroll
  • Ensuring compliance with local, state, and federal regulations
What Are the HR Priorities in a Startup?

While all HR functions are important, the above priorities are necessary for your business to run. You need people to get work done; you need to pay your team to keep them around, and you need to stay within the bounds of the legal system to avoid fines and restrictions.

Other critical HR functions include:

  • Communicating safety protocols and conduct policies
  • Optimizing employee performance
  • Partnering with contractors

Fractional HR services help businesses like yours reprioritize your efforts without throwing your budget out the window. Contact us to learn more. 

What Are the 5 HR Systems?

The five types of HR information systems are:

  • Operational Systems
  • Strategic Systems
  • Tactical Systems
  • Comprehensive Systems
  • Specialized Systems

These systems are designed to make the completion of HR tasks more efficient by automating routine processes, storing employee data in a central location, and more. Let’s take a closer look at the specifics of each HR system:

  • Operational systems help with many of the day-to-day HR responsibilities. For example, performance management software that tracks and categorizes employees by key metrics falls into this category.
  • Strategic systems can be leveraged to achieve specific goals, like expanding your team. These software programs can help analyze gaps that need to be filled. They can also assist in developing recruitment schedules and other tasks.
  • Tactical systems help organizations find ways to optimize their resources. Often, this software helps to fine-tune compensation and benefits packages to motivate current employees and attract new team members.
  • Comprehensive systems serve as a central storage point for employee information that could apply to a wide variety of situations. As companies grow, comprehensive systems can connect to more specific programs to automatically keep data current.
  • Specialized systems also primarily store data, but they are much more limited in scope than comprehensive systems. These systems are ideal for smaller organizations that have less data to store because they are more cost-effective than comprehensive systems.

Why Do Small Businesses Need HR Software?

Small businesses need HR software to stay organized. Disorganization in HR creates inefficiencies and frustrations that interrupt other vital processes in your business. Therefore, the best HR software for small companies focuses on sorting data into useful categories. Software should also serve as more than just a database; however, these programs should make it easier for your team to leverage that data.

For example, the best HR and payroll software for a small business doesn’t just track how much you need to pay your employees and when; it also enables you to deposit paychecks right into their bank account!

Why Do Small Businesses Need HR Software?

Is There Free HR Software?

There are free HR system for a small business options, but business owners should be careful when using these platforms. While free programs are enticing because of their low financial cost, they can wind up costing you when it comes to time. This is because most free programs come with limited features. When you decide to upgrade, you may need to switch platforms entirely to get the features you need to be successful. Unfortunately, switching platforms is a headache for you and your employees as you transfer data and processes and learn a new system.

That’s why the best free HR software for a small business also offers premium tiers. That way, you can upgrade when you’re ready without starting over from scratch. At Milestone, our experts are ready to help you find the best HR software programs for where you are today and where you’ll be in the future. Call today to get started.

How Do I Start an HR Plan for a Startup?

For startups seeking to start lean without sacrificing key functions, outsourced HR services offer a welcome solution. By partnering with a third-party provider, you can benefit from as much—or as little—help as you need. Whether you need an extra hand to polish employee conduct policies or you want someone on standby to ensure legal compliance, our team is ready to help you. Oh yeah, we’re also whizzing at HR software for startups.

How Do I Start an HR Plan for a Startup?

Milestone: Impactful HR Services for Startups

HR keeps your startup’s wheels turning. Without proper HR systems in place, you’re bound to stall out. If your business isn’t equipped to efficiently handle crucial HR responsibilities, it’s time to give the experts at Milestone a call. When you work with us, you get a complete HR solution, including:

  • Experts in your industry and business stage
  • Partners who truly get to know your business and team
  • Transparent pricing
  • No long-term contracts

We can’t wait to see how our team can help you.

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