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3 Things HR Software for Startups Needs to Have

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A few months ago, Capterra played a little April Fool’s Day joke. We made up an entire new category of software—Unicorn Management—and wrote blog posts and software reviews as if it were all legit.

Software examples included LaCroix inventory management (LIMS) and one-upsman-y employee benefits software, because we all think we’re hilarious. (I especially think I’m hilarious, so you should totally read my fake article about fake software.)

Your startup may not have achieved “unicorn” status (yet), but if you want to be successful, you’ll likely rely on a variety of business software tools to help you along the way. Chief among these is HR software, which may be one of the most important tools you’ll rely on as you take off.

What makes HR software for startups different?

There’s no reason general purpose HR tools won’t work for most startups. But there are particular features and capabilities offered by certain HR platforms that are especially helpful for startups.

Three features that are especially important for startups are: a low cost, modular feature packages, and the ability of the software to grow with your business. What exactly do these features mean for you and your business? Read on to find out.

1. Low cost; high value

“Low cost” may sound self explanatory, but it can actually mean different things to different people with different budgets. And if you’re unfamiliar with HR software in the first place, it’s hard to know when an ad claiming a product is “low cost” is legit, and when it’s just a marketing ploy.

When deciding what budget to set for HR software, consider these factors:

  • How many employees do you have?
  • How many of those employees will be accessing this software? If it’s only a handful, you’ll get more mileage out of a per-user price. On the other hand, if you have 200 people on staff and everyone needs a login, a flat annual fee might be cheaper for you

Rolly-chair-ing in money

Be on the lookout for surprise price tags, including extra fees for software integrations and a charge to call the help desk. They might not be much, but you never want extra charges to catch you by surprise.

“Free” is a pricing option that definitely sound too good to be true, but in the software world, free might have fewer catches than you think. Consider open source software, which is often free—albeit at the price of you doing your own upkeep and system management.

Check out our list of free and open source HR software options to learn more.

2. Modular application packages

“Modular” means there are multiple interchangeable pieces in a software platform’s design. You can also think of it as a “flexible” feature package, but I like the image that “modular” conjures up—of software as a set of building blocks you can interchange and use to build your ideal system.

Like Legos!

Modular packaging means you’re not stuck with one-size-fits-all software. Instead you have the ability to take the features you need and opt out of the ones you don’t, often with the choice to add or subtract different features later on, as needed.

This is especially helpful for startups, as the changing needs of a growing business calls for different features at different points (and different price points).

Look for software that will allow you to add on additional features when you need them, for example, gamification for engaging a large employee pool, or an in-app training program for a company too small to need dedicated training software. But, perhaps more importantly, look for a system that lets you skip the features you don’t need.

Make a list of the features you really need and the features you don’t need, but would be nice to have. Let that list guide you.

I’ve made a helpful list to explain the features talent software calls for, and you can check that out right here.

3. Built in scalability

An HR software platform’s ability to grow with your business often comes in the form of a tiered pricing package. In general, though, scalability means the software is designed to handle an increasing number of employees with the growth you’ll experience as your startup takes off.

Your business should grow like this plant

Many software packages offer tiered systems that can grow with you, but it’s important to really look at the options offered at each level and consider whether those packages fit your company’s needs.

Not all of these packages are created equal. Once you start looking, you might find that one vendor charges extra for a feature that is available as standard from another. But, then again, if that feature isn’t that important to you, does it matter? What does matter is that you don’t get stuck paying for a feature you’ll never use, so keep an eye out.

Finding the right HR software for startups isn’t complicated

All you need to know is what you’re looking for and where to find it.

Still trying to figure those things out? Check out these articles about HR and startup tech here:

And then browse through Capterra’s talent management software directory to find your perfect match.

Looking for Talent Management software? Check out Capterra's list of the best Talent Management software solutions.

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About the Author

Halden Ingwersen

Halden Ingwersen writes about HR and eLearning at Capterra. She’s a graduate of Agnes Scott College and a TEDx presenter. You can follow her on Twitter @CapterraHalden, just don’t get her started about her zombie survival plan.

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