How to Set up Your Startup Free HR Software Stack

Moving Fast and Breaking Only Yourself

Why you need an HR Tech Stack from Day 1

Many companies start off working frantically to build a product or close deals before cash runs out. Once the company passes this stage, there is a period of relative calm, where they relish in early success. Then, everyone gets back to work on growing and optimizing, continuously. Cash is still strapped, but now, there is renewed confidence to grow. These tiny companies feverishly seek to optimize every aspect of the business, but rarely optimize the area of people. True, many small firms don’t yet need a formal HR function. However, the teams themselves, which create the products, close the sales, and carry out the executive strategy, are then lost in the chaos and get overburdened and neglected, leading to turnover in the times when you really cannot afford to lose the key engineers and executors of your business model. By the fast-moving nature of trying to create and sustain a business, you can accidentally break your team!

Some of this can be simply alleviated by putting free HR software systems in place until you can afford to further build out the People & Culture function.

First, stop and ask yourself these key questions:

• How are people in these teams being selected?
• How are they communicating?
• How are they being measured, and how are you keeping these people on track?
• How are you making sure that key people are not planning on leaping ship to another company, taking their knowledge elsewhere?
• How are you making sure that someone can slide immediately into place and pick up where they left off?
• How are you looking to prevent people from burning out from a hostile work environment and a huge workload?
• How are you making sure that people have a solid, frictionless experience when they join your company?
• Finally, how are you making sure that you are not wasting time doing time-consuming tasks?

We would agree that having the owners and the leaders of the business sitting around trying to figure out how to pay employees and contractors is not the best use of their time, right? Then, why have you not automated these tasks already? There are free and cheap tools out there that allow bootstrapping young startups and small businesses to offload their “people” work to other systems, freeing you up to spend your time on things that make your products thrive and your business grow. Here are these systems, which are either free forever, or built on a “freemium” model that actually makes sense because it helps you to scale.

As a general bootstrapping tip, tip: Stay away from free HR software with open API and local download. Developing your own features and maintaining your own servers are distractions when you don’t have the time luxury of building a custom system.

Methodology

Included in the stack of recommendations is software that:

• Are “free forever” or free up to a specific user count
• Are tailored to the way that HR is moving toward in the United States
• Fit within an overall picture of how to streamline the organization
• Geared toward companies that simply cannot afford enterprise level software

Recruiting and Applicant Tracking

This is likely one of the first steps you will take when you first start your company – hiring people to do work that either you don’t have time for or you think someone else should do better than you. This includes sales, accounting, marketing, or software development. Here is my recommendation for a set of free HR software tools you should build into your hiring process.

Handshake

Free sourcing of interns and students. An added bonus here is that sometimes the universities from which you hire from will allow you to use their spaces for interviewing, which solves a potentially expensive problem if you are still very small and working remotely. Participating universities also can hold free recruiter training events on campus.

Angellist

Free sourcing and applicant tracking specifically made with software startups in mind. No frills or custom configurations here, but you will be able to access global top talent and move them through your hiring funnel. It also integrates with Slack to send applications to different slack groups that contain your intended audience for talent. Every startup should already have an Angellist account.

Zoho Recruit

If you are a small business or a startup that is looking for talent in all functions, not just designers and developers, you’d be better suited using Zoho Recruit, Zoho’s free Applicant Tracking System to create job ads, manage the candidate funnel, schedule interviews, and hire people. As an added bonus, you should download and install their resume parsing Chrome browser extension. If you are sick of wasting time printing out and scanning resumes for tons of people, you’re going to want to use this tool starting yesterday.

Note: If you use Zoho for your HR systems, you get to use their document management and e-signing software called ZohoSign. ZohoSign takes the place of the options listed below (with 5 documents per month).

Contract Signing

One of the bulkiest parts of the hiring process is getting documents out and signed by the new people. Luckily, you have free HR software to e-sign documents and send them out very quickly. Create an account on these two systems (as DocuSign and Hellosign both only allow three documents per month).

Check out their sign-up landing pages here:

DocuSign

Hellosign

HR Information Systems

Once you have people on your team, you’ll need to onboard them.

Note: only 12% of employees strongly agree their organization does a great job of onboarding new employees. (State of the American Workforce, Gallup, 2017-2018)

Because the quality of onboarding determines how likely a new person is to stay with your company, you should get this right the first time. While much of onboarding requires touchpoints with other managers and colleagues (one on ones and regular and useful training), some parts of this can be automated and checklist-ed out from day one. In addition, you’ll need a system that will act as the official HR system of record. Start off with one of these free HR software systems.

Zoho People

Use this if you recruited with the free version of Zoho Recruit since you can convert a candidate directly to a new employee from the same user interface, without having to switch systems or use a separate login. Note that Zoho People currently has no Payroll integrations in the United States. If you set up a DocuSign account, you will be able to integrate it with the new hire process when you are setting up the onboarding in Zoho People. Also, use the time and attendance platform that comes with People, it’s pretty solid as a starter system.

Here are the downsides to using Zoho People. It is only free up to 5 users, which means that it only makes sense if you are in a business that does not require too much headcount. In addition, there’s no payroll for the foreseeable future. If you go with Zoho People, use Quickbooks as your Payroll System, as there is a clear integration.

Payroll4Free

I’m recommending this software as your HR information system and as your payroll system. It is basic, but it is free forever. That is until you hit the 25 employee threshold. Is it pretty? Not really, it comes with conspicuously placed advertising (which funds the free plan). Does it get the job done? Absolutely. Core HR paperwork time-wasters are taken care of when you go ahead and set up your accounts in this system.

As a Payroll system, Payroll4Free is competent. One other way in which the payroll can be given away for free and kept sustainable is that the company charges $12.50 per month for Payroll Tax Service and Direct Deposit Service, totaling $25/month total for the full payroll service. You can avoid half of this by using your own bank to handle ACH transactions for payroll (which could be free or charge its own fee, based on your bank). To avoid filing all this tax stuff on your own, I’d recommend paying for the Payroll Tax Service. It is the price of a pizza order for a small team – I’m pretty certain that it pays for itself in recovered time and accuracy. Finally, Payroll4Free charges for every time you screw up or need major help:

• Cancellations
• Adjustments
• Late Batch Posting
• Service Reactivation
• Incoming Wire
• Return of Undeposited Funds
• Major Use of System Training
• Employee Data Setup/Reconfiguration

Payroll

Wave

If you are doing your accounting books in Wave for free, you can maintain your payroll with a 1 Month Free Trial, and then start from $39 per month after. Unfortunately, payroll is such a delicate and complex service that you won’t find a free software for this that actually gets it right. I would not feel right recommending a software that can catastrophically impact your business. Wave has become a solid payroll option, to supplement the free accounting system you get with Wave.

Wave has recently undergone a rebranding and user interface renovation, so the payroll has been vastly improved in both functionality and design. It is very secure and clean, and I highly recommend the accounting + payroll package for companies that are already using the accounting.

Gusto

Are you an accounting firm or business consultancy, and manage client payroll? If so, you have the opportunity to secure 100% free payroll as a partner of Gusto, like Xero. The intent here is that Gusto gains value here from collecting subscription fees on signing up clients to the software, expanding their user base. You get free HR software and get to offer the software, along with your services to your clients.

Collaboration

Slack vs Flock

I have very few recommendations for startup collaboration apps, as they usually clutter up screens so quickly that they become useless as a time-saving software. Use Slack because you can integrate many “best in class” apps into it, from many different business functions, enhancing productivity when you hop over the easy learning curve. Also, in terms of cluttering up the screen, Slack maintains two windows open even when you open a separate thread. Flock is more uncluttered in the main work area, but with all the team communications taking place in one main window without threads, it can get confusing.

Flock can do pretty much everything that Slack can do in terms of free functionality. However, when you set the two side by side, Slack comes out on top in most areas with much richer app integration by far, leaner conversation and reply structure, and more interface customization – all with the free version. Flock, however, offers double the document storage space as Slack with the free plan, but caps the document size at 100MB.  One thing you will have to live without for either of these options is screen-sharing, which is a feature only reserved for paid subscription. With Slack, you can get around this by integrating G-Suite Hangouts.

The last word on Flock – it has a very interesting process automation tool that can design workflows that start with a request form. In this way, you can design any number of superficial workflows, including a very basic internal ticketing system.

Time management

Top Tracker

I highly recommend Top Tracker for time reporting, offered by TopTal. It is the free-forever time management tool that is project-based and allows for breaking down activities into project time. A key feature is the ability to capture screenshots from remote workers and delivering it to you in real time, to ensure that they are working and progressing. There is no catch, but unfortunately, there is no mobile app for Top Tracker, so it is really is for managing time for contractors and freelancers who would be paid by the hour, and regularly log into their laptop. The Top Tracker website is, however, mobile-optimized, so just save the website as an icon on your mobile device in place of an actual app. The desktop time tracker is available on all popular operating systems. There are no integrations to other software systems, but the hour summaries can be exported as PDF or CSV files. Don’t let that deter you from trying it out and seeing if it is for you.

Team Deck

Team Deck is a fairly new software to manage resources. It comes with absence and time clock system, as well as an organizational resource calendar for traditional allocation of people’s time. Don’t be distracted by the lime green interface and the seafarer motif. If you want a time tracker like Top Tracker, but you want an easy view of how your people (up to six users in the free version) are allocating time across an entire team or organization, you’d be better off with Team Deck than Top Tracker. The company also indicates that Slack integration is on the horizon. Note that Team Deck (as of October 2018) only has a desktop time clock app for the Mac OS X, so if you are part of the PC tribe, stick with Top Tracker.

A Sample Startup Free HR Software Stack

Here is a perfect example of a free HR software stack for a tiny startup/small business.

A small business has four employees. They expect to hire 10 people by the end of the year. They are proactive enough to understand that they can use some free HR software to save time and money, and also structure processes since they don’t have any HR person on-staff that can handle these issues. They also don’t know how to calculate payroll tax or want to spend time issuing physical paychecks every week to the hourly employees they expect to have, or twice a month for the four current employees. It doesn’t matter, because they think they should be focused on sales, product, and service (and not trying to become payroll experts), so they can start making real money.

They read this Poprouser post and decided to set up their initial HR software stack. They modeled their free HR software stack based on our “blackboard” below.

As pictured above, the HR information system is central to the stack. The Applicant Tracking system, however, will be the focal point while the company is conducting the hiring process needed to bring these people on board. The interviews will be conducted via Google Hangout, removing the need to find some professional space from which to conduct the interviews. In Miami, renting a meeting room for candidate interviews can range anywhere from $25 to $125 per hour, and creates an inconvenience that slows down the candidate experience.

Hiring

When the company is ready to hire, the offer letter will be sent out to the candidate using a personalized welcome template email, and have the candidate e-sign the employment agreement and fill out the W-4s after acceptance. Acknowledgments of the employee handbook will be e-signed as well, and direct deposit for payroll will be set up in the HRIS-Payroll system, Payroll4Free. The onboarding checklist will be completed in the HRIS and the manager will schedule the first day in Google Calendar. New hires will be notified in Slack of what to bring on day 1.

Payroll

Skipping ahead to payroll, the company will take a few minutes to review payroll near the end of the pay periods and execute the process, talking about 10 minutes from the start of the process to the finish (cutting about 3 hours from the payroll execution per period). The hourly employees who work in the field or remotely will be entering their time regularly against a specific project. They will be paid according to the hours reported in Payroll4Free that are pulled from the weekly time report. The contractors will enter time the same way and can be paid out of Payroll4Free. When it comes time to record the payroll journal entries in the accounting system, it’s already taken care of, since the payroll transactions can be fed via integration into the accounting system, which was determined to be Quickbooks before the company started gaining traction. 1099s can be issued out of Quickbooks or Payroll4Free.

Core HR Tasks

Goals are communicated regularly on Slack, with the team using Slack to keep each other up to date on their wins and losses while they are working on the products or closing sales, and Google Docs are shared on Slack. At this point, they are using personal Gmail accounts, so Slack is how they are able to connect their documents and spreadsheets using the free version of Google Drive. They also happen to use Slack to request and approve paid vacation, and this was an unintended but delightful byproduct of their deep and quick user adoption of the collaborative system. The value of creating an HR software stack, even if free and lightweight, provides value that is lasting and undeniable.

In Conclusion

As you can imagine, there are many different software options that use the freemium model, in attempt to grow their user bases and eventually convert them to paid subscribers as they scale, and the product becomes “stickier” with use. However, the assumption with these recommendations is that you will likely outgrow them. We want you to outgrow them. But when you are just starting out and need to move quickly and cheaply, the software stack needs to allow you to be just that – nimble and without distractions.