10 Best Free HR Software Tools for Startups & SMBs (2024)

The benefits of using HR management software are substantial, but there are many common mistakes when buying and implementing a new tool that you should consider at every step of your search. We list them below along with ways to avoid them: 

• Rushing the decision: Often, teams get carried away by the look of an interface, good reviews, and functionality of a product, while neglecting their own needs. They then realize that their new shiny tool is lacking a key feature when it’s too late.
  Design and reputation are important when vetting any software, but they must be considered at the service of a broader goal. Any software decision must be preceded by the proper identification of a team’s needs, past issues, the main concerns of the workforce, and the overall objectives of the company. Are you even sure than an HRIS is the tool you need?
  
• Lack of awareness: This is probably not your case because you’re reading this, but some HR managers tend to choose a tool without fully understanding the kind of features available and what they do. It’s a common situation to be looking for new software systems to address one or two major pain points, without considering that the same decision could alleviate lots of other HR processes.
  
• Not consulting teammates: This can be disastrous when implementing all kinds of tech tools, let alone HR software, as it's one of the main reasons tech projects fail. Employees won’t need the same features as managers, and they’ll each weigh importance on each feature differently. Checking with other employees in every department can be a painstaking process, even in a small business, but in the long run, it’s worth it. Even if the software is free, having to change vendors after implementation can be quite costly. ‍
• Overlooking security & support: Just because there’s a budget constraint, it doesn’t mean that these important aspects should be ignored in favor of whatever software can do the most for the least. Often, and particularly among the vendors we’ve selected for this guide, the handling of sensitive employee data and customer support can still be excellent. However, as with any other feature, it should be considered with your team’s particular needs in mind.

The main benefit of having the right HR software at the core of your department is that everyday processes can be streamlined or even automated, freeing up time to focus on more strategic efforts. If an HR manager is not consumed by repetitive tasks like filing paperwork or keeping track of PTO balances, he or she can focus instead on finding ways to increase employee satisfaction, improving retention rates, or working with other managers to find the best possible fit for each opening. 

In more quantitative terms, recent research from Greenhouse, an Applicant Tracking System, shows that automating the onboarding process can reduce the time usually invested by 50%. If you consider the hourly rate of this HR professional at $33 USD per hour and contemplate that an average onboarding takes 11 hours and is normally done for 30 new employees per year, you’re talking about $5,450 in annual savings thanks to the automation. 

All of the software that we’ve discussed here is completely free in some form or another. Some of them put a user cap of either 5 or 50 employees, while others have free unlimited basic plans, or cost nothing because they are open source. 

Below, you can compare each of these options according to their pricing model to see just how free are they, what’s their catch, and which one does fit your needs: 

In case you’re new to HR software, what kind of features should you prioritize in your pick? Although these are free, it might not make sense to base your selection solely on the number of features, while certain options could work better in regard to user experience and integrations, for instance, even if their feature list is shorter. 

HR management software can be the difference between overstaffing the HR department, perhaps even the company, or making all HR processes as productive and efficient as they can be. However, to achieve that ideal scenario, your HR tool of choice should have all the features you need or it’s going to be back to square one. 

In that spirit, let’s take a look at the common features that most HR professionals consider must-haves: 

1. Employee management: This feature will have the employee database at its core and is where you can keep track of most things about the relationship of an employee with the company. A high-end employee management feature should include self-service, meaning that the employee can also access and update his or her information.
   
2. Performance Reviews: Since every employee’s information should already be within the HR system, it makes sense for their evaluation to be managed there as well. This tool should allow feedback to be gathered from both parts and is also where new goals can be set for workers & teams.
   
3. Payroll Processing: The best HR software usually comes with a fully-functioning tool to manage payroll and keep track of salaries. However, since payroll and accounting practices can vary depending on your location, many vendors prefer to sit this one out. If your HR tool doesn’t come with this function, it’s imperative that it can integrate easily with a payroll processing system.
   
4. Recruitment & Onboarding: If the idea is to concentrate all employee data in one place, why not handle recruitment from there as well? Many HRMS come with a basic Applicant Tracking System that can do everything from publish a job posting to onboarding a new employee. ‍
5. Time Off Management: Any HR professional knows that keeping track of employee schedules and time-off is one of the department's main functions. The HR solution should have a module or app that addresses this as well, whether it’s through time-tracking (if you need that), attendance-keeping, as well as eliminating complexities from the leave request process. Bonus points if it also comes with a calendar that every employee can consult in order to know who’s off on a given day.

So let’s say you’ve selected 1 or 3 options for your new HR management software that will likely fulfill your business needs. Then, the next step would be to give them all a try and see for yourself which one works best. Now, while most of the tools we’ve listed here are extremely easy to get started with (as in, just create a user, a password, and use the web version), most of them also give you the option of requesting a demo.

Whether you’re asking for a demo or just using the software for the first time, it’s wise to step into it with a game plan and some key questions in mind. For this, you should first decide the needs of your organization, the key tasks and HR processes that need to be automated or managed, and any particular integrations you may require.

After doing such a self-analysis, you should come up with a list of questions like the following.

• Which features stand out as the ones I need to try out?
• How seamless will the integration between this tool and our current tech sack be?
• Will other people on the team find value in using this tool?
• In what ways can this tool enhance candidate experience?
• What are the sticking points that would make me or my colleagues apprehensive about transitioning to this platform?
• How well does the vendor manage information security concerns?
• What initial insights can I draw about the quality of customer support? Does the platform provide a helpful help center with high-quality support articles?

Once you select the HR system that is right for you, the implementation process will vary depending on their operation. If you’re talking about an open-source solution like OrangeHRM or Sentrifugo, the process will likely entail a lot of communication and collaboration with their team. On the far other end of the intricacy spectrum, a cloud-based tool like Freshteam or SnapHRM gets you up and running within minutes. Each vendor page will explain their particular process in much more detail, and many will call or email you shortly after you’ve set up an account or asked for a demo in order to address questions or solve any issues you might be having.

If you'd like to read up a bit more on what to do after implementing a new HR tech solution, including proved processes and tips from an expert, we recently put together a brief guide to an HR software implementation.

What is free HR software?

Free HR software is any tool or solution that aims to improve the functionality of a company’s HR team.

What does HRIS stand for?

HRIS stands for Human Resource Information System.

What does HCM stand for?

HCM stands for Human Capital Management.

What does HRMS stand for?

HRMS stands for Human Resource Management System.

What’s the difference between HRIS, HCM, and HRMS?

On a surface level, there isn’t a huge difference between HRIS, HCM, and HRMS. They are all people management systems for companies. However, there can be some subtle differences. An HRIS is an all-encompassing in-house software for managing people, procedures and policies. An HCM has all the features of an HRIS, but often includes talent management capabilities. An HRMS has all of the features of an HRIS and HCM, but often includes payroll and time and labor management capabilities.

Why use free HR software?

Reasons to use free HR software include: saving time with automation, improving employee experience, improving employee performance, increased compliance, better organization, streamlined hiring, better business intelligence, and workforce management.

What are some key features of free HR software?

There are many key features of free HR software, such as: employee self-service portal, time and attendance management, onboarding capability, custom reporting, benefits administration, employee database, recruiting functionality, training and development management, company document storage, and compensation management.

If you’ve made it this far, then it’s likely that you already have a couple of options in mind but aren’t quite sure which free software to settle on yet. The best advice we can offer here is to set up an account with them and try the tool for yourself. You really can’t tell if some of the features and user experience will work exactly as you’d like them to until you start using them. 

Fortunately, these are all free and take minutes to set up, so don’t feel bad or awkward about creating an account with several vendors, even talking to some of their sales representatives, and then sticking to one choice. In the end, this decision will probably shape a good part of every day of the following years for your HR department, so it shouldn’t be taken lightly. 

If you're in need of a spreadsheet to help you organize this process, be sure to try our HR & Recruitment software buyer organizer. It's free ;)

Lastly, remember to check with each of your internal stakeholders, making sure that their questions are addressed as well, and even demoing the product with them. The decision will be much wiser if it's enriched by the input of the whole team.

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