Your HR Tech Stack: How to Choose the Right Tools As You Scale

By Kat Rumbles on August 22, 2019

At Two Sigma Ventures, we invest in startups (from seed stage to Series B) that use data science and advanced engineering to solve problems across a variety of industries. Leveraging the expertise of our team and Two Sigma, we try to help the startups in our portfolio make the most sound decisions they can about the software they use. This includes everything from technical architecture reviews, to recommendations on the internal software that powers the various aspects of their business, like human resources. In our work, we are continually evaluating and experimenting with new HR tools to help our portfolio companies make foundational decisions about their HR tech stack. 

Some of the questions we hear from our early stage portfolio companies are, “How do I choose the right technology that will meet my company’s HR needs (and budget) now, but will also scale with us as we grow?” Or, “What do I need to implement now and what can I hold off on adding until I have more resources to support HR?” While helping our CEOs and founders answer questions like these, we’ve learned a lot about which HR tech tools work best depending on a company’s size and priorities. We’ve also learned a few pointers along the way about how to implement and integrate these tools into your HR workflow, which we’re excited to share here today too.

This is a crowded space with lots of products available, each with unique features tailored towards a different customer segment. To help sort through the noise and surface the best tools and software for companies of every size, we surveyed 50+ startups in our portfolio to find out (i) which HR tech products they’re using, (ii) what they’re most excited about, and (iii) what tools they find most valuable. This isn’t meant to be a comprehensive list of options or a full market landscape, but rather a curated list of the top-rated HR tools that we’re seeing in our portfolio and the products we recommend to startups. 

Core HR: Data, Benefits, and Payroll

Choosing your HR tech stack doesn’t have to be super complicated. Complete the steps below to figure out which tools are right for your business.

Step One: Choose an HR Information System.

Whether or not you have an HR function in place at the moment, the first technology you’ll likely need to invest in is an HR Information System (HRIS). This is your employee database that will feed data to a variety of other tools and processes (think: payroll, benefits, etc.). One of the first things Russell Lobsenz, VP of People at our portfolio companies, Socure, did when he joined the identity verification startup was move his team from an Excel spreadsheet to BambooHR. In his words, a good HRIS is a “must-have.” Being able to track changes to employee status (pay, job changes, etc.) all in one place, having better reporting capabilities, and providing a self-service option for both employees and managers were some of the initial benefits. “Perhaps most importantly,” he added, “our HRIS is now regarded as the single source of truth for employee data.”

Tip: Because this will be your central repository for employee data, you want to make sure your HRIS integrates with the other HR tools you may want to use in the future.

  • BambooHR: This HRIS also offers a variety of services beyond your traditional employee database capabilities. BambooHR also provides hiring support and has an applicant tracking system, onboarding and offboarding tools, benefit tracking, electronic signature function, and more. BambooHR is ideal for small to medium sized companies. Pricing varies based on the package you choose, so contact their sales team to learn more.
  • Workday: For the biggest startups in our portfolio (500 employees and above), we recommend Workday. While they are a longstanding player in the space, we continue to get positive feedback on their services. Their HRIS is easy to use for both the employee and the employer. They also offer comprehensive HR features to help with the following: recruiting, talent management, learning, compensation, benefits, payroll, paid time off, and expenses. Beyond HR, Workday also offers tools for business planning and financial management. Pricing structures vary by company, so reach out to their sales team for a quote.

Step Two: Do you want to work with a PEO or a self-service provider?

A Professional Employer Organization (PEO) is an outsourced solution for your HR, benefits, payroll, and compliance. Rather than making all of the decisions and executing these processes yourself, you enter a co-employment with your PEO. They become your employer of record and therefore take on the responsibility of your company’s HR. This means your PEO will run payroll under their tax ID numbers (your employee’s W2s will say the PEO’s name on them instead of your company’s name). Working with a PEO also means they take on some of the risk associated with being an employer, and thus many PEOs require you to use their procedures, policies, or even employee handbook. 

For early stage startups that have complexities in their hiring processes such as international offices and employees, a PEO can take away some of the stresses of managing HR, payroll, benefits, and compliance. However, as your business grows, a PEO may become more expensive than managing all HR, benefits, and payroll in-house. Moving away from a PEO can also be tricky, which is why we recommend starting with an HRIS. You’ll want to have all your data in one place if you end up switching to a self-service provider down the line. 

Professional Employer Organizations (PEOs):

  • Justworks: Our portfolio companies highly recommended Justworks as a PEO. They have two packages available: one with access to benefits included and one without ($89/mo per employee and $44/mo per employee for 25-99 employees, respectively). In addition to payroll and benefits, they also offer services in paid time off management, onboarding, harassment prevention and inclusion trainings, 24/7 support, commuter benefits, and more. 
  • TriNet: This PEO of the most well-established players in the market. They specialize in partnering with small to midsize businesses and offer services in HR expertise, benefits, payroll, and more. Trent Blanchard, VP of People Operations at another one of portfolio companies, Security Scorecard, says working through TriNet allows his team to offer better benefits rates and options. “I personally love TriNet. They are very customer centric.” Their prices vary largely based on the number of employees and the services you opt to use, so schedule a call to find out more. 

Self-Service Benefits and Payroll Providers:

  • ADP: This HR management software company of the best known (and biggest) payroll providers on the market. They also offer benefits, both through a PEO and independently. While working with a large enterprise can provide security to a small startup, some portfolio companies have reported their customer service can be unreliable. 
  • Gusto: This benefits and payroll platform is affordable and scales well as businesses grow. Starting at $6/mo per employee (up to $12/mo per employee plus a $149/mo fee), it’s an affordable option for companies, and their three different plans allow businesses to pay for the features they plan to use. We’ve also heard that Gusto is easy to use and integrates nicely with other HR tools. Couple this tool with something like BambooHR, and you’re more prepared than most.

Talent Acquisition: Choosing a Platform as You Build Your Team

If you’re hiring like many of our startups are (as fast as possible!), having an Applicant Tracking System (ATS) is a necessity. It will allow you to track all candidates throughout their hiring process, create and manage automated notifications to candidates throughout the hiring process, and run valuable reports.

  • Hire by Google: A handful of our smaller teams that are using G Suite for email or storage recommend Hire. It integrates well with other Google tools and makes emailing candidates and scheduling interviews easy. The analytics aren’t as strong as the other two recommended ATSs, but it’s also more affordable; rates start at $2,400 per year for up to 50 employees.
  • Greenhouse: This is the most popular ATS in our portfolio. Our teams generally like the layout and the reporting/analytics it offers. It’s a pricier option for smaller companies with rates starting at $6,600 per year, but according to our portfolio companies, their customer service is the best in the business. Greenhouse also offers onboarding and CRM add-ons (priced separately). 
  • Lever: Clients of Lever seemed equally satisfied with its functionality and its reporting abilities. Lever also has some interesting bonus features, including “Social Referrals,” which they claim “boost employee referrals with trackable social links”. While their rates start at $3,500, companies need to purchase the higher tier option to integrate Lever with their HRIS and other HR tools.  

Tip: Incorporate steps to remove bias from your hiring process.

Talent acquisition tools will allow you to keep track of candidates from the time they enter your pipeline through the offer process, but it’s important to take additional steps to ensure all candidates have a shot at making it through the process. To ensure diverse candidates are attracted to your job description, consider using a tool like Textio, which scans your job descriptions for potentially bias language. As for the rest of the interview process, make sure you standardize your interview process and questions so that all candidates have the same interview experience and are evaluated against the same criteria. Partners like Paradigm can help review your interview process and help eliminate areas where bias might be affecting hiring decisions.

Talent Management: Tracking Employee Engagement and Performance

While your HRIS and your ATS are likely “must-haves” early on, many teams hold off on performance and engagement tools until their teams are a little bigger, when they’ve seen adoption across the company in their first couple of HR tools. “It’s easy to get sucked into the marketing hype around a shiny new tech solution only to implement before the necessary upfront work has been done to ensure adoption and engagement. In my opinion, introducing tech iteratively, building on existing tools, leads to better adoption,” said Russell Lobsenz. 

  • Lattice: When the time comes for you to start systematizing team and individual performance, Lattice is the vendor we recommend. In addition to a traditional review feedback cycle, Lattice connects day-to-day successes and challenges to structured annual or bi-annual performance reviews. They offer tools for tracking tasks at regular 1:1s, offering both praise and feedback to colleagues, managers and direct reports, and setting team and individual goals. Rebecca Price, our portfolio company Enigma‘s VP of People, implemented Lattice recently and said it was easy to set up and navigate. At 120 employees, they wanted to increase feedback shared. “We loved Lattice’s functionality around gathering, capturing and giving feedback both publicly and privately.”  Lattice starts at $11 per employee.
  • CultureAmp: For capturing and benchmarking people ops data (think employee engagement, employee turnover forecast, etc.), we would recommend implementing Culture Amp. Their platform allows clients to use tried and tested survey templates that are backed by research and then benchmark their results against companies of similar size and function. Finally, they have built-in reporting tools that are easy to use and comprehensive. Pricing starts at $3,300 per year for companies between 50 and 200 employees. 

Interested in learning more? 

This is just a start. Just like other aspects of your business, your HR needs may grow or change over time. However, we hope implementing scalable tools early on will save your company time and stress in the long-term. We’ll be sharing more on what HR data to capture in the coming months. In the meantime, feel free to drop my a line at

The views expressed herein are solely the views of the author(s), are as of the date they were originally posted, and are not necessarily the views of Two Sigma Ventures, LP or any of its affiliates. They are not intended to provide, and should not be relied upon for, investment advice.