Any administrator can create a new user by visiting (or by clicking on Setup | Users then the New button).  You need to enter their surname (forename can optionally be added), select their Organisation and add their work email.  When you save the record they will be sent an email telling them to create a password.  They need to do this within 3 days, or the link in the email ceases to function.

Admin Users

To make your user an Administrator (which will mean that they can also create new users for their organisation and below) visit the security tab and add the admin role to their record.