The ‘One HR Person for 150 Employees’ Disaster: How SMEs Can Stop Pretending and Start Sharing.
The ‘One HR Person for 150 Employees’ Disaster: How SMEs Can Stop Pretending and Start Sharing
Introduction
Figure 01: SMEs Can Stop Pretending and Start Sharing
The 1:150
Ratio Is a Crisis
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Figure 02: The 1:150 Ratio Is a Crisis
You might think it’s fine. But
let me ask you a question: “How many of you have an HR department that
feels like it’s drowning?”
You’re not alone. A
staggering 60% of HR professionals are working beyond capacity, and over
half say their departments are understaffed (AIHR, 2025). The Society for Human
Resource Management (SHRM) reports the median HR-to-employee ratio is now 1.98
per 100 employees (SHRM, 2025). For a 150-person SME, that means you’re
missing at least two HR people. And in Sri Lanka, the problem is even more
severe. One study found that two-thirds of SMEs adopted fewer than three formal
HR practices, and one-third adopted none at all (Wijesinghe, 2024). For these
companies, HR is a luxury they can’t afford.
Why This
Happens
Why cannot most Sri Lankan SMEs
afford proper HR? Money. For a typical 50 person SME, a full time HR salary
plus benefits represents a massive monthly cost. Small firms operate on tight
margins. Every rupee counts. HR often feels like a luxury.
But doing nothing is even more
expensive. Research confirms that digital HR tools offer significant benefits
to SMEs, including improved efficiency, better decision making, and enhanced
employee engagement (Buddhika, 2025). Yet without proper HR infrastructure,
SMEs remain trapped in a cycle of low productivity and high turnover.
The theory behind shared HR is
Resource Dependence Theory. A study on small professional service firms found
that organizations lacking critical resources form relationships with other
organizations to acquire them (Nolan and Garavan, 2019). When you cannot afford
your own HR person, you team up with other companies to share one. Three small
businesses each paying one third of an HR salary get full time expertise at
part time cost.
The
Solution: Shared HR Consortia
YouTube
Video 01: Shared HR Consortia
So, what does the solution look like in practice? A group of three to five non-competing SMEs pool their resources to hire one skilled HR manager. That one person handles compliance, recruitment, employee relations, and basic wellbeing for all the companies. Each firm pays a fraction of the cost of a full-time hire.
The benefits are proven.
According to NAPEO (National Association of Professional Employer
Organizations), businesses using shared HR models save an average of $1,775
per employee per year, with an ROI of 27.2% just on cost savings (NAPEO, 2025).
Beyond the money, these models improve staff retention, reduce consulting
costs, and give small businesses access to expertise they could never afford
alone (StepUp BC, n.d.).
Examples in Sri Lanka
Is anyone doing this in Sri Lanka? Yes.
Infomate Private Limited is a pioneer in shared services in
Sri Lanka. They offer comprehensive HR services including payroll processing,
management of EPF and ETF deductions, and compliance reporting (InfoMate,
2026). A team of qualified personnel handle all compliance matters for multiple
businesses.
hSenid Business Solutions offers PeoplesHR Outsourcing which
allows SMEs to outsource all or certain parts of their HR functions
(MarketScreener, 2025). The company also offers PeoplesHR Turbo specifically
for small and medium enterprises.
These examples prove that shared HR is already happening in Sri Lanka.
Figure 03: How to Build Your Own Shared HR Consortium
Conclusion
The one HR person for 150 employees model is not a badge of
honour. It is a warning sign. Shared HR consortia are a practical, evidence
based solution already taking root in Sri Lanka. They reduce burnout. They cut
costs. They deliver strategic HR support that SMEs deserve. So here is my
challenge. Reach out to two or three fellow business owners in your network.
Ask them a simple question. What if we solved our HR problems together? The
answer might just save your sanity and your business.
- AIHR (2025) ‘The Ideal HR to Employee Ratio: What It Is and How To Calculate It’, AIHR Digital, 18 July. Available at: https://www.aihr.com/blog/hr-to-employee-ratio/ (Accessed: 19 April 2026).
- Buddhika, Y.P.A.S. (2025) ‘The digital transformation of human resources: a conceptual framework for small and medium-sized enterprises (SMEs)’, Journal of Human Resource Management Perspectives, 10(2), pp. 100–120.
- InfoMate (2026) ‘Associate - Payroll Services’, John Keells Careers. Available at: https://careers.keells.com/InfoMate/job/Colombo-Associate-Payroll-Services/1329371166/ (Accessed: 19 April 2026).
- MarketScreener (2025) ‘hSenid Business Solutions PLC Company Profile’, MarketScreener. Available at: https://se.marketscreener.com/kurs/aktie/HSENID-BUSINESS-SOLUTIONS-130890361/foretag/ (Accessed: 19 April 2026).
- NAPEO (2025) ‘Frequently Asked Questions About PEOs’, National Association of Professional Employer Organizations. Available at: https://napeo.org (Accessed: 19 April 2026).
- Nolan, C.T. and Garavan, T.N. (2019) ‘External and internal networks and access to HRD resources in small professional service firms’, Human Resource Development International, 22(5), pp. 477–503.
- SHRM (2025) ‘More Support for HR, Talent: 3 CHRO Benchmarking Data Insights’, Society for Human Resource Management. Available at: https://www.shrm.org/executive-network/insights/more-support-for-hr--talent--chro-benchmarking-survey-insights- (Accessed: 19 April 2026).
- StepUp BC (n.d.) ‘Shared HR Services Tool Kit’, StepUp BC. Available at: https://fdocuments.in/document/shared-hr-services-tool-kit.html (Accessed: 19 April 2026).
- Wijesinghe, R. (2024) ‘Impact of human resource management practices on business performance of small and medium enterprises: evidence from manufacturing SMEs in Hambanthota District, Sri Lanka’, University of Ruhuna. Available at: http://ir.lib.ruh.ac.lk/xmlui/handle/iruor/16446 (Accessed: 19 April 2026).
Very insightful and practical post. I like how you highlighted the 1:150 ratio as a real issue rather than a norm, especially in Sri Lankan SMEs.
ReplyDeleteThe shared HR consortia idea is a strong and realistic solution, as it balances cost with access to expertise. Your local examples also make the concept more convincing.
Overall, this clearly shows that collaboration, not just cost-cutting, can be the key to improving HR practices in SMEs.
This is a very thought-provoking discussion that clearly highlights the challenges and realities of managing a large workforce with limited HR capacity, emphasizing the need for efficiency, prioritization, and strategic HR practices.
ReplyDeleteHowever, how can a single HR professional effectively manage compliance, employee relations, and strategic initiatives for 150 employees without compromising quality or employee experience?
This is a powerful analysis of the HR challenges facing Sri Lankan SMEs. I like how you’ve highlighted the cost barriers and then connected them to Resource Dependence Theory to justify shared HR models. The call to action at the end is especially strong and it makes the idea of shared HR consortia feel both urgent and achievable.
ReplyDeleteThe article demonstrates how small and medium-sized enterprises face a fundamental organizational challenge because their human resources departments lack staff members who should handle their strategic functions. The shared HR consortium concept has solid practical foundations but needs implementation guidelines that different SME dimensions and business domains will be able to understand.
ReplyDeleteThis is a very realistic and insightful discussion on HR workload. Do you think having one HR person for 150 employees is sustainable in the long run, or does it risk reducing HR effectiveness and employee support?
ReplyDeleteThis post clearly exposes a reality many SMEs try to normalize but shouldn’t. The “1 HR for 150 employees” model isn’t lean’s unsustainable. I like how you challenge the idea that HR is a luxury and instead position it as a shared strategic function. The concept of HR consortia is especially practical for Sri Lankan SMEs, where cost constraints are real but so are the risks of poor compliance and high turnover. Highlighting examples like Info mate Private Limited and hSenid Business Solutions strengthens the argument that this isn’t just theory, it’s already working.
ReplyDeleteWhat is your view on how can SMEs build trust and governance structures among non-competing firms to successfully implement and sustain a shared HR consortium?