In short, FTE gives companies a clear picture of their staffing needs and helps them make smart decisions. Whether you hire employees as part time or full time depends on your business needs and local regulations. A part-time workforce might save you money in wages and benefits but could, in turn, cost more in rehiring and training.
To maximize the benefits of Full-Time Equivalent (FTE) and mitigate its challenges, organizations should implement best practices in FTE management. While headcount provides a straightforward count of the number of employees in your organization, FTE offers a more nuanced view of your workforce’s capacity. In this scenario, Employee A contributes half the workload of a full-time employee. Let’s have a practical example to help you master the full time equivalent calculation. Calculating the FTE and using its figure side by side with the Compensation Software will help your company drastically improve its compensation practices.
This method of calculation is a common way of creating an accurate forecast. Human Resources departments often use FTE to figure out how to set the working hours and salaries of employees. It’s important to keep in mind that it doesn’t indicate the actual number of employees, but rather the actual hours worked.
Simply put, full-time equivalent is the total number of hours worked by an employee to meet the requirement for full-time status. There are numerous reasons why calculating FTE can prove meaningful to your company. By calculating your FTE, you’ll be able to get information on the overall productivity of all your employees (within a team, department, or entire company).
The Paycheck Protection Program (PPP) provides funds for small business owners to help them cover up to 24 weeks of payroll or other costs such as utilities, rent, etc. Bear in mind that these are just simple FTE example calculations — project managers approach FTE from a different angle, while federal programs use different FTE calculation methods. Bear in mind that the FTE is based on the total number of hours worked — it may not indicate the actual number of people working in a company. Using the same formula, the number of part-time hours worked amounts to 5,000 hours per year. The chart below displays the number of weekly hours worked with the corresponding FTE under the standard 40 work-week.
In this step, you have to add the total work hours worked by each full-time employee and total working hours worked by each part-time employee. FTE metrics serve as a cornerstone not only in workforce planning and financial forecasting but also play a pivotal role intalent management and development. FTE, an abbreviation for “full time equivalent”, counts the approximate number of full-time employees employed by a specific company, but with the inclusion of part-time employees. The Full Time Equivalent (FTE) represents a unit of measurement standardized to equal the number of hours worked by the typical full-time employee.
Try to include employee leave (both paid and unpaid) in the overall number of work hours to make your results fte full form in company more accurate. It’s used to determine the overall number of full-time hours that your team or business as a whole is able to perform or has performed during a certain period of time. While Full-Time Equivalent (FTE) is a valuable metric, it comes with its own set of challenges and limitations that organizations must be aware of when using it for workforce management. However, several organizations calculate the FTE weekly for the number of hours worked and the FTE week.
Three full-time employees would have an FTE of 3.0 and the part-time FTE is 0.875. The list should include the employee’s name and the number of hours they work per week. Clockify is a time tracker and timesheet app that lets you track work hours across projects. An FTE salary is an employee salary converted into a full-time equivalent salary within a full year, regardless of whether the said employee holds a full-time or part-time position. The actual workload is not taken into consideration for this calculation.
FTE (Full-Time Equivalent) impacts overall organisational efficiency by ensuring adequate staffing levels to meet operational needs. It helps organisations allocate resources effectively, manage workload distribution and maintain productivity. When calculating FTE, it is important to know whether you are dealing with full-time or part-time employees.
