It can refer to either one person’s work calculating full-time or numerous people doing the functions of one full-time employee. Imagine that, with the same FTE, an employee can deliver 100 units, while another only delivers 30. In this case, the calculation may show that the first professional is overqualified for the position, whilst the other needs more training and development. Three full-time employees would have an FTE of 3.0 and the part-time FTE is 0.875. Multiply the total hours worked in a week by 52, the number of weeks in a year, to find the number of hours worked annually.

They also use it to calculate labor costs for the expected project workload and subsequently define the funds needed to finish a project. For a business, specifically those with a large number of part-time workers, converting worked hours into FTEs is important in helping the company know how many full-time employees the part-time workers are equal to. It is critical for accounting purposes and determining wages, and for calculating the company’s expenses when paying its workers.

Are there any exceptions to calculating FTEs?

In other cases, you’ll need multiple employees to fill the quota—two part-timers, four employees that only work 10 hours a week, etc. You can create various combinations, depending on your business needs. Seeing a value of FTE 100% means a single full-time employee or multiple part-time employees work those full-time hours. Do you want help with the management of your company’s key figures, helping your team make the right decisions, and implementing the right measures in personnel planning? Based on an FTE of 1.0, we calculate employees work 2,080 hours per year. Furthermore, this value is used only as a basis for calculating the annual FTE and reflects the hours of an employee who works 5 days a week, 8 hours a day.

In reference to an individual, 0.5 usually refers to the fact that the worker renders less than a full day of work or the student attends less than a full day of classes. FTE can serve as a parameter for your decision-making as a manager regarding promotions, dismissals, division of tasks, training and talent development. Through this, you can identify the needs and internal capabilities of your employees more easily, as well as exercise more strategic management.

Business

This financial term assesses the productivity of all employees, full-time or part-time, regardless of their employment status. Employers and businesses use this measurement to track employee workloads and make recruitment and https://www.vizaca.com/bookkeeping-for-startups-financial-planning-to-push-your-business/ budgeting plans for the future. Let’s say you have two hires working 40 hours per week, three part-timers each working 20 hours per week, and two people with flexible schedules working an average of 15 hours per week.

For example, if two part-time employees each work four hours per day for 10ten days apiece during a weekly pay period, their 40-hour combined total represents 1.0one FTE on the company’s payroll for that pay period. The results will reflect the actual full-time payroll of the company. These metric is particularly important when companies are comparing themselves with industry averages or with close competitors. In most cases, employers fall below the threshold required to be an ALE and are, therefore, not subject to the employer shared responsibility provisions. Every employer with 50 or more FTEs is qualified for the ACA-compliant benefits, per the Affordable Care Act (ACA).

FTE Calculation

As you can see, because the project only took 100 hours, you have one FTE left over. This tells you that, when allocating resources for future projects, you can reduce the number of FTEs by one and still have enough workforce to complete the project. In this example, imagine you are tasked with reallocating resources within your department.

Keep on reading to learn what FTE is, how it is calculated, and how it is used in project management. In this example, a person earning $50,000 per year and working 40 hours per week would have an FTE wage of $24 per hour. As an added bonus, a company with a high number of satisfied customers is more likely to have a great reputation, which could lead to increased sales and the hiring of outstanding workers. As a result of increased demand for goods and services, a larger workforce may be required. An organization can make the best use of its resources and workers by calculating FTE which will result in an increase in efficiency. Also, it can help find places where work isn’t being done as efficiently as it could be.

Step 1. List all of your employees and hours worked

Additionally, FTE measurement enables the organization to assess other aspects of corporate accounts, employee compensation, and other expenses and estimate the effectiveness of full-time and part-time personnel. Full time equivalent allows you to calculate and analyze your workforce a lot more accurately, and also explains how much value and workload you’re getting out of part-time staff in comparison to a full-time baseline. Although it might seem complicated at first, this is actually a really useful calculation that can support HR and Finance teams with a wide range of goals.

• As you will understand by the end of this article, there are plenty of situations in which knowing the meaning of FTE and how to calculate it can be quite useful.
• It can be helpful in cases where companies employ both full-time and part-time employees.
• Wobbly will help every project manager not only to calculate FTE easily but to plan resources, make weekly/monthly reports, send invoices for clients, etc.
• Employers can use FTE to guide their hiring strategy and plan for a project, while governments often use the metric to determine program eligibility.
• Time Analytics is an easy-to-use timesheet app that makes calculating FTEs effortless.

The goal here is to count how many hours are worked rather than counting the number of employees. Do you want to calculate how much hiring an employee abroad will actually cost you? Use our employment calculator to get an estimate of your overall costs for employees in different countries. The PPP is an SBA program (Small Business Administration) that helps preserve a business in times of crisis. The total FTEs number is used to calculate the loan that borrowers are eligible for. To calculate the FTE metric, find the average number of FTEs per month from two different time periods (February 15, 2019, to June 30, 2019, or January 1, 2020, to February 29, 2020).

FTE 100% means that the employee works full-time and is equivalent to 100% of the work that can be done by one person in that position. For example, if an employer hires two employees to work part-time, each working 20 hours a week, the total FTE for those employees would be 1 (i.e., 0.5 FTE for each employee). However, if an employer hires one employee to work full-time, that employee would have an FTE of 1 (i.e., 1.0 FTE) because they are equivalent to 100% of the work that can be done by one person in that position. To qualify as an FTE employee, an individual must typically work a full-time schedule of 40 hours per week, although this can vary depending on the organization’s policies.

If a full-time employee works for 40 hours in a week, this amounts to 100 total hours during that week. By comparing that figure with industry averages the company can analyze its current productivity. An understanding of FTE also helps employers decide when to hire staff for short-term projects. In this way, scheduling projects based on the FTE calculation allows for greater accuracy in workforce planning and the efficient allocation of resources. HR departments use FTE salaries to determine part-time workers’ salary compensation.