Understanding FTE: The Complete Guide For Employers

It provides a standardized measurement that companies can use to compare the productivity and capacity of their different departments, teams, or projects. Using time tracking software, like Homebase, will allow you to run a historical report based https://www.bookstime.com/ on employee work history and status to gather the average hours worked using custom fields. In addition, Homebase provides small business employers with a range of scheduling options to ensure your staff hours are within the correct range.

• If your company considers 35 hours full-time, then you would adjust your calculation accordingly.
• Determining the amount of workers in your organization and the amount of time they work is crucial for budgeting, benefits administration and legal purposes.
• Understanding these scenarios and factors influencing FTE calculations is essential for effective workforce management and resource allocation within your organization.
• When an employer has a 40-hour workweek, employees who are scheduled to work 40 hours per week are 1.0 FTEs.
• Full-time equivalents (FTEs) is a metric that measures the total number of full-time employees you have based on hours worked rather than the exact number of employees.
• By understanding the FTE concept and its applications, you can streamline your workforce, optimize budgets, and make well-informed decisions.

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Trends in this ratio can show which teams are operating efficiently and which may be over or understaffed relative to output. Sudden changes or churn in FTE numbers can serve as an early warning for HR of underlying staffing problems or challenges.

FTEs calculator for the small businesses tax credit program

A full-time equivalent (FTE) is a unit of measurement used to figure out the number of full-time hours worked by all employees in a business. If your business considers 40 hours to be a full-time workweek, then an employee working 40 hours per week would have an FTE of 1.0. In contrast, a part-time employee working only 20 hours per week would have an FTE of 0.5—which shows that their hours worked are equivalent to half of a full-time employee. Full-Time Equivalent (FTE) is a powerful metric that simplifies workforce management in various aspects of business. It allows organizations to convert different work hours into a common standard, making it easier to allocate resources efficiently, control costs, and plan for the future. Srijitha Ashok began her career as a software developer following her graduation .

Example FTE Calculation

This calculation provides a convenient way to quantify how many theoretically “whole” full-time employees are on the company payroll per year, even if the majority of your workforce is actually part-time. The annual hours for your part-time employees (C, D, and E) add up to 3,120 (1,560 + 1,040 + 520). The annual hours for your full-time employees (A and B) add up to 4,160 (2,080 x 2). By understanding the FTE concept and its applications, you can streamline your workforce, optimize budgets, and make well-informed decisions. Whether you’re in human resources, financial management, project management, or any other industry, FTE is your key to achieving greater efficiency and effectiveness in managing your workforce.

A part-time worker who works half-time would be equivalent to 0.5 FTE. Please note that the information on our website is intended for general informational purposes and not as binding advice. The information on our website cannot be considered a substitute for legal and binding advice for any specific situation.

How Do You Calculate Full-Time Equivalents?

If you have a mix of full-time and part-time resources it can be hard to figure out how much work they can provide you. But by expressing the working hours of the resources as FTE we can easily quantify how much work they can do. Jennifer Soper has 25+ years of writing and content design experience, working with small businesses and Fortune 100 companies. If you’re concerned about staying compliant, consider software such as Homebase that will track your employee hours, provide reporting, and can also prepare your time sheets for payroll. To convert an employee’s full-time equivalency into standard hours, multiply their FTE rate by 40.

Full Time Equivalent (FTE)

The chart below displays the number of weekly hours worked with the corresponding FTE under the standard 40 work-week. When things change, you need to know the impact of delaying, pausing or approving projects. The new what if planning features in Kelloo give you a crystal ball at your fingertips so you can see the future. What if planning shows what will happen if you change project timings, delay projects, hire or fire resources or cancel or commit to new projects. In the realm of project and resource management, one term that frequently appears but remains shrouded in mystery is “FTE” – Full-Time Equivalent. Read on to learn what an FTE is, how to calculate it, and how it is different from headcount.

• For example, comparing the two groups over time allows an organization to find opportunities to improve efficiency when hiring seasonally or when making part-time and full-time staffing decisions.
• She can often be found testing and writing about apps meant to enhance the workflow of freelancers, remote workers, and regular employees.
• To find the equivalent of a full-time day, divide the total number of hours by 8.
• This calculation reveals not just the number of employees but the extent of their contribution in hours worked, thereby providing a clear picture of the actual workforce size.
• Utilizing digital tools for Full-Time Equivalent (FTE) calculation offers several advantages, making the process more efficient, accurate, and accessible.
• FTE plays a huge role in resource planning for companies across various industries.

Consequently, the FTE for a part-time employee working 20 hours a week would be 0.5. Interns may or may not be included in Full Time Equivalent calculations, depending on their employment status and your organization’s policies. If interns are considered employees and fte meaning their hours contribute to your organization’s workload, they should be included in FTE calculations. That said, if interns are classified differently or their hours are not counted toward operational capacity, they should be excluded from your FTE calculations.