Full-Time Equivalent FTE & How to Calculate It

fte meaning

To identify the FTE for part-time positions, divide the total number of part-time hours worked by the number of hours worked by one full-time worker. In our example, we will divide the total hours worked by Employees D and E by the number of hours worked by Employees A. To identify the FTE of part-time employees, divide the total hours worked by part-time employees by the annual hours worked by one full-time employee (i.e., 2,080 hours). Calculate the FTEs by determining the number of hours worked by full-time or part-time employees in a year. To do this, multiply the number of weeks in a year with the number of hours for a full-time position.

fte meaning

Example Calculation

However, if another employee works only 20 hours per week, they would be considered half-time. First, let’s look at what full-time equivalent or FTE actually means. The full time equivalent, often abbreviated as FTE is an indicator that reflects an employee’s productive capacity. An FTE of 1.0, for example, corresponds to the hours worked in a day for a full-time employee.

  • The method for calculating FTE is slightly different for each of these uses.
  • For one, it makes planning resources and workloads across full and part-time staff easier.
  • Let’s review what FTE means, why it’s essential, and how to use it for resource management planning.
  • The first step in calculating FTE is to make a complete list of all employees.

Productivity

Staying up-to-date on laws, getting legal advice, and having clear processes are crucial to ensure FTE calculations are legal and fair to workers while following the rules. For example, an employee working 20 hours per week is considered half a full-time employee (if the employer considers a 40-hour workweek full time). As long as the employee’s hours add up to 40 hours per week, it doesn’t matter what hours and days they work. Since FTE considers the total time worked, it provides flexibility.

How is FTE calculated?

So, if your standard work week consists of 40 work hours, your employees probably work 8 hours per day. Still, this doesn’t have to be the case in all organizations as certain employees may work 7 hours one day and 9 hours the next day. For example, comparing the two groups over time allows an organization to find https://www.bookstime.com/ opportunities to improve efficiency when hiring seasonally or when making part-time and full-time staffing decisions. After all, the net costs of hiring additional part-time employees may, in fact, be lower than the more visible cost of overtime pay for existing staff, and FTE is used to uncover such findings.

fte meaning

fte meaning

FTE calculations should be updated regularly to reflect changes in employee hours, staffing levels, and business needs. This could be done monthly, quarterly, fte meaning or annually, depending on the organization’s requirements. Now determine the number of hours worked by full-time employees over a given period.

  • Just indicate how many employees work at your company, how many hours they work a week, and for how many weeks.
  • It applies the following procedure, which we explain through an example for a hypothetical company.
  • Since FTE considers the total time worked, it provides flexibility.
  • This ensures that you’re not getting a skewed result based on a higher or lower number of hours worked in a week than typical.
  • To work out your FTE, you must determine what’s considered full-time in your organization.
  • On the flip side, a spike in FTE levels without corresponding business growth may indicate a need to realign staffing plans and reduce hours.

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How do I calculate full-time equivalent (FTE) hours?

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What is the purpose of calculating FTE?

  • Most US companies adhere to the standard 40-hour, five-day workweek.
  • HR departments use FTE to standardize their part-time employees’ working hours and salaries.
  • Running an organization can be like conducting a well-coordinated symphony, especially when it comes to maintaining a 12-hour working schedule,…
  • Trends in this ratio can show which teams are operating efficiently and which may be over or understaffed relative to output.
  • Determining the amount of workers in your organization and the amount of time they work is crucial for budgeting, benefits administration and legal purposes.
  • It is then important to note that some FTE calculations do involve a fair amount of assumptions.