So, the FTE calculation does not indicate the number of employees in a company, but the equivalent of a full-time employee. First, it is necessary to determine the number of hours worked by part-time employees (i.e. part time FTE). Simplify your workforce planning with our easy-to-use calculator to optimise staffing levels and make informed HR decisions. Yes, when employees work more than full-time hours or significant overtime, total FTE can exceed headcount.
What are the Key Factors that Affect Revenue Per FTE?
What do offering employee health benefits and planning workforce capacity have in common? You need a metric called FTE, or full-time equivalent, to work out both—but many companies don’t know what this is or how to calculate it. This method helps you understand workforce size, especially in mixed environments with part-time and full-time https://minac-gov.com/2020/04/08/accounting-pros-are-accounting-payroll-taxes-and/ employees. A 0.75 FTE equates to 30 hours per week, representing a three-quarter time workload. This FTE value is common for roles requiring nearly full-time commitment but with slightly reduced hours, such as roles with flexible scheduling or reduced workdays.
Using FTE for staffing & workload management
FTE converts total hours worked into the equivalent number of full-time employees, allowing part-time and variable schedules to be standardized. As a result, headcount reflects staffing quantity, while FTE reflects labor capacity. This standardization can help you assess whether you have the resources needed to meet your company’s goals. For example, project managers (PMs) may use FTE fte meaning to evaluate workload and labor costs. If a project requires 100 hours of work, calculating FTE helps determine whether your team has enough collective hours available, not just enough people. If the FTE calculation falls below this figure, the PM might add a team member or adjust the project timeline.
Step 2
- Professional services firms bill clients based on hours, making FTE the primary planning metric.
- Full Time Equivalent calculations are an important part of the payroll process because they help determine the total cost of labor being spent by your organization.
- FTE optimization helps organizations balance labor costs with productivity goals, making it possible to adapt staffing to changing needs.
- Here’s how you calculate the full-time equivalent salary using a part-time wage.
- Employers can use FTE to evaluate their hiring capacity and current payroll, as well as for reporting purposes related to labor laws and employee benefit programs.
- Using the calculator on a regular basis enables you to identify trends, empowering you to make informed adjustments based on historical data and future projections.
- Once a department manager reviews their needs and current staffing levels, they can request additional FTEs to help with time-sensitive projects.
If you have five CARES Act full-time employees working 40 hours per week, the total full-time hours would be 200. For example, if you have three part-time employees working 20 hours each per week, the total part-time hours would be 60. If an employee were to take no vacation time, and he or she works 40 hours a week, it would add up to 2080 hours. Granted, U.S.-based employees often take two weeks of vacation, and their European counterparts may take upwards of four to six weeks. If you are using FTE calculations to determine future hiring needs, it makes sense to adjust the number of hours to fit your business.
- Audit your current HR software solutions to determine whether they calculate both metrics accurately.
- Help remote, hybrid, and in-office teams have their best day at work.
- Its overall usage is to determine the total full-time hours that your team or organization can or has performed during a specific time.
- Making plans and setting goals is easy with a few full-time employees.
- If your team includes part-time employees, calculating their contributions in terms of FTE can clarify their impact on overall productivity.
- You can easily calculate FTE using the formula and four steps listed below.
FTE is invaluable for project planning, enabling managers to estimate the resources needed to complete specific projects. By defining project requirements in terms of FTE, teams can calculate how many full-time and part-time employees are required for successful execution. FTE estimates help allocate appropriate personnel and maintain productivity within timelines and budget constraints.
