How to Calculate a Full-Time Equivalent FTE

By using the above example as a reference, and taking it step by step, you simply need to expand it to encompass your entire workforce, and you’re on track for an accurate look at your organization’s FTE. To help you fully understand how Full Time Equivalent is determined, let’s take a look at a hypothetical example of FTE calculations and break down the math step by step. While the outcome is simple and easy to understand and use, the steps you need to take to actually calculate your Full Time Equivalent can be a bit complicated. Here, we break down the steps to do so with detailed examples, and a thorough understanding of the benefits of FTEs.

The full-time equivalent converts the hours worked by part-time employees into hours worked by full-time employees. In other words, do you know what the full time equivalent is and how it can help you better understand the needs of your organization? If you don’t know what it means, you should, as this metric can help you make important decisions. Through the full time equivalent calculation, it is possible to identify whether your small business needs to hire, restucture or reduce its staff, for example.

How to Calculate the Full Time Equivalent (FTE) in 4 Steps

• To ensure that a company with 100 part-time employees is treated as fairly as one with 50 full-time employees, an FTE is calculated to compare both workforces.
• Stay up-to-date with the latest developments, get news, and fresh insights.
• A metric shows the difference between two or more numbers, while analysis shows us why something is happening along with the impact.
• This assessment helps prevent understaffing and overstaffing, ensuring cost-effective resource utilization, including recruitment fees.

Amir, Mark, Phyllis and Sue could each work 10 hours per week and the total would be 40 hours worked, or one FTE based on a 40-hour workweek. An employer with a 35-hour workweek would simply divide the employee’s scheduled hours by 35 to determine the FTE. For example, an employee scheduled to work 21 hours per week would be 0.6 FTE when the full-time workweek is 35 hours.

FTE provides valuable insights for making informed decisions about your workforce, ensuring you have the right talent in place to meet your objectives. Understanding the benefits of Full-Time Equivalent (FTE) is crucial for making informed decisions about workforce management. FTE offers a comprehensive view of your workforce’s productivity and can significantly impact your organization’s efficiency and cost-effectiveness. Calculating Full-Time Equivalent (FTE) is a fundamental aspect of workforce management. It allows you to convert the various working hours of your employees into a standardized metric, making it easier to analyze and plan your workforce effectively. Let’s say you have four full-time employees, three part-time employees working 20 hours a week for 30 weeks per year, and one part-time employee working 15 hours a week for 52 weeks per year.

FTE is an incredibly useful metric for organizations looking to assess and quantify the total labor resources available within their workforce. It provides a standardized measurement that companies can use to compare the productivity and capacity of their different departments, teams, or projects. In this example, your company has the equivalent of 5.24 full-time employees, or a 5.24 FTE. By this measurement, your four part-time workers amount to just less than one and one-quarter of a full-time equivalent employee.

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This enables HR to categorize employees, analyze, gain valuable insight for business planning and projection, and boost the organization’s efficiency. Now determine the number of hours worked by full-time employees over a given period. Full-time employees are those who work a minimum of 30 and a maximum of 40 hours a week and more than 120 days a year. According to the Affordable Care Act (ACA), employers with 50 or more FTEs are required to offer ACA-compliant benefits. The ACA defines a full-time employee as someone who works 30 hours per week or 130 hours per month.

Calculating FTE: A guide for employers

This process proves especially valuable when managing part-time or full-time workforces. By assigning a numerical value to part-time employees that reflects their contribution relative to full-time staff, organizations can gain a standardized measure of workforce capacity. Headcount refers to the total number of people employed by your organization, including both full-time and part-time employees. In contrast, FTE full time equivalent calculates the total workload based on the number of hours worked by employees, converting part-time hours into the equivalent of full-time hours to provide a standardized measure of workforce capacity. FTE is a powerful tool that helps organizations manage their workforce, plan budgets and measure performance.

Calculating the Total Hours Worked by Employees:

By applying the FTE values, supervisors can ensure fair work assignments within the group. For example, in the sales sector, 3 team members might possess FTE metrics of 1.0, 0.5, and 0.75. When tasks are allocated according to FTE, supervisors can ensure each team member’s workload corresponds with their capacity, averting both excess and insufficient work. By comparing actual Full Time Equivalent counts with targeted FTEs, your organization can identify gaps in its workforce coverage and weed out any inefficiencies. This insight allows you to address staffing imbalances, reducing potential burnout and enhancing productivity. Such technology is already a part of many workplaces and will continue to shape the labor market and HR.

If you need any assistance, don’t hesitate to reach out to us or email us at Understanding FTE counts allows your organization to conduct cost analyses related to labor expenses, and ultimately update the recruitment budget accordingly. By calculating FTE-related costs such as salaries, benefits, and overhead expenses, your organization can optimize its budgeting and financial planning processes for the most efficient spending strategy. Efficient resource allocation is a cornerstone of effective business management. FTE assists in optimizing your human resources, ensuring you have the right people in the right places at the right times. Effective workforce planning is essential for the long-term success of your organization.

It enhances the effectiveness of the project coordination procedure, guaranteeing successful project completion. You can use your business’s definitions for full-time and part-time employees. When you apply for a PPP loan, you will need to include your documents showing the number of full-time equivalent employees on your payroll. When calculating your FTEs for basic accounting or business purposes, the simplest way to do it is to divide total annual work hours for all employees by an average full-time annual work schedule. Just remember to divide the number of hours worked by the total hours a full-time worker would work in the same period.

The Fair Labor Standards Act (FLSA) does not define full-time employment or part-time employment. Yearly, a company generally considers an FTE to be valued at 2,080 hours. To delve further into the matter, let’s look at how FTEs are calculated. Consider a multinational corporation with diverse departments operating across multiple regions.