How To Calculate FTE for Better Resource And Budget Management

fte meaning

Let’s take an exampl e to understand how to calculate work hours in FTE. Understanding your FTE can be very beneficial for project success, but if you consistently get it wrong it can lead to project miscalculations and delays. bookkeeping for startups The value of knowing your FTE depends on whether you’re looking for something specific in your business or organization. It also helps you track any changes to your project’s workload and personnel needs as time goes on.

  • 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.
  • These two part-time employees will be considered one full-time employee.
  • Now, it’s important to note that this FTE result does not necessarily reflect actual FTE employees.
  • Meanwhile, a part-time or contract graphic designer at the same company works 22 hours per week.
  • However, it will be up to you to decide how many people you’ll want to employ to carry this out and what type of employment you will offer them.
  • To illustrate, consider an accounting firm operating in a highly competitive market.

As long as the employee’s hours add up to 40 hours per week, it doesn’t matter what hours and days they work. This is critical in today’s workplace, with more people working remotely and with flexible hours. Project-based organizations operate in a way wherein teams work on multiple client https://www.apzomedia.com/bookkeeping-startups-perfect-way-boost-financial-planning/ projects simultaneously. In such a scenario, tracking hours would be advantageous as they allow the company to allocate resources based on the specific needs of each project. They can monitor individual team members’ hours worked and project progress and track billable hours accurately.

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

HR departments use FTE salaries to determine part-time workers’ salary compensation. A part-time employee’s FTE salary is calculated by multiplying their FTE value by the salary allotted to an equivalent full-time employee. Say a full-time graphic designer at a company makes 48,000 dollars a year, amounting to around 923 dollars for each workweek. Meanwhile, a part-time or contract graphic designer at the same company works 22 hours per week. Now to figure out their FTE salary, simply multiply their FTE by the full-time employee’s yearly and weekly salary. Our part-time employee’s annual FTE salary would be 26,400 dollars and their weekly pay would be 507 dollars.

In Australia, the equivalent to FTE for students is EFTSL (Equivalent Full-Time Student Load).

A. What are the benefits of using hours?

For example, consider a multinational organization with various departments operating in different regions. Each department has unique workforce requirements and autonomy in decision-making. In such a decentralized structure, tracking hours would provide the departments with the flexibility to manage their workforce independently based on their specific needs and demands. This decentralized approach ensures that each department can optimize resource allocation based on their requirements while still adhering to overall organizational objectives.

fte meaning

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). Although most businesses consider 40 hours a week and 160 hours per month full-time employment, according to the IRS, 30 hours a week and 130 hours per month are enough.

How to Calculate Full-Time Equivalent

FTE value helps in indicating the number of full-time employees that a company shall employ in a year or the number and type of employees needed to complete a project. Full-time equivalent is used in project management and to decide eligibilities for federal programs. It can also be ambiguous when considering employees who don’t work fixed hours every week, such as hourly employees or freelancers contracted on a per-project basis. In this case, you can use this calculation method as a general guide but should also consider the possible limitations. FTE is used to determine staffing needs for projects by comparing the time that a person would work if they were working full-time to the number of hours they will actually work. The PPP is an SBA program (Small Business Administration) that helps preserve a business in times of crisis.

fte meaning

A full-time equivalent (FTE) — also known as a whole-time equivalent or WTE — represents the sum of all full-time hours employees work in a certain company. Along with counting the hours worked, FTEs show how many full-time employees a particular company employs within a fiscal year or needs to employ to carry out a project. Next, add the total hours worked by full-time employees and the total part-time hours worked by part-time employees. Calculate the FTEs by determining the number of hours worked by full-time or part-time employees in a year.

Full Time Equivalent (FTE)

FTE tracking allows you to aggregate the capacity of role-based employees. For example, if you have 20 content writers with a capacity of 0.7 FTE each, then their aggregate is 14 FTE. You can use the aggregate for accurate role-based resource management and assign tasks. Simply put, hours FTE is a standardized measure to calculate project hours and staff count. In a nutshell, it is a comprehensive measure of the upcoming projects and tasks and the total number of people you plan on scheduling for these tasks. The amount of benefits depends on the FTE value, as some employers offer half the benefits of full-time employees to part-timers working between 0.5 and 0.75 FTE.

fte meaning

To do this, multiply the number of weeks in a year with the number of hours for a full-time position. For example, let’s say you have a 100-hour project to complete within a week. Based on a 40-hour FT workweek, you’d need two full-time workers and one 0.5 FTE part-time employee. The goals and objectives of the organization heavily influence the choice between FTE and hours.

The US falls somewhere in the middle when compared to other countries, with 38.8 hours of work time per week, on average. Divided by the standard 40-hour work week, this would equal 2.5 FTEs — so you know that you will need two full-time workers and one part-time worker or another combination of workers that adds up to 2.5 FTEs. Full Time Equivalent (FTE) refers to the unit of measurement equivalent to an individual – worker or student – one unit of a work or school day, applicable in a variety of contexts. In most cases, full time equivalents measure an employee or student and/or their workload. Horizons can support your business by helping you hire full-time employees anywhere in the world.

  • Unlike headcount, FTE takes into account the total number of full-time and part-time workers working at your firm.
  • In other words, it allows you to compare different types of staffing arrangements on a level playing field.
  • Anything is possible with the most powerful work management software at your fingertips.
  • Once you have your total FTE count, multiply it by $83,200 to find your total spent on full-time equivalent workers.

One FTE equals 2,080 hours per year and the total number of employees is taken into account rather than the number of hours they have worked. Certain employees are not included in the calculation such as owners, partners, shareholders, family members or relatives, and seasonal workers who work fewer than 120 hours per year. This is particularly true for large organizations that employ a variety of full-time, part-time, and flexible staff. To calculate the total FTE, add the number of FTEs worked by full-time employees (1 FTE for each full-time worker) to the part-time FTE you calculated in step five. 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).

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