Full-time equivalent (FTE) is a way for employers to standardize their headcount and combine their part-time workers’ hours to figure out how many full-time employees would work those hours. This way, you will be able to determine the number of full-time equivalent workers in your company even when you have part-time workers on-site. Knowing how many full-time equivalent employees you have is beneficial for several reasons. For one, it makes planning resources and workloads across full and part-time staff easier. Or perhaps some of your part-time employees can put in additional hours to pull the weight of a larger project. Full-time equivalent, or FTE, is a calculation human resource managers use to determine how many full-time employees they have on staff.
Join BambooHR and League to explore how to go beyond wellness resolutions so your organization can reap all the benefits of a healthy workforce. The full-time equivalent is an https://www.apzomedia.com/bookkeeping-startups-perfect-way-boost-financial-planning/ indicator that answers many of the questions Human Resources departments need answers to. This, therefore allows them to make better decisions regarding personnel management.
What is an FTE salary? How to calculate an FTE salary?
This is for ease of calculating the cost — in time, money, and personnel — of a project, since it standardizes the unit of measurement. A full-time equivalent (FTE) is a unit of measurement used to determine the amount of full-time hours worked by all employees in an organization. If a normal work week bookkeeping for startups consists of 40 hours, an employee who works for 40 hours per week has an FTE of 1.0 while a part-time employee working only 20 hours per week has an FTE of 0.5. 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.
- Seeing the accrual of leave in real time makes it easier to calculate the resources needed at any given time.
- 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).
- So, 75 is the number of hours needed per day to finish the said 600-hour project.
- In contrast, non-exempt positions who typically work only 28 hours per week on a 0.75 FTE schedule do not qualify, even if the employer policy defines them as full-time.
- Full-time equivalent and hours-based resource models cater to different kinds of industries and projects.
- For example, if cost control is a priority, FTE may be preferred as they provide a standardized measure of capacity.
If your company considers the number of hours for a full-time position as 40 hours per week, note that working 30 or more hours counts as 1 FTE for purposes of ACA compliance. It provides a standard approach for calculating the demand for future projects and the number of hours required to accomplish tasks. Hence it is a great measure in project management for long-term strategic plans. For example, if your project needs 400 hours of work, you can equate it to 10 FTE (400 hours/40 hours) for 5 days.
How to calculate an FTE?
Analyze your upcoming projects/seasons to determine how many FT hours you’ll need to ensure successful completion. You can use your resource management tool to adequately divide your workforce (or bring more people on). Using software for resource management simplifies (and speeds up) the process of maintaining favorable capacity levels. Float does the heavy lifting by calculating your resources based on their total available hours (for both FT and PT capacity). For example, in some countries, labor laws define full-time and part-time employee classifications based on the number of hours worked. In this case, FTEs may be necessary to ensure compliance with legal requirements and determine eligibility for benefits.
- With 14 employees, 7 of which are full-time and 7 part-time, the staffing capacity is 9.04 full-time employees per year.
- In this comprehensive guide, we explore the significance of FTE in the business world by providing insights into its calculation, strategic benefits, drawbacks, and the best tools for tracking it all.
- To convert an employee’s full-time equivalency into standard hours, multiply their FTE rate by 40.
- For example, consider a multinational organization with various departments operating in different regions.
- 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.