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Full fte meaning Equipment is based on the total number of hours worked, and not the number of people employed by an organization. Using the same formula, the number of part-time hours worked amounts to 5,000 hours per year. When using FTE alongside other performance metrics, it can become easier to understand per-employee costs and output in a large organization. For example, comparing the two groups over time allows an organization to find opportunities to improve efficiency when hiring seasonally or when making part-time and full-time staffing decisions. To convert an employee’s full-time equivalency into standard hours, multiply their FTE rate by 40. For example, if an employee has an FTE of 0.80, multiplying that number by 40 means that an employee works 32 hours a week. FTE has several different uses and several different calculation methods, depending on why you want to calculate it.
- Three full-time employees would have an FTE of 3.0 and the part-time FTE is 0.875.
- In another variation of the weekly pay, businesses can provide payroll on a specific day every two weeks.
- Then, calculate the total number of hours worked by full-time employees for that same time period.
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For instance, in terms of business, calculating FTEs may be of great use when determining how many hours part-time employees should work to equal the number of hours full-time employees work. Such calculations facilitate accounting processes such as estimating wages, payroll, costs, etc. Like we mentioned, some employees count 37.5 to be the standard workweek, which is the number of hours actually worked when you exclude the breaks. Full-time employees usually work 40 hours each week for over 120 days a year, but it also includes anyone who works more than 30 hours weekly. Add all of the hours from full-time workers together to use for your calculation. Full-time equivalent 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.
FTE Calculator — Excel Template
In conclusion, having accurate FTEs for all your employees will also help employers determine responsibilities towards them, their PTO rates, and whether the business is eligible for certain federal programs. Once you decide why you want to use FTE, identify the appropriate calculation method, and follow it through. Do you want to calculate how much it is to hire employees abroad will actually cost you? There are several tools online called “employment calculators” to get an estimate about your overall costs for employees in different countries.
A contractor doesn’t enjoy the benefits of a permanent employee such as a bonus or company’s subsidies and discounts. For example, imagine you plan to offer a new line of fidget spinners that also send social media messages to users’ friends. You need to hire more employees, especially developers to integrate this software into your product designs. Of course, employee profitability factors heavily into hiring decisions. Remember, to average the number of employees you employ across the year, especially if you run a seasonal business.
Benefits of Calculating FTEs
FTE is simply a measure of time that allows the comparison between full-time and part-time workers, including contractors. It also gives a clear idea of balancing the permanent and temporary workforce, whether an increase or a decrease is necessary to complete a project within a timeframe.
Legal process outsourcingLegal process outsourcing deals more with delegating legal processes and compliances to legal firms in another area. The majority of BPOs are generalists, in that they offer a full range of professional services. Flexible workforceOutsourcing is a great way to establish a remote workforce, especially for companies looking to implement this setup for the first time. Global presenceAt the same time, outsourcing opens clients to global trade opportunities. They can establish their global presence and expand more easily to other locations since they already have operations in the area. Cost savingsCompanies can enjoy savings of up to 70% by leveraging the salaries and costs in offshore countries. Outsourcing poses more growth opportunities for businesses of all shapes and sizes.
Why Measure FTE?
The full-time equivalent measure can also be applied to a student’s classes. For example, if the establishment requires 30-hour classwork per week and the student only completes 15, this will account for 0.5 FTE. All plans come with a free, 30-day trial of Toggl Track Premium—no credit card required. Upgrade at the end of the trial or continue using Track for free. By examining revenues instead of profits , you can judge profitability on an employee’s actual work, not your other costs (ad costs, etc.). Though estimates are estimates, you can get a quick picture of your employee cost withsimple multipliers.
- The full-time employees work 40 hours per week and 52 weeks out of the year, meaning that the number of full-time hours worked on an annualized basis is 104,000 hours.
- The following example will help you understand the concept of FTE in terms of total hours worked for all employees and the time they worked.
- For this reason, many businesses entrust their payroll to dedicated professionals who can process them with speed and accuracy.
- She looks at KPIs likegross profit margin(should be over 50% before hiring) and cash accounts (should equal min. 3 months’ revenue).
Marija Kojic is a productivity writer who’s always researching about various productivity techniques and time management tips in order to find the best ones to write about. She can often be found testing and writing about apps meant to enhance the workflow of freelancers, remote workers, and regular employees. Appeared in G2 Crowd Learning Hub, The Good Men Project, and Pick the Brain, among other places. Bear in mind that these are just simple FTE example calculations — project managers approach FTE from a different angle while federal programs use different FTE calculation methods.