In this blog, we explain what FTE (Full-Time Equivalent) is and why it’s important for your organization. We’ll show you how to calculate FTE, taking into account flexible working hours and working from home. Using a Kiosk — for more advanced time management, choose the time clock Kiosk in Clockify where employees can clock in with their PIN code (just make sure you enable it in the Settings section).
- Generally, contractors are not counted as FTEs unless they are considered equivalent to full-time employees.
- The SBA defines FTE employees as workers who work 30 hours a week or more.
- Overtime increases the number of hours worked, which can increase your FTE.
- FTE provides a clear overview of how many employees you have in terms of full-time working hours.
- As it helps you work out how many manhours of work are being done, FTE calculation is an important part of business planning.
Workforce Planning And Resource Allocation
Furthermore, this value is used only as a basis for calculating the annual FTE and reflects the hours of an employee who works 5 days a week, 8 hours a day. The full-time equivalent converts the hours worked by part-time employees into hours worked by full-time employees. FTE, an abbreviation for “full time equivalent”, counts the approximate number of full-time employees employed by a specific company, but with the inclusion of part-time employees. The Full Time Equivalent (FTE) represents a unit of measurement standardized to equal the number of hours worked by the typical full-time employee. ClickUp is that ideal project management tool—it will do the heavy lifting to help you estimate, track, and improve resource allocation.
Wrap-up: Streamline Your HRM Accounting with FTE Calculation
Let’s say that a full-time weekly schedule in your company is 40 hours per week, and your employees are scheduled with 40 hours of work a week (which makes them full-time employees). This is a straightforward example since each employee who works 40 hours per week in your company has a 1.0 FTE. If you have a mix of full-time and part-time employees, the full-time equivalent (FTE) lets you represents the full-time hours that all of the employees in your business work. FTEs are important for checking HR metrics and determining tax statuses for your business, but luckily they’re pretty easy to calculate on your own.
Analyzing Productivity Levels
- When calculating FTE, it is important to know whether you are dealing with full-time or part-time employees.
- Also, include FTE custom fields in the ClickUp Reporting Dashboards feature to analyze workload trends, identify bottlenecks, and track progress.
- The industry paradigm is to look at the production metric for the workers handling the freight in terms of cases per hour (CPH).
- An employee with a regular budgeted assignment of 75% of a full-time job position has a 0.75 FTE.
- With 14 employees, 7 of which are full-time and 7 part-time, the staffing capacity is 9.04 full-time employees per year.
- By incorporating FTE into financial strategies, organizations can optimize resource allocation and gain insights into their workforce-related expenditures.
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. The results will display the annual individual work hours and the Full-Time Equivalent (FTE) https://www.bookstime.com/ based on the input values. Our productivity expert from Easy Metrics, a labor management system, shares an example to illustrate one possible calculation. Let’s say your company generated $80,000 worth of goods or services in one week with 30 employees.
What is Full-Time Equivalent (FTE) in Project Management?
Because the number of employees says nothing about a company’s actual work performance. 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. In practice, FTE is measured by companies to estimate the number of full-time employees employed within a specific time frame. Based on the total FTE (1.5 FTE), you can decide whether to hire full-time employees, part-time specialists or outsource specific tasks.
How to Use FTE for Staffing
You could also look at labor productivity in terms of individual employee contribution. In this case, instead of using hours as the input, you would use number of employees. In a world with countless life hacks and must-have morning routines, we’re all searching for the latest and greatest way to boost productivity. When we represent our organizations, we want to generate more revenue with fewer resources. And we’re all trying to show that the tools we use actually have an effect on productivity. In the realm of project management, Full-Time Equivalent (FTE) is a valuable tool for ensuring the efficient allocation of resources and tracking workforce contributions to project success.
In education, FTE calculations may consider instructional hours, student-teacher ratios, and classroom capacity. In healthcare, FTE calculations often revolve around patient-to-staff ratios, bed occupancy rates, and clinical workload. Each industry tailors FTE calculations to align with its unique operational needs, service demands, and regulatory requirements.
- You would divide 80,000 by 30, which equals 2,666 (meaning each employee produced $2,666 for your company per week).
- Keep reading to find out everything you need to know about calculating FTEs and how to use them.
- When assessing how different departments measure up in terms of efficiency, you can leverage the FTE calculator for comparative insights.
- You should include paid time off such as vacations or sick time in the total number of hours each employee works.
- Armed with solutions like automated tools and clear policies, we can conquer these obstacles.
Its versatility and precision make it an indispensable tool for businesses striving for efficiency and cost-effectiveness in workforce management. The standard measure for calculating FTE is based on 40 hours per week; however, other times, such as part-time work and overtime, can be accounted for accordingly. To calculate FTE accurately, consider the total number of hours worked in a given period and any additional factors, such as vacation days and sick leaves. Using FTE in project management also helps to identify your staffing needs.
Step 4: Calculate total FTE
Various FTE formulas accommodate different timeframes and employee types. For weekly calculations, FTE equals total hours worked divided fte meaning by standard weekly hours (e.g., 40 hours). Monthly FTE is total hours divided by standard monthly hours (e.g., 160 hours).