What Is FTE? Wrike Project Management Guide

The FTE is calculated by taking into account the number of hours worked in a full-time weekly schedule and the actual number of hours employees work. FTE stands for full-time equivalent and measures how many full-time employees an organization has. Calculating headcount is as simple as adding up your employees, while FTE refers to the number of full-time hours being worked at the company. All together Jack, Leva and Julia’s hours make up 0.5 + 0.375 + 0.125 or 1 FTEs. And, even though the company employs 4 people, they only have 2.0 full-time equivalent employees.

Time Analytics is an easy-to-use timesheet app that makes calculating FTEs effortless. It features a simple drag-and-drop interface, customizable reports, and productivity insights to help you optimize your team’s performance. With Time Analytics, you can also set up reminders for employees to submit their timesheets on time and get an overview of their hours worked. 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. Imagine you are a human capital manager who has lost four employees and needs to replace their hours.

  • It is a measure of the total number of hours worked by an employee or group of employees on a full-time basis, relative to the hours worked by another employee or group of employees on a full-time basis.
  • All together Jack, Leva and Julia’s hours make up 0.5 + 0.375 + 0.125 or 1 FTEs.
  • You can view the unused balance as a whole number or percentage for on-the-fly planning.
  • To calculate FTE correctly, you’ll need to quantify your total weekly available work hours; it’s an important component of the calculation.
  • And some state and federal employment laws only apply to companies who meet a certain threshold of FTE employees.

FTE is important for calculating labor costs incurred by your company. By determining your company’s overall FTE, you can plan in advance and manage your payroll expenses. Planning a new project and making estimates can be tiresome, especially when you have employees with different types of contracts (part-time, full-time, and freelancers) working for your company. FTE calculations make it easier for you to assign different personnel to different projects or specific tasks based on their overall performance and contribution to your company.

Step 4. Add annual hours worked for full-time employees and part-time employees

In the construction industry, you’ll need a larger headcount when a bigger project comes along. It’s easier to plan for this when you can visualize your project needs and team capacity. Use your FTE calculation to find out whether your company qualifies.

Before we delve into how to calculate it, there are a few important points to note. You can work out the Full-Time Equivalent by dividing an employee’s scheduled hours by the employer’s hours for a full-time workweek. In our hypothetical scenario, our company has the equivalent of 52.40 full-time employees. Suppose a company currently has 50 full-time employees on its payroll, along with 10 part-time employees.

  • As a business owner or project manager, sooner or later you will come across the FTE abbreviation.
  • And while they’re all valued as part of the company, there are certain situations in which they’re not considered in the same way when calculating your headcount.
  • The full-time equivalent converts the hours worked by part-time employees into hours worked by full-time employees.
  • It is important to understand the FTE of a given provider’s teams to compare the provider’s performance to other providers and determine which provider offers the best value for money.

To determine your total FTE, add the total part-time hours worked, plus the total full-time hours worked. From there, if your full-time hours are 40 per week, divide the number by 2,080. If your total full-time hours are 30 per week, divide the number by 1,560. This will give you your total FTE for all full- and part-time employees for the year. You can use the FTE total each week, month, or year to determine company growth.

To qualify for PPP loan forgiveness an organization must have maintained the same level of FTE employees during certain specified time periods following the loan disbursement. 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. In 2020, the company decided to let a few people go and made $1.8m with 25 FTEs. So, in 2020, the company’s profit per employee was $72k a year, which indicates higher efficiency, despite having fewer employees.

How does the U.S. Small Business Administration (SBA) define FTE employees?

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.

What Is the Purpose of Calculating FTE?

FTE or full-time equivalent is used to convert the hours worked by several part-time employees into the hours worked by full-time employees. Based on the FTE value, some of your employees could be eligible for minimum or affordable healthcare insurance. Knowing this will help you stay compliant with state and federal laws. Under ACA, any employee that works at least 30 hours per week, or 130 on a monthly basis, is entitled to some form of healthcare.

It is a way of adding up the hours of full-time, part-time and various other types of employees into measurable ‘full-time’ units. The part-time employees, on the other hand, work 20 hours per week and 25 weeks out of the year. FTE is calculated by adding up the total number of hours worked by all employees and dividing that total by the number of hours in a full-time work week, which is typically 40 hours. To identify the FTE for part-time positions, divide the total number of part-time hours worked by the number of hours worked by one full-time worker. In our example, we will divide the total hours worked by Employees D and E by the number of hours worked by Employees A. 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.

Time Tracking

Through this, you can identify the needs and internal capabilities of your employees more easily, as well as exercise more strategic management. The underlying https://1investing.in/ period can be, for example, a day, a month or even a year. Stay on top of FTE trends and leverage HRIS tools to master this essential workforce metric.

FTE Calculation: FTE Full Form

We’ll assume that where you are, full-time employment means working 8 hours a day, 5 days a week, for 52 weeks a year. Benefits like paid time off and maternity/paternity leave are all included within the number of hours worked, so don’t worry about accounting for these hours. Divide the total hours worked by all of your employees by the number of available full-time hours in a year (usually 2,080).

As you can see, calculating FTE is essential for many reasons—from abiding by employment laws to accurately planning team resources. It makes planning for projects and upcoming seasonal changes easier when you know how much capacity your team has. 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). To be required to provide COBRA continuation coverage, a company must employ at least 20 full-time equivalent employees on more than half of its working days in the past year.

More importantly, many government support programs use FTE as a basis to decide how your company should be treated. And some state and federal employment laws only apply to companies who meet a certain threshold of FTE employees. In general, full-time means an employee who works 40 hours per week, although this can vary depending on the organization. Managing employees, time tracking, overtime, and time-off data in disparate systems is complicated. Join us on this webinar case-study to see how Vimeo was able to leverage the BambooHR and Boomr integration to simplify their workforce management and streamline their processes. To qualify for this program, the company can’t have more than 500 full-time employees or FTEs.

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