In general terms, full-time equivalent (or FTE) is a unit of measure that plays an important role in calculations used in businesses, project management, or federal programs for eligibility purposes. With 14 employees, 7 of which are full-time and 7 part-time, the staffing capacity is 9.04 full-time employees per year. First, it is necessary to determine the number of hours worked by part-time employees. Based on an FTE of 1.0, we calculate employees work 2,080 hours per year. 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.
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How Do You Calculate Full-Time Equivalents?
The full-time equivalent converts the hours worked by part-time employees into hours worked by full-time employees. For the first time in eight years, two albums earned over 300,000 equivalent album units in a single week in the U.S., according to Luminate. Three of them work full-time (40 hours per week respectively) and the rest work 10 and 5 hours in total.
Benefits of Calculating FTE
By leveraging HRIS like Omni, organizations can elevate this process to the next level. FTE data serves as a common metric for communication and decision-making across departments and organizational levels. Clear and consistent communication about staffing levels is important for a company culture of transparency and alignment with top-level strategic goals. Understanding FTE counts allows your organization to conduct cost analyses https://www.bookstime.com/ related to labor expenses, and ultimately update the recruitment budget accordingly. By calculating FTE-related costs such as salaries, benefits, and overhead expenses, your organization can optimize its budgeting and financial planning processes for the most efficient spending strategy. FTE data enables your organization to analyze team performance by comparing productivity levels across different departments or teams.
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Fear not, as we’ll reveal ways to bill a client accurately through a few easy steps. As easy as that, Clockify can be your ally in estimating fte meaning your employee FTE for your specific needs. Get a quick demo of our HR software to see how Factorial can help your business grow.
- Appeared in G2 Crowd Learning Hub, The Good Men Project, and Pick the Brain, among other places.
- One part-time employee who works ten hours per week and one part-time employee who works 25 hours per week.
- In this case, the calculation may show that the first professional is overqualified for the position, whilst the other needs more training and development.
- By adding the full-time and part-time hours worked, we can calculate the total number of hours worked by all employees for the year as 109,000.
- As you can see from the example above, you can easily calculate how many full-time equivalent employees you need to hire to successfully complete a project.
Altogether, those 18 employees only account for the hours of 4.5 full-time employees. The annual hours for your part-time employees (C, D, and E) add up to 3,120 (1,560 + 1,040 + 520). The annual hours for your full-time employees (A and B) add up to 4,160 (2,080 x 2).
- The IRS Taxpayer Advocate Service has an Employer Shared Responsibility Provision (ESRP) Estimator to help you determine FTEs and see if you qualify as an ALE.
- Amir, Mark, Phyllis and Sue could each work 10 hours per week and the total would be 40 hours worked, or one FTE based on a 40-hour workweek.
- After you have all your employees’ work hours in one place, make sure you follow the steps in the How to calculate FTE for your company?
- So, with all the previous steps in mind, let’s calculate the actual FTE based on the specific numbers we’ve used.
- These regulations include shared responsibility provisions and tax reporting requirements like issuing Form 1095-C when necessary.
By comparing actual Full Time Equivalent counts with targeted FTEs, your organization can identify gaps in its workforce coverage and weed out any inefficiencies. This insight allows you to address staffing imbalances, reducing potential burnout and enhancing productivity. An FTE calculation will help your organization determine the right number of employees needed to meet the demands of your organization. This assessment helps prevent understaffing and overstaffing, ensuring cost-effective resource utilization, including recruitment fees. To help you fully understand how Full Time Equivalent is determined, let’s take a look at a hypothetical example of FTE calculations and break down the math step by step.
A practical example of calculating FTE
