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In addition, Homebase provides small business employers with a range of scheduling options to ensure your staff hours are within the correct range. To calculate FTE correctly, you’ll need to quantify your total weekly available work hours; it’s an important component of the calculation. Available hours per week is the number of hours your business considers standard work time multiplied by the number of employees you require to accomplish those related needs.
Headcount planning is important for Human Resources because it helps ensure they have the right number of people with the right skills to meet the short and long-term needs of the organization. FTE is equally important because it helps HR standardize their headcount, simplify their payroll, and accurately forecast budgets. Such technology is already a part of many workplaces and will continue to shape the labor market and HR. Here’s how employers and employees can successfully manage generative AI and other AI-powered systems. FTE is a very specific term used to calculate whether a company is required to provide benefits under the Affordable Care Act (ACA) and the Family Medical Leave Act (FMLA), for example. Employers can also monitor workloads for future budgeting and staffing with FTE.
List all of your employees and hours worked
A typical or full-time work week usually consists of 40 working hours without paid or sick leave. So, if your standard work week consists of 40 work hours, your employees probably work 8 hours per day. Still, this doesn’t have to be the case in all organizations as certain employees may work 7 hours one day and 9 hours the next day. The calculation is straightforward — divide the employee’s scheduled hours by the number of hours that represent an official weekly full-time schedule in a company (e.g., 40 hours per week).
- The actual PTO an employee can accrue may depend on several factors, including years of employment that dictate an employee’s hourly PTO accrual rate.
- It could also be a temporary staff member who works an irregular schedule.
- But, in many situations, a business needs to view or report its staffing level in terms of full-time work.
- HR departments often use FTE salaries to determine their part-time workers’ compensation.
- Let’s review what FTE means, why it’s essential, and how to use it for resource management planning.
This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel. This formula can be modified to calculate the FTE of a single employee, as shown below.
Step 3: Sum Up All the Work Hours
Converting hours worked by part-time employees into full-time equivalents can be helpful when calculating these metrics. An employer with a 35-hour workweek would simply divide the employee’s scheduled hours by 35 to determine the FTE. For example, an employee scheduled to work 21 hours per week would be 0.6 FTE when the full-time workweek is 35 hours. Salaried employees who work full time or are expected to work a full-time schedule (even if they don’t report their actual hours each week) are considered full-time employees in both cases. With this FTE Calculator, you can quickly calculate how many full-time equivalent employees are on your team. As it helps you work out how many manhours of work are being done, FTE calculation is an important part of business planning.
A metric shows the difference between two or more numbers, while analysis shows us why something is happening along with the impact. To work out your FTE, you must determine what’s considered full-time in your organization. There are companies that have a significant number of people working part-time, i.e., workers who spend only a fte meaning short time in the company. Seeing the accrual of leave in real time makes it easier to calculate the resources needed at any given time. Once you have your total FTE count, multiply it by $83,200 to find your total spent on full-time equivalent workers. Want to improve your project budgeting and allocate workloads more effectively?
Step 5. Identify the part-time FTE
HR can analyze FTE ratios to ensure the workforce alignment supports desired cultural goals. FTEs can be compared to revenue output and other productivity metrics to assess workload balance across the organization. On the flip side, a spike in FTE levels without corresponding business growth may indicate a need to realign staffing plans and reduce hours. By multiplying the number of FTEs by the average cost per FTE, HR can predict total labor budget needs more precisely than just using headcount alone. Do you want help with the management of your company’s key figures, helping your team make the right decisions, and implementing the right measures in personnel planning?