What is Full-Time Equivalent FTE & how to calculate it

All you need to do is enter how many hours of work are required to complete the whole project (estimated time), and then how many hours a day your employees will work on that specific project. 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. For example, if a company requires employees to work at least 35 hours per week, they would be considered full-time. However, if this individual has been working on research and development for 40 hours per week for two weeks, their FTE would be 1.14 (40/35). Now add the total number of hours worked by full-time employees to that of part-time employees to get the total number of hours for all employees.

• It is typically used by management teams, consultants, and investors to set targets for business goals, strategic management, or be part of an investment strategy.
• These tasks will demand more focus and commitment; full-time employees are best placed to provide the solutions.
• The IFTE of 4 employees equals 160 work hours (assuming a regular work week has 40 hours).
• Her company has a 5-day work week, and full-time employees work 8 hours daily.
• FTE allows companies to assess workforce capacity and the real performance of their team, the individuals within that team, entire departments, or even the company as a whole.
• This tells you that, when allocating resources for future projects, you can reduce the number of FTEs by one and still have enough workforce to complete the project.

You can use your resource management tool to adequately divide your workforce (or bring more people on). If you want to calculate FTE salary, multiply the FTE figure by your full-time salary. So if you pay FT workers $40/hr, this equates to $83,200 (roughly 2,080 hours scheduled annually—make sure to subtract leave balances). If you’re worried about salaries and benefits, you can use FTE calculations to learn what you’re currently paying those working full-time hours. Add your team’s billable rates to forecast project costs, and track actual hours worked to monitor budget spend. Based on the FTE value, some of your employees could be eligible for minimum or affordable healthcare insurance.

Calculate annual hours worked

FTE allows companies to assess workforce capacity and the real performance of their team, the individuals within that team, entire departments, or even the company as a whole. Regardless of the type of business you’re in, it’s important to keep an updated number of your employees and the hours they dedicate to their work duties. Day.io offers a comprehensive solution for convenient and accurate FTE calculation to aid in this process. By streamlining workforce management, Day.io ensures optimal leverage of your human capital, aligning it with your business objectives. Sign up for Day.io today and redefine how you understand and manage your workforce. In the landscape of business strategy, the Full-Time Equivalent (FTE) metric plays an essential role, offering critical insights into workforce dynamics.

“We feel this really arms employees, consumers, investors and other stakeholders with the information about their company … Now with your understanding of the best practices for finance benchmarking FTE, let’s fte meaning move on to find out where to source external benchmarks. In addition to qualitative factors, FTE benchmarking should not be done in isolation, but as part of a broader analysis of the finance function.

What does FTE mean in salary?

Float does the heavy lifting by calculating your resources based on their total available hours (for both FT and PT capacity). An FTE of 100% is equal to the amount of work one full-time employee performs within a given time period (a https://www.bookstime.com/ day, week, month, or year). To calculate your yearly FTE, you should calculate the work hours of all of your employees for that one year and divide that number by the ideal number of work hours per year for one full-time employee.

• The calculation is straightforward — enter the number of full-time employees together with the total number of hours worked by part-time employees per week.
• FTEs are calculated in different ways for different accounting uses or for calculating eligibility for different federal programs.
• By determining your company’s overall FTE, you can plan in advance and manage your payroll expenses.
• An FTE of 1.0, for example, corresponds to the hours worked in a day for a full-time employee.
• And the actual number of hours attached to an FTE will also depend on your organization’s policy.

Yearly, a company generally considers an FTE to be valued at 2,080 hours. To delve further into the matter, let’s look at how FTEs are calculated. The information gained from benchmarking the finance function to certain best practices can help management teams assess opportunities for improved business practices and cost savings. For example, you’ll want more hands on deck in a restaurant during the busy holiday and summer seasons. In the construction industry, you’ll need a larger headcount when a bigger project comes along.