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What does FTE (full-time equivalent) mean?| Skuad

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What does FTE (full-time equivalent) mean?

What does FTE (full-time equivalent) mean?| Skuad

Updated on:
16 Jan, 2014
What does FTE (full-time equivalent) mean?
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Full-time equivalent (FTE) is a way to measure the total workload or number of hours worked by all the employees in an organization. 

Calculating FTE is useful when comparing different employment instances, such as contractors versus full-time employees. It can also be used to calculate how many employees are essential to finish a project or achieve certain productivity levels.

Benefits of calculating FTEs

Calculating FTEs have several benefits including-

  • By calculating FTEs, organizations can effectively manage their workload and ensure that the workload is evenly distributed among employees. 
  • FTE calculations can help organizations determine the number of staff required to meet their goals and allocate resources accordingly. This can help optimize staffing levels and reduce labor costs.
  • By comparing the number of hours worked to the output or results achieved, organizations can identify areas where improvements can be made thereby allowing employees to increase their performance and productivity.
  • FTE calculations can help organizations plan for future recruitment needs and predict labor costs. This can help businesses make informed decisions about hiring and training.

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How to calculate FTE?

FTE is typically used to calculate the number of hours an employee works per week or year based on the number of hours a full-time employee would work. Here's how to compute FTE:

  • Determine the hours a full-time employee works per week or year in your organization. For example, if a full-time employee works 40 hours per week, that is equivalent to 2,080 hours per year (assuming a 52-week year).
  • Next, determine the number of hours the employee or group of employees you want to calculate FTE for works per week or year.   [Total amount of hours worked by all employees] / 40 hours = FTE. For example, if employees work 30 hours per week, that is equivalent to 0.75 FTE (30 divided by 40)
  • Multiply the number of hours employees work per week or year by the FTE percentage. For example, if an employee works for 30 hours per week and is 0.75 FTE, then their FTE calculation would be 30 x 0.75 = 22.5 hours per week.

Who qualifies as an FTE employee?

So, what is an FTE employee? To qualify as an FTE employee, an individual must typically work a full-time schedule of 40 hours per week, although this can vary depending on the organization's policies. It's important to note that the definition of an FTE employee may vary depending on the specific context or industry. For example, in some industries, an FTE employee may be defined as someone who works at least 30 hours per week and 130 hours per month.

What does FTE 100% mean?

FTE 100% means that the employee works full-time and is equivalent to 100% of the work that can be done by one person in that position. For example, if an employer hires two employees to work part-time, each working 20 hours a week, the total FTE for those employees would be 1 (i.e., 0.5 FTE for each employee). However, if an employer hires one employee to work full-time, that employee would have an FTE of 1 (i.e., 1.0 FTE) because they are equivalent to 100% of the work that can be done by one person in that position.

What is a 0.5 FTE?

A 0.5 FTE (Full-Time Equivalent) means that an employee works half of the full-time hours for the position they are in. For example, if a full-time position typically requires an employee to work 40 hours per week, a 0.5 FTE employee would work 20 hours per week or half of the full-time hours.

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