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In other words, it allows you to compare different types of staffing arrangements on a level playing field. FTE refers to one full-time employee or the equivalent of a full-time employee. 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. For example, a project that is estimated to take 600 hours of work can be accomplished in a variety of ways depending on your allocation of staff and time requirements. FTE calculations are also important when determining eligibility for certain federal programs and benefits.
CTO at Orbiter, Adviser at LOT.TRADE & Founder Wobbly.me and co-founder of Lazy Ants. I am advising on the production and growth of blockchain-based projects. I do web and smart-contract development, IDO, DAO and DeFi, CEX and DEX listings.
How to calculate an FTE?
Manually calculating and then recalculating your FTE can lead to errors and discrepancies in data, this is why it is a good idea to use workforce planning tools and automate this process from the very beginning. This distinction is needed because a 40-hour work week is common, yet it is not universal. At some companies and in some countries, a 36-hour work week is also a viable option so for them, 36 hours of work equal 100% or 1.0 FTE. In simple terms, 100% FTE equals 1.0 FTE — it might be used to identify an individual employee who’s working full-time or a few people who work the equivalent of one FTE.
Similarly, it helps determine if the company needs to hire more employees for a specific project. It can be helpful in cases where companies employ both full-time and part-time employees. This measurement unit was created due to the necessity to determine how many full-time employees are equivalent to working hours if an enterprise has both full and part-time workers.
The Benefits of Using FTE?
Let’s dive a little deeper and learn about why full time equivalent matters to your business. Within this method, the employee is credited with 8 hours for each day they would be required to work at least 1 hour (including PTO). Within this method, you add up all actual hours worked (including PTO).
- By comparing full-time employee’s numbers between industry competitors a company can analyze its current status about staffing, this can lead to conclusions like whether the company is under-staffed or over-staffed.
- For example, imagine the project will involve designing a new website.
- Fortunately, some tools and techniques help businesses accurately compute and monitor their FTEs – simplifying this critical process.
- It will help you plan your project work, set deadlines, and work out your budget.
Full-time equivalent (FTE) is calculated by dividing an employee’s scheduled hours by the company’s work scheduled hours on a weekly full-time basis. If each of these workers works 40 hours per week, then you are already meeting the FTE requirement. However, if one works only 20 hours per week, you must bring in another part-time worker to complete the FTE requirement. bookkeeping for startups 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. In its most basic form, FTE is calculated by dividing the total number of hours worked by full-time employees by the number of hours worked by all employees.