fte finance meaning

In the busy world of finance we tend to evaluate performance using metrics and financial ratios. Time tracking in Float gives you a combined view of your team’s estimated vs. actual hours worked so that you can plan future projects with greater accuracy. Rated #1 on G2 for resource management, more than 4,000 of the world’s top https://www.bookstime.com/articles/what-is-a-cost-benefit-analysis teams choose Float to plan projects, manage resources, and track their team’s time. There are numerous reasons why calculating FTE can prove meaningful to your company. By calculating your FTE, you’ll be able to get information on the overall productivity of all your employees (within a team, department, or entire company).

On the flip side, a spike in FTE levels without corresponding business growth may indicate a need to realign staffing plans and reduce hours. FTEs are the essential data needed to accurately forecast and manage labor costs across the organization. Each FTE represents the fully loaded expense of having one full-time permanent employee on staff. In other words, FTE allows companies to standardize headcount and measure workload capacity by converting part-time staff to a full-time basis. Understand how accurately gauging FTEs can optimize staffing, predict budgets, and support employee retention – a must-read for every modern HR professional. The chart below displays the number of weekly hours worked with the corresponding FTE under the standard 40 work-week.


Along with counting the hours worked, FTEs show how many full-time employees a particular company employs within a fiscal year or needs to employ to carry out a project. Calculate the FTEs by determining the number of hours worked by full-time or part-time employees in a year. To do this, multiply the number of weeks in a year with the number of hours for a full-time position. Determining the amount of workers in your organization and the amount of time they work is crucial for budgeting, benefits administration and legal purposes. That said, full-time equivalent (FTE) is a metric used to determine the total number of full-time workers that you have in an entire organization.

fte finance meaning

As was the case with the monthly FTE, this equation presumes that all work weeks had a total of 153 work hours. The IFTE of 4 employees equals 160 work hours (assuming a regular work week has 40 hours). fte meaning So, whether you’re a business owner, HR professional, or just curious about how work can be measured, understanding how to calculate FTE is a crucial part of effective workforce management.

The Importance of Determining FTEs

It allows you to manage and monitor employee hours, generate detailed reports, and even set specific goals for your team. With Day.io, you can also compare the performance of different teams or projects over time and track progress against goals set by individual employees or the whole company. They also use it to calculate labor costs for the expected project workload and subsequently define the funds needed to finish a project. For example, an employee working 20 hours per week is considered half a full-time employee (if the employer considers a 40-hour workweek full time). As long as the employee’s hours add up to 40 hours per week, it doesn’t matter what hours and days they work.

The method for calculating FTE is slightly different for each of these uses. Marija Kojic is a productivity writer who’s always researching about various productivity techniques and time management tips in order to find the best ones to write about. She can often be found testing and writing about apps meant to enhance the workflow of freelancers, remote workers, and regular employees. Appeared in G2 Crowd Learning Hub, The Good Men Project, and Pick the Brain, among other places. Considering that the FTE unit of measure is based on the total number of hours worked — it may not indicate the actual number of people working in a company.

What Is Full-Time Equivalent (FTE) & How Is It Calculated?

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 KPMG report into gender pay in 2022, for example, found that about 36 per cent of gender pay gaps come down to biased hiring practices and promotion pathways.

  • Appeared in G2 Crowd Learning Hub, The Good Men Project, and Pick the Brain, among other places.
  • If a company considers 40 hours per week as the basis for a full-time position, then anyone working an amount of hours below this range is considered a part-time employee.
  • Access and download collection of free Templates to help power your productivity and performance.
  • The Paycheck Protection Program (PPP) was launched by the US Small Business Administration (SBA) to help businesses keep their workforce employed during the Coronavirus (COVID-19) crisis.
  • However, depending on the program, such as medical or legal, and the level, for example, undergraduate or not, the student will need to have a certain number of credits to graduate.

This means using the same definitions and assumptions for calculating FTE levels, such as the number of hours worked per week, or any adjustments for part-time or temporary employees. With this data at your fingertips, you can keep track of hours worked, along with how long it takes for employees to complete tasks. Using software for resource management simplifies (and speeds up) the process of maintaining favorable capacity levels.