It’s a simple yet powerful method for making better decisions about staffing, budgeting, and compliance. Even if your team includes part-time workers, contractors, or temporary staff, you’ll know exactly how much full-time labor is being delivered. FTE calculations are vital for any business—they help https://www.fasanolive.it/bookkeeping-review-vs-audit-why-cpa-firms-must/ you understand staffing levels and labor costs.
Why calculate FTE? And why for FTE calculation Excel isn’t enough?
By leveraging HRIS like Omni, organizations can elevate this process to the next level. FTE data serves as a fte meaning common metric for communication and decision-making across departments and organizational levels. Clear and consistent communication about staffing levels is important for a company culture of transparency and alignment with top-level strategic goals.
How does FTE differ from headcount?
Tracking FTE calculation over time enables your organization to identify workforce trends and anticipate future staffing needs. This insight is very important for strategic workforce planning, expansion initiatives, and continued, sustainable growth over time. Understanding FTE counts allows your organization to conduct cost analyses related to labor expenses, and ultimately update the recruitment budget accordingly. Having a comprehensive understanding of your workforce is absolutely essential as an HR professional. As part of this, calculating a Full Time Equivalent (FTE) count is essential. It paints the full picture of working hours and labor at your organization and breaks it down to a simple number.
- Federal laws like the ACA require that businesses report FTEs annually for compliance purposes.
- Let’s say that you have a frontend developer named Mark who is one of your part-time employees.
- This means that in May you can actually offer your clients 59 full-time employees, even though you might think you have 70 of them.
- No stranger to IT and enthusiastic hackathoner, Ioana is also an accomplished fintech, SaaS and B2B tech writer.
- Calculating FTE helps businesses take full advantage of these programs by ensuring they meet eligibility requirements.
- This insight allows you to address staffing imbalances, reducing potential burnout and enhancing productivity.
- But as mentioned, the full-time equivalent employee calculation can vary depending on what you are calculating the FTEs for.
Total all full-time employee hours:
For example, five part-time employees might represent fewer FTEs than their head count suggests. FTE is often more useful for workforce planning and resource allocation. To calculate the total FTE in your company, first determine the FTE of your part-time workers. To do that, divide the total number of hours worked by your part-time employees by the total number of annual hours worked by 1 full-time employee.
Resource & Skills Management
You are subject to employer shared responsibility if you have at least 50 FTEs on average during the previous calendar year. Affordable Care Act rules state full-time employees are employees who work at retained earnings least 30 hours per week or 130 hours per calendar month. Revenue per FTE is a valuable metric in understanding workforce efficiency and profitability. For instance, if a company with 50 FTEs generates $5 million in revenue, its revenue per FTE is $100,000.
Track Workers’ Hours and Wages With Connecteam
Headcount is the total number of individuals employed, while FTE measures workload equivalent to full-time positions. A company with 50 employees might have only 35 FTEs if many work part-time. TimeRewards helps thousands of businesses track time, manage projects, streamline payroll, and ensure compliance. Calculate the Full-Time Equivalent employees for your organization accurately to better manage your workforce planning, budgeting, and compliance. Remember that FTE calculations vary based on factors like work hours, workdays, weeks, and the organization’s definition of full-time work. Suppose you have an employee who works 25 hours per week, and the standard full-time workweek in your organization is 40 hours.