How to Calculate FTE

What is the formula for calculating FTE?

 To better understand their workforce in terms of hours worked, companies can use the full-time equivalent formula, or FTE. This formula standardizes a company’s labor force, especially when it has a combination of full-time, part-time, and seasonal workers.

So, how do you calculate FTE? Take a look at the steps below:

1. Figure out the regular full-time hours: This number is the quantity of hours regarded as full-time in a particular company. This is often forty hours per week, though the specific number may vary across organizations or countries.

2. Determine FTE for specific employees: If an employee works part-time, you should divide the hours he or she works by the regular full-time hours. For instance, let’s say Jake is part-time and works twenty hours per week. At his company, full-time positions work forty hours. Therefore, the FTE for Jake is 0.5.

3. Figure out the total FTE for all workers: To get the total FTE, add up each employee’s FTE. The total number is representative of the same number of full-time employees.

Formula to calculate FTE

 Employee FTE = Employee’s hours per week / Regular full-time hours

Sample calculation

As an example, let’s imagine that Company ABC has 3 full-time workers who work the standard forty hours apiece. The company also has two part-time workers who work twenty hours per week.

To get the FTE for the full-time employees, you would perform the following calculation: 3 x 1 = 3. Because they are already full-time employees, each individual’s FTE is 1.

For the part-time employees, the FTE calculation is as follows: 2 x 20/40 = 1

To get the total FTE for Company ABC, you simply add the employees’ FTEs: 3 + 1 = 4.

Thus, with three full-time workers and two part-time workers, Company ABC has a total FTE of 4. This means that the company has the equivalent of four full-time employees.

Full Time Equivalent (FTE) Calculations Table

FTE is based on a full time equivalent of a 40 hour work week. Using the number of hours you intend for the employee to work (estimate the average if it is not exact) divide by the full time equivalent of 40.

How do you calculate FTE and headcount?

1. Calculating full-time equivalent (FTE)

The purpose of the FTE formula is to help a company better understand its own workforce in terms of how many hours employees work. It makes it simpler to aggregate or compare across different kinds of employment (part-time, full-time, temporary, and so on.)

Steps:

• Figure out the normal full-time hours per week for the company (usually forty hours).
• Calculate FTEs for each individual employee by dividing their average hours per week by the normal full-time hours.
• Add all the employees’ FTEs to get the company’s total FTE.

Formula:

Employee FTE = Employee’s hours per week / Regular full-time hours

Total FTE = ∑(Employee FTEs)

2. Calculating headcount

It is much easier to figure out headcount. This is simply how many people are in a company and has nothing to do with the hours they work.

Steps:

• Count each employee, part-time or full-time, as one headcount unit.
• Add up the count to determine the total headcount.

Sample:

Let’s say a small business has 3 full-time employees who each work forty hours per week. The company also has two part-time workers who come in twenty hours per week.

Let’s first find the FTE for this company:

• Normal full-time hours: 40 hours per week
• Full-time workers’ FTE: 3 × 40/40 = 3
• Part-time workers’ FTE: 2 × 20/40 = 1
• Total FTE = 3 (from full-time) + 1 (from part-time) = 4 FTEs

To get the headcount, the company must count each employee, including the three full-timers and the two part-timers. The result comes out to five employees. This is the headcount.

The company in this example has a total FTE of 4, which means that it has the equivalent workforce of four full-time employees. Its headcount of five people represents the actual number of individuals employed at the company.