Full-Time Equivalent (FTE) is a unit of measurement used to quantify the workload of an employee or a group of employees. It represents the number of full-time employees that could be hired to do the same amount of work. This metric is crucial for workforce planning, budgeting, and understanding labor costs.
An FTE of 1.0 typically represents a standard full-time employee, often defined as working 40 hours per week or a similar consistent number of hours over a specific period (e.g., monthly, annually). Employees working fewer hours, such as part-time staff, are counted as fractions of an FTE. For example, an employee working 20 hours per week would be considered 0.5 FTE if the standard full-time workweek is 40 hours.
How to Calculate FTE
The calculation for FTE is straightforward. You need two key pieces of information:
Total Hours Worked: This is the sum of all hours worked by all employees (or a specific group) over a defined period. This includes regular hours, overtime (though sometimes handled separately depending on the context), and can encompass all staff, including full-time, part-time, and contract workers.
Standard Hours per FTE: This is the number of hours that constitute a full-time workload for the same defined period. This is often based on company policy or industry standards (e.g., 40 hours per week, 160 hours per month, 2080 hours per year).
The formula is:
FTE = Total Hours Worked / Standard Hours per FTE
Use Cases for FTE Calculation
Workforce Planning: Determine the optimal number of staff needed to meet operational demands.
Budgeting and Cost Allocation: Accurately estimate labor costs and allocate them across departments or projects.
Performance Measurement: Track productivity and efficiency by comparing output against FTE.
Compliance: Essential for reporting requirements related to employee benefits, healthcare (like the Affordable Care Act in the US), and labor laws.
Resource Management: Understand the overall labor capacity available for new initiatives or scaling operations.
Example Calculation
Let's say a small business has the following staff over a one-month period:
Employee A (Full-time): Worked 160 hours.
Employee B (Part-time): Worked 80 hours.
Employee C (Full-time): Worked 155 hours (due to a short holiday).
The standard work hours for a full-time employee in this company for that month are 160 hours.
This means the total workforce effort for that month is equivalent to approximately 2.47 full-time employees.
function calculateFTE() {
var totalHoursInput = document.getElementById("totalHours");
var standardHoursInput = document.getElementById("standardHours");
var resultDiv = document.getElementById("result").querySelector("span");
var totalHours = parseFloat(totalHoursInput.value);
var standardHours = parseFloat(standardHoursInput.value);
// Input validation
if (isNaN(totalHours) || isNaN(standardHours)) {
resultDiv.textContent = "Invalid input. Please enter numbers.";
return;
}
if (standardHours <= 0) {
resultDiv.textContent = "Standard hours must be greater than zero.";
return;
}
var fte = totalHours / standardHours;
// Format the result to a reasonable number of decimal places
resultDiv.textContent = fte.toFixed(2);
}