FTE is an acronym for "full-time equivalent." It is a unit of measurement that expresses the number of full-time employees needed for a certain task. However, not all employees are full time, and so a single FTE unit can actually represent two or more part-time employees. A total of 2,080 hours of labour per year is equivalent to one FTE, regardless of how many individual employees contributed to this total. Calculating FTE is useful because it helps businesses predict the ideal number of employees that should be present on the payroll, as well as how much the labour for a particular project is going to cost.
- Skill level:
Decide which time-frame you want to use as the basis for your calculations. You can base your calculations on the number of labour hours the business requires per day, per month or per year. The most accurate measurements will be made by using the yearly labour requirements. However, if data on your daily or monthly labour requirements is more readily available, you can use this as the basis for your calculations just as easily.
Determine the number of labour hours that the business requires within the time-frame selected in Step 1.
Divide this number of labour hours by the appropriate factor. The appropriate factor will depend on which time-frame you selected. If you chose years, divide the number of labour hours by 2,080; if you chose months, divide the number of labour hours by 173.33; if you chose days, divide the number of labour hours by 8. The resulting quotient is the FTE requirement.
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