FTE vs Headcount: Which Model Is Best For You?


Your 10 part-time employees work 20×10, a total of 200 hours a week. And let’s assume that you take 8 hours of work per day as a baseline for calculating your FTEs. After all, this is how much your full-time employees spend working for you. The FTE salary is an employee’s salary converted into a full-time equivalent wage within the year. The actual number of working hours spent by an employee is not considered in these calculations.

The term “full-time equivalent,” or FTE, refers to the number of part-time employees who provide a company with the equivalent of full-time hours. There are several methods for raising FTE and improving profitability, such as increasing revenue, lowering expenses, and increasing productivity. When you use FTEs, it’s simple to measure how well you’re doing at work, especially if you have part-time employees. You can contrast your staffing level with your competitors in your industry after converting part-time meters to FTEs.

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Here’s how to create a restaurant budget that works for your business…. If you are such an employer, then you are eligible to apply for a tax credit in the amount of 50% of employer-paid health care premiums. Headcount planning might not be the right approach for every project as it comes with three obvious limitations. It predicts your project’s costs accurately when implemented well. It can also help you avoid scrambling to backfill important positions once your project is underway.

How do you calculate FTE for a project?

  1. Add up all of your FT employees.
  2. Calculate all the hours your part-time employees work in a month.
  3. Divide the total hours your part-time employees worked by the number of days you employ FT workers annually (this gives you the FTE of your part-time workforce)

To determine full-time hours for your company, you’ll need to know which days are considered workdays, which days are holidays and how many hours a day people typically work. Many organizations in the U.S. follow a 40-hour workweek to represent full-time work, but this might not be the case for your organization. Maybe your office closes early every other Friday or maybe some employees work longer shifts.

Example #3: 2 full-time employees and 5 part-time employees / 40-hour workweek

Use FTEs to check eligibility for tax and health insurance policies. Some health insurance policies through the Affordable Care Act are only available to businesses that have certain FTEs. For example, the Small Business Health Options Program requires you to have fewer than 50 FTEs to qualify. If you have more than 50 FTEs, then your business must offer 12 weeks of family and medical leave as well as more comprehensive health insurance plans. If your business has a 32- or 35-hour workweek, then multiply the number of employees by that amount instead of 40.

Full-time equivalent, or FTE, is a calculation human resource managers use to determine how many full-time employees they have on staff. To get this figure, they add the hours paid to all employees (full-time, part-time, etc.) and divide that by the number of hours a full-time employee would work over a given period. If you want to calculate FTE for a business that is only open for a few months of the year, you should first ascertain the total number of hours worked by all employees during the open months. Then divide that figure by the number of hours worked by a full-time employee in a year .

The difference between FTE and headcount?

One way is to take the total number of hours that the project will require and divide it by the number of hours in a full-time work week. This will give you the number of FTEs that you will need for the project. Another way to calculate FTE is to take the total number of people who will be working on the project and divide it by the number of hours in a full-time work week. There are many ways that you can measure the people power and resources in your company, like tracking worked hours, or using a simple head count. In order to get a more accurate and nuanced understanding of your team’s human capital, however, you should use Full-Time Equivalents . To calculate the total FTEs for your business, you need to add up the hours worked by all employees, both full-time and part-time.

What is FTE and why it is important?

FTE or Full-Time Equivalent is a measurement used to convert hours worked by several part-time employees into hours worked by full-time employees. The Full-Time Equivalent (FTE) is the number of computed full-time positions. It is used to count employees depending on their degree of employment.

Get crystal-clear insights into what your team members do with their time and see which team members are overworked, and which ones can take on more. In addition to this requirement, my customer wasn’t using Resource Engagements, so all the calculation would be created considering assignments only. So it makes sense to set the baseline as 7 hours to get 1 FTE per man-day and settle correctly. Your client might pay you per FTE, which in your case equals 8 hours of work. Because when you calculate capacity, you calculate for a given person. If you see that you have 5000 hours of frontend development available in the next three months, it sounds great, but you also have no idea what it means.

How to calculate a full-time equivalent

You could use one full-time employee and three part-time employees or two-full time employees and a third full-time employee for half of the project. Therefore, eligible employees may obtain affordable and minimum health insurance coverage thanks to FTE calculations under the Affordable Care Act. Any employee having at least 30 working hours per week is considered a full-time employee under this act. Add your team’s billable rates to forecast project costs, and track actual hours worked to monitor budget spend.

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To claim PPP, you may need to keep a PPP chart for the scheme’s duration to show your employee retention. Divide the annual salary by the number of working hours per year to determine the FTE salary. Setting an error budget allows teams to prioritize items that are more vital to the product’s success and ensuring that they are produced with a greater level of reliability.

Keep in mind, however, that the fte meaning strategies that may be most useful are depending on the organization and the industry. FTEs can be used to quantify staff productivity and efficiency by comparing the number of FTEs to variables such as revenue, output, or customer satisfaction. Organize projects into hierarchical groups on the Manage Enterprise Project Structure page. Be sure to get solid sales targets based on market research to estimate the amount you can make from this new product. You will need to invest a substantial amount of money in this product line well before you take in any revenues. In fact, you provide more room for each employee to work than your competitor; you don’t need to expand your facility to match their productivity figures.

  • The allowances are sub-divided broadly into two categories- direct labor involved in the manufacturing process and indirect labor pertaining to all other processes.
  • This way, you will be able to determine the number of full-time equivalent workers in your company even when you have part-time workers on-site.
  • Let’s say you have two hires working 40 hours per week, three part-timers each working 20 hours per week, and two people with flexible schedules working an average of 15 hours per week.
  • The first FTE question you need to ask is “How many work hours are there in a year?
  • Speaking of time off policies, if you’re in the U.S.,the Affordable Care Actrequires ALEs to offer health insurance to their workers.