1 billion hours is the same as many years
How to calculate the full-time equivalent (FTE) [free template]
How much capacity does your company have with how many workers? In other words: do you know your full-time equivalent? You should, because it gives you an idea of your company's staffing needs. It represents an important basis for any restructuring or the creation and reduction of staff. How much staff capacity you have can therefore be calculated using the full-time equivalent.
In this article, we explain how the conversion from part-time to full-time employees works and why it is so important to know the respective key figures.
Definition: full-time equivalent simply explained
What does full-time equivalent mean? The full-time equivalent is also often used with FTE or FTE for full-time equivalent abbreviated. It describes the employee's capacity, whereby a FTE or FTE of 1.0 corresponds to the working hours of a full-time employee. Accordingly, the FTE for a part-time employee who works 20 hours a week would be 0.5. The full-time equivalent converts the hours worked by part-time employees into hours worked by full-time employees.
These key figures are of great importance for personnel management. Because they indicate how much manpower a company has. In other words: How many full-time positions result in the actual positions with different working time models.
Example: A company employs 10 people. Five of them work full-time (40 hours per week), three occupy a part-time position with 20 hours per week each and the other two work 10 hours per week each. The FTE or FTE value in this case is 7.0.
A full-time position corresponds to a FTE of 1.0. Accordingly, 5 full-time positions result in one FTE of 5.0.
A part-time position (20 hours) corresponds to a FTE of 0.5. With three part-time positions, that results in one Value of 1.5.
10 hours per week correspond to a FTE of 0.25. With two 10-hour digits, that makes one FTE value of 0.5.
As you can see, the part-time employees are converted into the performance of a full-time employee. So the FTE or the FTE is not the number of employees in a company, but the equivalent of a full-time employee. Because the number of employees says nothing about the actual work performance.
What is the purpose of calculating the FTE or FTE?
The conversion of part-time employees into full-time employees provides information about the personnel capacity of a company. This has some advantages:
- Companies experience the actual work performance of their staff. It is less important how many employees there are in a company, but rather the available work performance. With the calculated value, important personnel decisions can be made.
- Part-time is a working time model that is increasingly in demand. For the HR department, the full-time equivalent is therefore particularly important for personnel planning. In this way, changes and trends in the labor market can be better assessed.
- Projects are easier to plan. Employees with different working time models can be assigned to projects more easily, as the performance of an employee can be better calculated - no matter how many hours he works per week.
- The FTE determines which labor laws apply in a company.
- With the FTE, companies and departments and their personnel capacities can be compared. If you only compare the number of employees, the results are too imprecise.
Calculate full-time equivalent: step by step
The FTE can be quickly calculated in four simple steps.
As a basis for a full-time equivalent of 1.0, we calculate with 2080 working hours per year. This does not include holidays, public holidays and days of absence. This figure is only used as a basis for calculating the annual FTE and reflects the working hours for a 5-day week with 8 hours per day.
Full-time equivalent formula
You can calculate the full-time equivalent using the following simple formula:
|(Total number of hours of all part-time employees + total number of hours of all full-time employees) / period for the calculation (2080 for the annual FTE, 173.33 for the monthly FTE or 8 for the daily FTE) = FTE (or FTE)|
Divided into several clear steps, it looks like this:
First of all, you need to determine the number of hours worked by part-time workers. This applies to companies that employ both part-time and full-time employees.
|Part-time employees x total number of hours per week x number of weeks (which an employee has worked) = total hours worked in a period|
5 part-time employees work 25 hours a week for 30 weeks.
2 part-time employees work 10 hours a week for 25 weeks.
5 x 25 x 30 = 3750 hours
2 x 10 x 25 = 500 hours
To get the total number of hours worked by all part-time workers, add up the two results:
3750 + 500 = 4250 part-time hours
Now determine the number of working hours for the full-time employees in a certain period of time. Full-time employees are those who work at least 30 and a maximum of 40 hours per week and more than 120 days per year.
|Full-time employees x hours worked per week (40) x 52 weeks per year = total hours worked by full-time employees per year|
7 full-time employees work 40 hours a week
7 x 40 x 52 = 14560 full-time hours
Now add the total hours of full-time employees with those of part-time employees to get the total number of hours for all employees.
|Total hours of full-time employees + total hours of part-time employees = total hours worked by all employees per year|
4250 (part-time) + 14,560 (full-time) = 18810 total hours
In the last step you divide the total number of hours of full-time employees and part-time employees (in our example 410 hours) by the number of regular full-time hours (in our example 2080 hours per year or 40 hours x 52 weeks) to give the full-time equivalent for a certain period of time receive.
|Total number of hours of all employees / 2080 = FTE|
18,810 (total number of hours) / 2080 = 9.04 FTE (FTE)
To get the full-time equivalent of one month, divide the total number of hours by 173.33 (2080 hours / 12 months).
For example, if the total number of hours for the month of March was 2,800, the invoice would look like this:
2080 (total number of hours) / 173.33 = 16.15 FTE (FTE)
To find the full-time equivalent of one day, divide the total number of hours by 8.
For example, if the total number of hours was 75, the calculation would look like this:
75 (total number of hours) / 8 = 9.38 FTE (FTE)
The result is a full-time equivalent of 9.04. With 14 employees, of which 7 are full-time and 7 part-time, the personnel capacity is 9.04 full-time employees per year.
✔️ Calculate full-time equivalent with Excel: Free download
If you want to save time and prefer to use an Excel template to calculate the FTE (FTE), you can download our free template here.
👉 Download the FTE Excel template here
Simply indicate how many employees work, how many hours per week and for what period of time. Our template thus calculates the full-time equivalent for you directly.
Would you like to keep an eye on your personnel key figures in order to make the right decisions and measures in personnel planning? Then Factorial is right for you.
Optimize your HR processes with Factorial.🚀 Try it now for free.
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