How FTE is calculated
Divide the hours an employee is contracted to work by the company's standard full-time hours for the same period. If full-time is 48 hours a week, someone contracted for 24 hours is 0.5 FTE, and someone contracted for 36 hours is 0.75 FTE. Add the FTE values of all employees to get the team's total. Some companies calculate FTE on actual hours worked, including overtime, to measure workload; others use contracted hours to measure capacity. State which method you use.
Where FTE is used
Hospitals, schools, laboratories and retail chains with many part-time or shift staff find FTE especially useful, because headcount alone either overstates or understates their real capacity when hours vary so much from person to person.
- Budgeting: people costs per FTE compare better than costs per head
- Staffing norms: nurses per bed or teachers per class, worked out in FTE
- Workload analysis: whether a team has enough capacity for its volume
- Productivity: output such as orders or patients per FTE
- Client billing and project staffing in services firms
FTE vs headcount
Headcount answers how many people work here. FTE answers how much work capacity they add up to. A store with 10 full-timers and 6 part-timers on half hours has a headcount of 16 but 13 FTE. Report both: headcount for people-based costs, facilities and thresholds, and FTE for workload and productivity. The formulas for both, with examples, are in HR metrics.
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How do you calculate FTE for part-time employees?
Divide the part-time employee's contracted weekly hours by the full-time weekly hours. If full-time is 45 hours and a part-time employee works 18 hours, their FTE is 18 / 45 = 0.4. Add up the FTE of all employees to get the total for a team or for the company.
Is 1 FTE equal to one employee?
One FTE equals one employee working the full standard hours. A full-time employee is 1.0 FTE, but a part-time employee is less than 1.0, so a team's FTE total is often lower than its headcount. Some companies also use 1 FTE as a planning unit for an opening that could be filled by one full-timer or two half-timers.