Full Time Equivalent - what is it?

Full-Time Equivalent (FTE) is a measurement unit that is equal to one full work day. In the business setting, full-time equivalents track an employee's work flow. FTEs are usually expressed in whole numbers, with 1.0 representing a full day of work, while 0.5 referring to a half-day of work. When tracking an FTE below 1, such as 0.5, it usually indicates that an employee has worked less than a full day (i.e. 6 hours of work). 

What is FTE?

FTEs are most commonly used by companies to understand their employees' workload. The goal of using FTEs is to provide the accounting department with how many part-time employees add up to the hourly output of a full-time employee. 

Usually, a company considers 2,080 hours as an FTE, with the following formula serving as the method for calculating the metric. 

How to Calculate FTE

This is the formula to calculate FTE, assuming that the average full-time worker remains at a firm for at least a year and works 8-hour days:

Businesses utilize FTE when experiencing a rising number of part-time workers. By converting part-time workers' hours into FTEs, firms can gain insight into how many full-time employees their part-time workforce represents. 

Tracking FTE

Although measuring this KPI can serve as a powerful insight generator, accurately tracking this indicator over a long period determines success. Since FTE is dependent on employee turnover and the frequency of part-time hires, it is vital to construct dashboards that display your firm’s progress in real-time.

A data visualization tool like Toucan can aid a firm’s financial tracking efforts by catering to users with little data experience and enabling collaboration through the usage of cloud technology. The ability to track FTE, employee turnover, and part-time hiring rates in real-time on any device allows for full ownership of a firm’s data across multiple departments.

With a new generation data visualization tool, FTE becomes a valuable tool for accounting and HR departments looking to focus on maintaining an optimal workforce.