FTE: Full Form, Definition, Objectives

What is the Full Form of FTE?

The full form of FTE is Full-Time Equivalent.

What is the definition of Full Time Equivalent?

Full-time Equivalent or FTE refers to a measurement unit that highlights the number of full-time hours an employee has worked. It is a combination of full-time, part-time time and temporary staff. This metric enables to determination of the actual manpower size and the workload by regulating the working hours of all employees.

 How is FTE Calculated?

• Calculate the total working hours of all employees by adding them up during the period the company is analysing. A company calculates the working hours of the part-time and full-time employees.
• The company then determines the standard number of hours for a full-time employee for the same period.
• The third step is to divide the total hours by full-time hours.

What are the Objectives of FTE?

1. Managing Manpower

Staffing and Recruitment- FTE enables the process of determining staffing requirements by converting part-time hours into equal full-time roles, facilitating a systematic decision-making process about recruiting and handling workload distribution.

Workload Analysis- It offers a standard benchmark to evaluate the workload of an individual employee and teams to determine if employees are overworked, underworked, or if resources are not utilized properly.

Project Structuring- FTE helps in gauging the number of staff required to complete a project on time. This enables organizations to plan projects more precisely and helps manage workforce capacity.

2. Fiscal Governance

Budget and Prediction- FTE presents clarity in terms of staffing capacity, enabling businesses to plan their budget accurately and plan budgets smartly, along with labour cost prediction and planning of salaries and benefits.

Cost Evaluation- The metric helps in analysing labour costs and evaluating savings in expenses, providing a better and accurate overview of the business’s or a department’s financial performance.

3. Regulatory Conformity and Action Plan

Legal Adherence- Companies can meet the regulatory laws and rules with the help of FTE calculations related to health insurance and labour laws.

Smart Planning- By providing a clear picture of manpower capacity, FTE assists firms in making smart and intelligent decisions regarding amendments and modifications in the workforce, distribution of resources, and overall business strategy.