Full-time equivalent (FTE)

economic-dictionary

The full-time equivalent or FTE is a measure used in human resources to find out the number of full-time workers that are necessary to carry out an activity.

Within a company there may be full-time workers, being considered as such in Spain 8 hours a day, and others part-time, that is, working less than 8 hours a day. The FTE acts as an indicator to compare the performance of a work team.

FTE formula

The FTE formula is described below:

FTE or equivalent number of workers = (Number of hours actually worked / Number of working days in the reference period) / Hours of the full day.

That is, we have a fraction. At the top is the number of hours actually worked in relation to the number of reference working days, which would give us the "working day" and at the bottom of the fraction the hours of the full day. In this way we will know how many workers we need to carry out the same activity if we had full-time workers.

It can be calculated for different reference periods such as the FTE per year, per month, per week or even per day.

FTE example

A company has 5 workers: 1 with 50% of the working day, 1 with 75% of the working day and 3 full time. How many equivalent workers are needed in a week?

You are asking us for the weekly FTE. The full weekly working day is 5 working days at 8 hours a day: 8 × 5 = 40 hours a week

1st we calculate the number of hours worked per week that all employees add up

1 employee x 8h x 5 days x 50% = 20h

1 employee x 8h x 5 days x 75% = 30h

2 employees x 8h x 5 days = 80h

Total per week = 20 + 30 + 80 = 130h

2º We divide the total hours worked per week by the number of working days of the week, that is, 5, and by the full daily time, which is 8 hours.

FTE = (130/5) /8=3.25

3º The company needs 3.25 full-time workers per week to carry out its activity

Another example

A company has 110 workers, with different working hours. The sum of the hours worked by all employees within a month is 14,823.

The month has 20 business days

The whole day is 8 hours a day

How many full-time workers were needed to carry out the activity this month?

They are asking us for the number of equivalent workers in that month (monthly FTE).

To calculate the FTE -> We divide the time worked by the reference period, which is 20 working days, and by 8, which are full-time hours

FTE = (14.823 / 20) /8=92.64

It means that we have needed 92.64 full-time people to carry out the activity of the company.

Outsourcing

Tags:  Colombia banks derivatives 

Interesting Articles

add