Completing projects is about more than just meeting deadlines. It’s about assigning the best people to the task and putting them in a position to succeed (without wearing them thin).
This requires impeccable project planning capabilities, and that can be tricky if you’re not tracking your workforce’s capacity. One way project managers can do this is by calculating FTE.
Let’s review what FTE means, why it’s essential, and how to use it for resource management.
What does FTE mean?
Full-time equivalent, or FTE, is a calculation human resource managers use to determine how many full-time employees they have on staff. To get this figure, they add the hours paid to all employees (full-time, part-time, etc.) and divide that by the number of hours a full-time employee would work over a given period.
For example, an employee working 20 hours per week is considered half a full-time employee (if the employer considers a 40-hour workweek full time). As long as the employee's hours add up to 40 hours per week, it doesn't matter what hours and days they work. Since FTE considers the total time worked, it provides flexibility. This is critical in today's workplace, with more people working remotely and with flexible hours.
Our team at Float employs a global remote workforce, with most working from home (or from a co-working space). We operate asynchronously, so everyone can choose which hours work best for them.
Why does my employee FTE matter?
Knowing how many full-time equivalent employees you have is beneficial for several reasons. For one, it makes planning resources and workloads across full and part-time staff easier. Maybe your team needs extra help from temporary workers or new hires. Or perhaps some of your part-time employees can put in additional hours to pull the weight of a larger project.
Calculating FTE even gives small businesses insight into whether they're paying too little or too much in project costs.
Plus, you get better visibility into labor trends. By knowing how many full-time equivalents you have, you can see where your organization has room for growth. One option is to bring on a part-time employee on a full-time basis temporarily.
If you're worried about salaries and benefits, you can use FTE calculations to learn what you're currently paying those working full-time hours. This way, you can better budget and plan for the future.
Float comes with a handy time off policies feature to calculate accrued leave, ensuring no one goes over their allotted time. It makes resource and project management seamless!
Speaking of time off policies, if you're in the U.S., the Affordable Care Act requires ALEs (applicable large employers) to offer health insurance to their workers. You're considered an ALE if you have at least 50 FTE employees.
Use your FTE calculation to find out whether your company qualifies. If so, confirm you're offering the right level of health insurance to your team to prevent a tax penalty.
How to calculate FTE
The formula used to calculate FTE is simple. You take the hours an employee works in a month and divide it by the total number of hours in a full-time schedule (typically 30 to 40 hours weekly). The formula looks like this: Scheduled work hours / company's full-time working hours per week
For example, a part-time employee working 15 hours weekly (out of 40) has an FTE of 0.375. The goal is to look at how many hours employees work, not the number of employees you have. So based on the hours worked, you may have the equivalent of four full-time workers (if you have eight employees working 20-hour work weeks).
Now, if you're a larger company, you'll need a quicker way of calculating FTEs. To do this:
- Add up all of your FT employees
- Calculate all the hours your part-time employees work in a month
- Divide the total hours your part-time employees worked by the number of days you employ FT workers annually (this gives you the FTE of your part-time workforce)
- Add together your FT employees and FTE part-time employees to get the actual number of FTE employees
If you want to calculate FTE salary, multiply the FTE figure by your full-time salary. So if you pay FT workers $40/hr, this equates to $83,200 (roughly 2,080 hours scheduled annually—make sure to subtract leave balances).
Once you have your total FTE count, multiply it by $83,200 to find your total spent on full-time equivalent workers.
How to plan FTE resources
Next, you must determine whether you need more resources now or in the future. This will depend on your industry and the type of projects you embark on.
For example, you'll want more hands on deck in a restaurant during the busy holiday and summer seasons. In the construction industry, you'll need a larger headcount when a bigger project comes along. It's easier to plan for this when you can visualize your project needs and team capacity.
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Here's how you can manage your resources more efficiently:
1. Choose a resource management software
Using software for resource management simplifies (and speeds up) the process of maintaining favorable capacity levels. Float does the heavy lifting by calculating your resources based on their total available hours (for both FT and PT capacity). It also generates reports to see all the numbers behind your team.
Find the average number of hours worked to see if there's room for scaling or if you need to cut back to save on costs.
2. Divide a project into FTE
Analyze your upcoming projects/seasons to determine how many FT hours you'll need to ensure successful completion. You can use your resource management tool to adequately divide your workforce (or bring more people on).
For example, let's say you have a 100-hour project to complete within a week. Based on a 40-hour FT workweek, you'd need two full-time workers and one 0.5 FTE part-time employee.
3. Give some leeway for time off
Well-rested employees make for a happy and productive workforce. To achieve this, you need to determine the leave balance for your workforce. Take into account the various types of leave:
- Sick leave
- Paid time off (personal days)
Seeing the accrual of leave in real time makes it easier to calculate the resources needed at any given time.
With Float, you can check the total leave balance for FTE or PTE employees using the time off policies feature. You can view the unused balance as a whole number or percentage for on-the-fly planning.
4. Have staff track their time
Keeping track of employee hours ensures everyone gets a fair share of the workload. It also keeps part-time workers from going over their allotted hours each month.
With this data at your fingertips, you can keep track of hours worked, along with how long it takes for employees to complete tasks. This is vital knowledge to have when planning future projects.
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Time tracking in Float gives you a combined view of your team's estimated vs. actual hours worked so that you can plan future projects with greater accuracy.Try for free
Plan resources better with FTE calculations
As you can see, calculating FTE is essential for many reasons—from abiding by employment laws to accurately planning team resources. It makes planning for projects and upcoming seasonal changes easier when you know how much capacity your team has.
Luckily, Float has the tools you need to manage FTE employees.
Track your team's time off and see your total leave balance in real time with time off policies, and set custom work hours to get an accurate picture of who is available and when—all in one dashboard. Talk about making resource management easier!
Try Float for free today and start planning your resources smarter.