Full-Time Equivalent (FTE) shows how many employees you have on an aggregate level, considering full-time employees and part-time employees as well. For example, in the case of 40 hours workweek and assuming that you have 10 full-time employees and 10 part-time employees who work 20 hours per week, FTE is 15.
Actually, this indicator is used to convert part-time employee hours into full-time numbers.
Your FTE number can be calculated as follows:
You can download the excel file of FTE Calculator.
Why FTE is important in analytics?
1. Budgeting Process
FTE is used by budget analysts and controllers to estimate costs salaries. In the process of preparing the project and company budget, the first question is how many people we need to achieve budgeted figures. It is more efficient to make budged estimation having in view FTE instead of calculating detailed hours of each part-time employee or each freelancer.
2. Calculation of Essential KPIs
FTE is used for the calculation of some KPIs such as Revenue per FTE, Profit per FTE, hourly rate per FTE, cost per FTE, and others.
3. Compare with Competitors
When you compare your business figures with competitors the most reliable labor benchmark is to have insight into the competitor’s FTE numbers.
4. Paycheck Protection Program (PPP)
The Paycheck Protection Program (PPP) is a Business Administration program to help employers to keep their employees on payroll in the case of health and economic crisis. The number of FTE is used to determine the number of funds that can be forgiven.
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