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What standard FTE (Full Time Equivalent) do you use?

FTE Fulltime Equivelant CalculationI'm revamping some of the Budgeting and Reporting we're doing and I wanted to take a poll and see what everyone's standard thought of what an FTE is.

The general assumption is that 1 FTE = 40 Total Hours. This is based on Total Hours (Regular + OT + DT) 

For Example: 400 Reg Hrs + 100 OT Hrs + 20 DT Hrs = 520 Total Hrs = 13FTE's 

I've across a couple companies that only consider Regular Hours in their FTE Calculation so the Previous example would only result in 10 FTE's.

Is it common practice to base FTE's on just Regular Hours? 


Topic Expert
Regis Quirin
Title: Director of Finance
Company: Gibney Anthony & Flaherty LLP
LinkedIn Profile
(Director of Finance, Gibney Anthony & Flaherty LLP) |

Yes, I consider only regular hours per FTE, i.e. 2080 hours/year. The standard pay for OT is time and a half. Your budgeting should include OT, only if your production warrants it.

The computation should be directly related to your revenues, which will increase, as production increases. I am a very big proponent in developing budget scenarios to consider what needs to be done if production exceeds or falls short of plan:

1) If production = 100% of plan, 10 FTE;

2) If production = 150% of plan, 10 FTE + 20 hours of OT (which is the same as 30 hours straight time);

3) If production = 200% of plan, 11 FTE.

The example is arbitrary and the actual plan would be relative to your business, but it makes the point. A direct revenue relationship is necessary to justify OT.

Topic Expert
Vernon Reizman
Title: CFO
Company: RCM Industries, Inc.
(CFO, RCM Industries, Inc.) |

Thomas, I believe you are on the right track. I also use total hours and divide by 40 weekly hours for full time employees. However, some companies see benefits as a major cost and they ignore OT as to not overstate the total cost, (In your example the 13 FTE would imply 3 additional benefit costs). We also use temporary employees whom we factor in using the same formula even though they may work less hours. Four temporaries each working 10 hours a week equals one FTE. Consistency is the key. You want to make sure you maintain the same formula.

Sarah Jackson
Title: Associate Editor
Company: Proformative
(Associate Editor, Proformative) |

Thomas, you might want to check out this free resource here at Proformative

Topic Expert
Malak Kazan
Title: VP, Special Projects
Company: ERI Economic Research Institute
(VP, Special Projects, ERI Economic Research Institute) |

Thomas, I 've worked in service industry (BPO) budgeting non-exempt FTEs based on straight time only using the 2080 annual hours. I think it depends on the cost structure / business model. Hope this helps.

Topic Expert
Lee Andrews
Title: P/T CFO, Business Consultant
Company: Pacific Bag, Inc./Other Clients
(P/T CFO, Business Consultant, Pacific Bag, Inc./Other Clients) |

I agree with others particularly in that the method you might use could vary greatly depending on the industry. If OT is an occasional thing then I would ignore it and measure only off a standard 40 hour week. (My company is in packaging distribution -- OT is minor -- I count regular hours only). If OT is a material integral part of the labor equation based on fluctuating production/demand levels, widely varying business seasonality, etc., then I think you have to factor in regular and OT if you are asking the question -- how many regular hour "heads" did it take to get the job done. I did not know what "DT" was (down time?). Lee

Thomas Sherrouse
Title: Business Intelligence Manager
Company: TaxSlayer
LinkedIn Profile
(Business Intelligence Manager, TaxSlayer) |

Thanks for the input everyone this is a great detailing of information.

DT is Double-Time.

Topic Expert
Wayne Spivak
Title: President & CFO
LinkedIn Profile
(President & CFO, |

Depending on the client, I've used both, 2080 for Exempt employees and some derivative (based on client) on the going assumption for those who will have overtime.

Topic Expert
Barrett Peterson
Title: Senior Manager, Actg Stnds & Analysis
Company: TTX
(Senior Manager, Actg Stnds & Analysis, TTX) |

I use the standard hours ("40"). Overtime is additional cost of staffing or scheduling considerations, replaceable perhaps wit FTEs. The uses can influence the calculation. You may use both for different analyses.

janet kataw
Title: HR & Payroll Manager
Company: siparadigm llc
(HR & Payroll Manager, siparadigm llc) |

I work for a small healthcare laboratory with less than 50 employees and we are entertaining a company "Inspirity" to come in and handle our healthcare benefit, employee costs, workers comp, 401k, employment attorney fees, etc. We are doing everything ourselves and we don't know if this is wise to do i need help in making this decision.

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