Definition
Full-Time Equivalent (FTE) is a standardized unit that represents the workload of a single full-time employee over a specific period (usually a year). It’s used to quantify total labor capacity regardless of how many part-time, contract, or temporary workers are on staff.
One FTE = one person working full-time.
Two part-timers working half-time each? Also equals one FTE.
Why FTE matters
How to calculate FTE
Formula:
FTE = Total number of hours worked ÷ Number of hours for a full-time schedule
Example:
- Full-time = 40 hours/week
- Employee A: 40 hours/week → 1.0 FTE
- Employee B: 20 hours/week → 0.5 FTE
- Employee C: 10 hours/week → 0.25 FTE
Total = 1.75 FTEs
In HR planning terms:
FTE vs Headcount
A team of 10 part-timers could equal 5 FTEs.
FTE in SaaS efficiency metrics
When FTE is critical
- Workforce cost planning
- Funding rounds or board reporting
- Resource allocation for multi-team projects
- Post-merger headcount rationalization
- Government compliance (e.g., US ACA regulations)
Final takeaway
FTE gives you an apples-to-apples view of workforce capacity. Whether you’re scaling, budgeting, or reporting, it lets you plan and measure labor resources accurately, without getting misled by raw headcount.
