Full-time equivalent (FTE)

How is FTE calculated?

Divide each employee's contracted hours by the full-time standard, then sum. An employee on 19 hours against a 38-hour standard is 0.5 FTE; a team of ten such people is 5.0 FTE across ten headcount. Both numbers matter and they answer different questions: FTE measures capacity and cost, headcount measures the number of humans to manage, onboard, licence and communicate with.

Where FTE earns its keep

Budgeting and planning: salary budgets, ratio metrics (revenue per FTE, HR-to-employee ratio) and demand modelling all behave sensibly in FTE and misleadingly in headcount whenever part-time work is common. Casuals convert via average hours worked, which makes FTE the only honest way to compare a casualised operation with a permanent one.

The classic FTE mistakes

Confusing FTE with headcount in systems that licence or provision per person; hiding overwork by treating sustained overtime as invisible extra FTE that never appears in the plan; and planning growth in FTE while forgetting that 6.0 FTE of new capacity might be nine actual people who all need desks, managers and onboarding. Keep both numbers in view and label which one every report is using.