FTE - what is it? Examples and methods of calculations
The term FTE means the total equivalent or volumework done for 40 hours of work of employees during the week. How does the literal translation of Full-Time Equivalent sound? This is the equivalent of full employment. What is it - FTE - it is necessary to know the managers of large companies that need to optimize the work of their employees. What is it for? Thanks to the calculation of FTE, it is possible to compare and find out the effectiveness of the labor force for a given period of time, taking into account a number of additional factors.
Calculation of work efficiency
It is quite simple to calculate the profit thatbrings the seller to the owner of the company. But how to calculate the income that accounting or lawyers bring? To get acquainted with the term FTE, it is necessary to find out what it is, first of all, in order to understand how much income each individual employee of a big firm brings.
Method of calculation
The basic formula that makes it clear how to calculate FTE is as follows:
Efficiency = the ratio of the result to the resources spent.
When calculating, there are a number of rules that are mandatory for execution:
- The final result should only be positive. All tasks set earlier must be carried out.
- Achieving the goals should be adequate. Timing should be comparable with the tasks set, the employees should be provided with all the necessary resources.
Organization of staff
To understand in more detail what it is - FTE,you should know that he is responsible for the formation of the team in the organization. As an example, let's take a trade point where it is necessary to organize effective work of employees. To solve this problem, there is a ready-made formula:
Turnover of goods per person = the ratio of turnover for a period of time to the average number.
With this calculation it is necessary to take into account the time of year, andalso the most active periods of attendance of customers (holidays or temporary promotions). That is why, in order to find out what it is - FTE - when organizing staff, it is best to take the average income that a person brings in several time intervals.
Cost of an employee
It is important for the owner of an enterprise to know the price thatyou must pay for the work of an employee. Sometimes employees become a big expense of the firm, but at the same time employees are also the main capital.
Knowing about FTE, what it is, helps to reducecosts for employees. The most popular option for savings is a reduction in wages. This approach does not always bring the desired result in the end. It is much better to optimize the work of specialists. Spending on employees consists of direct costs and indirect costs. The first category includes:
- social payments;
- employee training;
- costs associated with layoffs.
To indirect costs, you can include 2 factors: the cost of organizing a new employee's workplace, as well as ensuring comfortable working conditions.
If necessary, save the enterprise budgetIt is worthwhile to deal with indirect costs. If you correctly present information to employees, savings on office supplies or office furniture will be painless, but the cuts in earnings for workers will definitely not have to taste.