Full time equivalency is the sum of the total amount of work conducted by your workforce as if it was all conducted by full time employees, which allows for a comparable and standardized way to understand the overall scope of a company’s operations. For companies who only employ full time workers, this is easy, as the sum of all workers is the sum of FTEs. It is when a company has workers that work part time, temporarily, and/or have qualifying independent contractors that calculations are more complicated.
There are two ways to calculate FTE, either through an estimation methodology or via precise data on hours worked. Given the complexity of calculating based on exact hours, it is generally recommended to calculate using the below estimation methodology:
*For independent contractors meeting the parameters above, they should be considered the equivalent of the closest other employment category. For instance, if working the equivalent of full time, they should be considered 1 FTE and if only part time, 0.5.
To calculate the appropriate size track of your company:
(1) Identify the number of employees in the last year, in each category,
(2) Multiply by the appropriate FTE equivalent ratio, and
(3) Sum them together for the total FTE
For example, if a company has 100 Full Time Employees, 30 Part Time Employees, 100 Temporary Part Time Employees, and 20 independent contractors who work on a part time basis, but 20+ hours a week ongoing, their calculation would be as follows:
Alternatively, a company could calculate the exact number of hours worked by each employment category to arrive at an exact Full Time Equivalency if the above estimations do not seem appropriate and the relevant data is available.
For guidance on how to complete metrics and questions related to workers in the assessment itself, see here.