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Full-Time Equivalent

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Definition:

Full-time equivalent, or FTE, is a unit of measure showing how many employees an organization has or a project requires assuming all employees work a full-time schedule.

FTE is a helpful measurement because it helps budget analysts and project managers estimate labor cost. By knowing how many people are needed to accomplish certain tasks and at what approximate salary those people are budget analysts and project managers can tell about how much money they will need to complete their work.

organizations use FTEs to allocate employees across departments. Allocations are based upon the work required of each department and the scarcity of financial resources. Department directors work with the human resources department to determine which positions should be full-time and which should be part-time. Depending on the laws and policies the organization must follow, there may be a financial advantage to classifying positions one way or another.

While it often does, one FTE does not necessarily equal one job vacancy. Part-time employees sharing a job can equal one FTE, and some jobs do not require a full FTE.

Examples:

  • The Texas Legislature assigns each state agency an FTE cap for each fiscal year. If an agency has an FTE cap of 100, that agency can employ 100 full-time employees, or it can split some of the jobs into part-time positions. If the agency had 10 positions that could logically be split among more than one part-time employee, the agency could have 20 people working 20 hours per week could fill those 10 FTEs. If the agency split the jobs this way, the agency would have 110 employees for 100 FTEs.
  • A project manager estimates that a major deliverable will take 50 hours to complete. This deliverable would take an FTE 1.2 weeks to complete. The project manager can assign work on this deliverable in a variety of ways. Assuming that employees assigned to the project can spend a maximum of 10 hours a week working on this project, the task would take one person five weeks to complete. If the work plan calls for the task to be completed in three weeks, the project manager could two people could work on the task, each for 25 hours. It is rare to have one employee -- even the project manager -- devoted to one project full-time.
  • A police chief notices that over the past few months that the time it takes the crime lab to process evidence has increased dramatically. The chief has had an officer position vacant for a while, and it has not impacted how well the department serves the community. The chief decides to make that vacant position into an evidence technician position, so the chief moves one FTE from the patrol division to the crime lab.

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