Recruitment is a complex process, regardless of the size and scale of an organization. Every HR decision affects its future as it determines the overall salary expense of a company and the value it gets from its employees in the long run. Not surprisingly, HR managers go the extra mile with their calculations and hiring decisions because data-driven choices are far better than instinctive ones. Full-time equivalent is one of the key metrics to help with the right recruitment decisions. Essentially, FTE determines an employee’s workload and helps with the determination of wages. But there is a lot more it can help with beyond helping managers with better recruitment and workload management. Let us explain why HR managers should bother about this metric.
Helps with assigning employees to departments
Most organizations run multiple departments and have flexible workers who can join different teams. For example, you may have part-time workers in lead generation roles. You may assign some of them to work on lead generation software and get others to create landing pages and forms. FTE helps managers to determine the optimal number of full-time workers required for these tasks and assign positions to part-time employees accordingly. Typically, one FTE is the same as one job opening, and any number of part-time workers sharing a specific job make one FTE. The information enables managers to optimize the allocation of resources.
Facilitates better project management
A company considers its workforce and its bandwidth while taking up projects. The number of projects team members can handle varies from business to business. A marketing agency employee can pick multiple projects simultaneously because every project may require only a couple of hours. Conversely, a web development professional often works on a single project at a time. Managers can rely on the full time equivalent figure to identify the project requirements and allocate them to employees. They can also understand the company bandwidth and plan for future demand accordingly.
Enables budget prediction and management
As employees join an organization, each of them has a cost to the company (CTC). It depends on factors such as the role, designation, and experience of the employee. More experienced team members are likely to deliver more work in less time than the less experienced ones. So the employer needs to consider the experience factor to decide on the required number of employees for every project. The FTE method enables hiring managers to pick the right people within the budget constraints. The organization can align its hiring process according to its current budget and ensure the best returns on its HR investment.
FTE simplifies hiring for businesses that have a team of full-time and part-time employees working on their projects. Some businesses require it more than others. Companies working on long-term projects such as engineering firms, construction firms, and software or app development agencies can derive immense benefit from this valuable metric. It cuts the guesswork from hiring decisions and offers precise numbers to HR managers so that they can be sure about their choices.