FTE Definition: (full time equivalent definition)
The definition of FTE
(full time equivalent) is the number of working hours that represents one
full-time employee during a fixed time period, such as one month or one year. FTE simplifies work measurement by converting
work load hours
into the number of people required to complete that work.
FTE is a two step process.
Step 1. Determine
how many hours one full time employee works. Start with the scheduled hours and
subtract holidays and PTO (personal time off). Add overtime; whether paid OT or
unpaid for exempt
(salaried) employees. This will calculate the annual working hours for each job
Step 2. Determine how many hours of work
are for each job position and divide this workload total by the FTE working hours of one employee. This calculates the
number of full time equivalents that are needed. Depending on your operation and
the nature of your management goals, use Life Cycle Phase, Process, Product, or
Customer metrics workload.
This resource management
tool calculates the number of working hours that one FTE works
in each job position of an insurance company's policy services unit.
This resource management
tool calculates the number of FTEs (resource capacity)
that the workload forecast will require. Policy life cycle work measurements
are used. Resource management tools like this help managers forecast their
resource needs and resource budgets based on their annual business plan.
management is the analysis, decision making, and implementation processes that determine:
many employees are needed
- the skills each job position needs and the total
available skill hours the department needs
- how work will be
assigned to employees
- how organizational and staff performance will be
whether job positions will be generalists or specialists
which organizational structures will be adopted, such as virtual shared
services and expert centers, etc.
FTE analysis is
the methodical analysis of current work activities with related time and
cost measures. This helps managers understand the root causes and drivers of workload levels, organizational performance,
and productivity improvement
FTE Models assemble and relate
work measurement data to job positions, processes, products, customer segments, and
other performance drivers.
FTE models are
constructed with statistical tools and methods, and are organized
as data models with charts and graphs. Data models are used because they accurately measure
work metrics such as incidence, time and cost while also making scenario
forecasting (what if analysis) easy and very accurate.
FTE Analysis Models will enable you to:
customers' service expectations and increase customer retention
Define and maintain the skills that your processes need
all of your human resource capacity and skills in the most productive ways
rewarding work and careers to your employees and improve employee retention
Optimize the balance of generalists and
Management Exhibit -
Capacity & Process Cost Management Application
This is a screen shot of
Orient Point's Results Navigator. This application forecasts resources
capacity and process cost for products and customers in complex operations.
It is used regularly by operations, finance, human resources, product
managers, customer segment managers, and executives.
The many complex operational variables require specialized management tools
that forecast resource capacity and process, product, and customer costs.
"I've engaged Orient Point Consulting since 2001 at Chubb and
now at XL. I've always been able to solve my problems and achieve my
goals by using their activity information models as my core information
for analysis and planning."
Chief Processing Officer, XL Group
"AIM is a
unique and valuable tool for us. It delivers new information needed to make
better decisions and achieve our goals."
Larry Agoglia, Managing Director & COO, Citigroup Private Bank
Business Case for Resource & Process Models and Management Applications
discover new ways to improve organizational productivity and performance, and solve the problems that are
preventing them from achieving their revenue growth goals.
They have the information and
tools to align
areas of their organization for their strategic goals. Often this is
accomplished by re-designing processes, changing the mix of
specialists and generalists, and establishing new Shared Services Centers and
Expert Networks that are customer and product focused rather than process
clients tell us they always recover a multiple of the project cost within six