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FTE Definition
FTE Calculation
FTE Analysis

 

 

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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 Calculation

FTE calculation is a two step process that determines how many hours of work there are in a department and how many hours one full time employee works. The total workload hours are then divided by the working hours of one employee. This calculates the number of full time equivalents that are needed.
 
The number of FTE needed = workload hours / the working hours of 1 FTE in your organization
 
Modifications to the workload and/or productivity will precisely forecast how many FTEs will be required.
FTE Management
 
FTE management is the analysis, decision making, and implementation processes that determine:
-
how 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 measured
- whether job positions will be generalists or specialists
- which organizational structures will be adopted such as virtual shared services and expert centers, etc.

FTE Management Checklist

These are the minimum essentials that are needed to calculate and manage FTEs

o Process performance specifications and expectations
o Workload hours for processes and activities
o Work standards for processes and activities
o Working hours, not scheduled hours, for job positions
o Staffing model Excel tool

FTE Analysis

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 opportunities.

FTE Models

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 and relate work metrics such as incidence, time, and cost while also making scenario forecasting (what if analysis) easy and very accurate.

FTE Analysis Models guarantee that you will:

  Reduce and optimize staffing costs

  Increase and optimize productivity

  Meet and exceed service quality levels

  Define and maintain the skills that your processes need

  Utilize all of your human resource capacity and skills in the most productive ways

  Provide rewarding work and careers to your employees

  Rationalize and optimize your organization with the right balance of generalists and specialists

 

"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."
Jeff Brown
Senior Vice President, Chief Processing Officer XL Group
 

 

 

 

 

 

 

 


 

 

 

 

 

 

 

 

 

 


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FTE Exhibits

 

Have your attempts to improve staffing and process performance been more frustrating than successful?

Using FTE (Full Time Equivalent) information and tools is a fundamental management function that improves performance by optimizing labor productivity and operational costs.

Your grandfather's tools and methodologies from manufacturing operations are of no value. They were designed by Fredrick Taylor in the 1800's for simple, single-stream, predictable and standardized manual fabrication processes. They can not capture nor measure even the most common complex event-based service processes that are 95% of today's business activity.

Manufacturing process engineering methodologies produce inaccurate measurements when used to calculate knowledge and relationship activities because they require absolute process standardization. Yet service processes are rarely standardized because they're responding to a customer event that has some unique aspects. (Footnote 1)

FTE Management Exhibit

The very many number of workload and resource variables require specialized management tools that forecast workloads and resource capacity and retrospectively report how well workloads and capacity were managed.

Managers conduct this four step process.
1. Assess their department's workload forecast for the month based on their historical trends.
2. Adjust the trend-based workload to incorporate this year's adjustment factor and other current factors such as special
     marketing campaigns that are expected to modify the historical trend.
3. Check the resource trend and assess if resource capacity will meet the workload levels. This is the "normal" resource hours
     that are pre-scheduled.
4. Adjust the resource hours to close capacity gaps and reduce excess capacity. This may involve moving work to other days or
    changing resource schedules.

Resource and workload management must be periodically reviewed to assess how well resources have been managed to minimize capacity gaps and how well workloads have been scheduled to utilize resources.

This report displays the actual workload that occurred each day in hours (green), the actual work that was completed in hours (blue), and the actual hours of resource capacity that day (red). The capacity gaps (+/-) are easy to spot. Notice that on some days workload completed exceeded workload occurred after some days where there was a negative capacity gap. This indicates that the department worked on back logged items that were not completed during a spike in the workload.

Tools like this help managers consistently manage their department's resources and processes to within very small variances of zero resource capacity gaps (+/-), zero backlogs, and 100% completion of high value work such as monetary transactions, customer retention activities, and new business activities.

Source: RPM (Resource & Process Management Suite), Orient Point Consulting LLC

AIM-Activity Information ModelingTM, a new FTE management methodology and tool

We invented AIM-Activity Information ModelingTM, a powerful new approach and methodology that quickly builds comprehensive and accurate Staffing Models with FTE calculations. We're experts at building FTE Analysis Models and we've delivered them to over 300 organizations. We guarantee our models will help you solve your toughest staffing problems.

"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

The Business Case for FTE Models

Our clients always discover new ways to reduce staffing costs. They frequently realign areas of their organization for their strategic goals. Often this is accomplished by changing the mix of specialists and generalists and establishing new Shared Services Centers.

Additionally, the FTE Models allow them to predict future staffing problems and address them before they occur. They predict future staffing costs and conduct scenario planning; playing "what if" on paper (data models) with various scenarios until the optimal costs are achieved. Their new designs are then implemented quickly and precisely.

Our clients tell us they always recover a multiple of the project cost within 3 months.

Learn about our no-cost FTE Model evaluation pilot

Contact us to see a demonstration of RPM - Resource & Process Management suite
email request  1(631) 949-2300

Footnote 1:

Fredrick Taylor  http://en.wikipedia.org/wiki/Frederick_Winslow_Taylor
Standardized  processes are those which always execute the exact same activities in the exact same order, like a manufacturing process. Most service processes can not be standardized efficiently because they are responsive to the event-based needs of internal or external customers. When service processes are standardized they either fail to meet many customers' expectations or they are inefficient because they conduct un-necessary work activities.
 


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