Crucial for organizational success and effective resource management, Full-Time Equivalent (FTE) serves as a human resources indicator capable of optimizing costs and employee distribution within a company.
Moreover, FTE is one of the tools used to assess automation opportunities in the business context. This is because calculating this metric reveals how much human work can be saved by automating repetitive tasks.
So, in this article, we will understand what FTE is, its importance, applications, and how to perform the calculation. Keep reading!
What is FTE (Full-Time Equivalent)?
FTE (Full-Time Equivalent) is an indicator used in business contexts to represent the workload of a full-time employee. In other words, it is the unit of measure used to express the amount of work performed by an employee in relation to their working time.
In the context of Robotic Process Automation (RPA), the FTE metric assesses productivity by comparing the number of items a robot can process with the number a human can process in the same period.
Frequently used in the human resources sector, back-office, RPA Centers of Excellence (CoE), project management, and financial planning to compare workloads among employees based on the time regime for task execution in a day.
Performing this calculation reveals how employees’ time is utilized at work. Highly useful for employee management, team planning, resource allocation, and financial analysis, FTE enables an effective comparison of employee workload and output.
The Importance of FTE
As we’ve seen, FTE is crucial in the business context for areas dealing with automation and human resources management, as it assesses the time and efficiency of processes in relation to employee availability. Within the business context, full-time equivalent can be used for various tasks, such as:
- Budget planning – with FTE, it’s possible to estimate the costs associated with the workforce, facilitating budget planning and financial resource allocation;
- Human resources management – the calculation is performed to understand and plan the company’s workforce, assisting in determining the number of employees needed to meet workload demands;
- Performance evaluation – it also serves to assess the performance of team members in relation to company objectives, showing which teams are operating within the planned parameters;
- Work process automation – FTE can be used to assess the time saved in manual processes and tasks if there is an intelligent automation strategy, such as combining RPA and AI;
- Project management – when planning new projects in a company, FTE calculation aids in managing human resources and the necessary timeframes for the project;
- Hiring strategies – FTE shows whether it is necessary to hire more employees, reduce the team, or adjust working hours.
Learn more: What is automation software and what are its benefits?
How to Calculate FTE?
To calculate FTE, you need to have employees’ working hours and divide by the limit of hours worked in a full-time or part-time schedule. The formula is as follows:
For a full-time schedule, we consider a total of 40 hours per week. Check the calculation example below:
- Employee X works 30 hours per week on a full-time schedule of 40 hours. , resulting in 0.75 or 75% of the full-time equivalent;
When an employee works part-time, the schedule limit is changed to 20 hours per week. In this case, check the example below:
- Employee Y works 20 hours per week on a part-time schedule of 20 hours. So, F. That is, the result is 1 or 100% of the full-time equivalent for the part-time schedule.
Additionally, to determine the real FTE of each employee, it is necessary to account for lunch breaks, coffee breaks, and interaction with colleagues. Therefore, an estimated 15% reduction in the employee’s FTE is considered.
In our first example, the full-time equivalent of the employee would drop from 75% to 60%, representing a delivery of only 60% of the estimated workload for that period.
Application of FTE in Companies
Applying FTE in companies involves various areas, being extremely useful for efficient human resources management in budgeting, planning leaves and automation resources, and performance analysis.
FTE can be applied to plan the number of employees needed to meet the company’s demands—or the volume of automations needed to support them. Moreover, it can be used to predict the costs and returns of new hires and new automation licenses, for example.
Through the FTE result, it is also possible to understand different role requirements, allowing for task allocation and reallocating people to areas with greater strategic or automation demand, for instance.
The calculation can also be used to optimize time and resources when choosing to invest in robotic process automation (RPA). Based on your business’s FTE calculations, it is possible to understand the equivalence of the work that software robots can perform compared to a full-time employee.
Thus, introducing RPA into business processes can reduce the need for human labor in repetitive and routine tasks. This way, employees can be freed up to focus on more strategic and complex tasks.
Learn more: What is hyperautomation, and what are the benefits for complex operations?
The Importance of FTE in Robotic Process Automation
In the context of Robotic Process Automation (RPA), Full-Time Equivalent (FTE) is an essential component for measuring automation effectiveness, savings, and ROI. See more details below.
FTE Calculation per Automation
FTE is used to measure productivity by comparing the number of items a robot can process with the number a human can process in the same period. You can calculate FTE per automation in two distinct ways:
FTE = Items or tasks produced by the Bot in one month / Items produced by a human in one month. Human time per task x Items processed by the bot / Human full-time work per month.
Total Savings and ROI
FTE is also used to calculate the total savings generated by RPA, considering the human cost per item and the time a human takes to produce each item. ROI is calculated based on the savings generated by automation compared to the cost of implementing and maintaining the RPA solution.
FTE Reports
In well-established RPA operations, having FTE reports is crucial, providing a clear view of automation efficiency by showing how many full-time equivalents of human work are being saved through bot utilization.
RPA orchestrators often feature automated dashboards for monitoring FTE and key metrics for tactical and strategic management of automation operations.
These metrics are crucial for assessing the success of RPA initiatives and justifying the investment in technology, both from the standpoint of operational efficiency and financial return.
Ready to Leverage FTE for Your Business?
One way to optimize your company’s automations and workforce is by using an orchestrator or RPA software. With it, you can manage the FTE of specific areas of the business and related automated processes more effectively.
Through orchestration, the accurate management of automations and RPA teams becomes much more effective, allowing employees to be reallocated to perform more urgent functions within the company.
To orchestrate your automations and have a complete view of FTE and RPA ROI, using an open-source or high-code Python-based RPA platform like BotCity can be an excellent option. This is because they offer flexible licensing models that adjust according to usage scale, resulting in savings of up to 80% compared to low-code tools.
BotCity’s hiring model, for instance, is based on runner capacity – with no unit cost per robot or license, unlike most tools on the market. With 100% code-based automation development, such as in Python, you can rely on increasingly faster automations. Ultimately, this process generates a significant increase in FTE savings.
Moreover, BotCity features Botcity Insights, a reporting dashboard that addresses FTE in relation to automations, cost savings, and ROI. So, if you’re ready to automate business processes, schedule a meeting with one of our experts right away!
