Headcount vs FTE Benchmarks: What is the Difference?

First of all, we need to understand the difference between Headcount and FTE, or full-time equivalent. Headcount refers to the number of people employed by a company, regardless of their working hours or job status. This includes full-time employees, part-time employees, temporary employees, outsourced personnel, and contractors.

Comparatively, FTE is a unit of measurement that represents the workload of one full-time employee. It is calculated by dividing the total number of hours worked by all employees in a company by the number of hours that a full-time employee typically works in a week.

For example, if a company has 100 employees who work a total of 40 hours per week, then it would have 100 headcount and 100 FTEs. However, if the company has 100 employees who work a total of 20 hours per week, then it would have 100 headcount and 50 FTE.

Now with this in mind let’s turn our attention to benchmarking these two metrics. The key question is which metric will provide amore accurate representation of what we are trying to benchmark? As you know, Headcount is typically used as a broad measure of the size of a company's workforce, while FTE is a unit of measurement that takes in to account the different working hours of the workforce. Due to the standardized nature of FTE, it is a more accurate metric to use for benchmarking workforce capacity, performance, and productivity.

In general, it is recommended to use FTE when benchmarking any workforce. This will lead to more accurate insights and ultimately better decisions when it comes to people in organizations. However, FTE information can be difficult and time consuming to obtain, especially when performing an external benchmarking exercise.

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