The Cost Per Full-Time Employee (Equivalent), also known as the Cost Per FTE is the best way to benchmark workers’ comp costs when a company has both full-time and part-time employees. Using the “number of employees” is not useful in isolation because the percentage of part-time employees varies dramatically, often by business unit, department or industry. Using “manhours” equates losses between departments or business units having part-time and full-time employees.
The formula for calculating the Cost Per FTE is: (Incurred Losses X 2,000) divided by (Manhours Worked).
This measurement uses the incurred losses and manhours allowing you to measure losses at any point in time regardless of labor charges. Thus, no matter how far into the calendar year or fiscal year a company is, Cost Per FTE can be used.
To learn more about benchmarking go to Benchmarking.
For more cost savings tips go to WC Cost Reduction Tips.
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