In a small business context, which of the following best describes a Full Time Equivalent (FTE) employee?

A Full Time Equivalent (FTE) employee is a measurement used to capture the combined workload of part-time employees and represent it as a full-time employee for the purposes of calculating staffing levels, costs, and productivity. This concept allows businesses to assess their human resources more effectively, considering both full-time and part-time positions.

In this context, option B accurately captures the essence of FTE by highlighting that it can consist of a combination of part-time workers whose combined hours equal those of one full-time employee. For instance, if you have two part-time employees each working 20 hours a week, their total of 40 hours can be counted as one FTE.

This classification is crucial for small businesses as it helps in budget planning, understanding labor costs, and making staffing decisions based on the actual manpower required, regardless of how many employees are in part-time roles. It provides a clearer picture of workforce capacity and is essential for effective management and growth strategies.