What "industry" are you talking about? Conventional wisdom is often wrong

Pay varies by industry, so every pay survey worth its price is an industry-specific survey; but many people today don’t even know what their industries are. Industry categories exist to classify the various types of enterprises that make goods or provide services. The problem is, the kinds of categories used by bureaucrats, economists, data collectors and information classifiers are not the kind of industry categories used by the typical person on the street.

If your employer is a fast-food place, it is really a subset of the Standard Industrial Classification (SIC) code for Eating Places. SIC codes are used by the Securities and Exchange Commission that regulates corporate stock markets, so that code remains in use even though it is an old-fashioned four-digit code. The new North American Industry Classification System (NAICS) required on American business tax returns has more digits and provides for both Take-Out Eating Places and Buffet Eating Places. But there is no officially recognized industry named "fast food" in the United States or Canada or Mexico, which all use the NAICS code system.

It gets even worse with new popular terms like "technology," with people making casual reference to high-tech or IT as industries when those are just terms that describe a process. Literally every industry has a technology and many qualify as high-tech. Suggest a field of work or an industry that does not have any high-tech element, I dare you; try, because I don’t think you can stump me. Even in the new NAICS code that was last updated in 2007, there is only one place the word "technology" appears in connection with an industry, and that is code 712110 Science and Technology Museums.

A rose may be a rose, under any other name, as Shakespeare said, but rose-growers are classified under agriculture in the SIC system. To be precise, they are in nursery production under rose bush growing and rose bush cutting under the NAICS code. Dealing with individual roses (not full bushes) probably falls under floriculture production or retail flower shops.

Farming isn’t even recognized as a separate "industry," although some formal industry titles do identify General Farms, Strawberry or Orange Farms and Dairy Farms in the old four-digit SIC system. There are 339 NAICS industry codes with the word farm in them, but no specific industry code for general farming in the newer six-digit industry coding system.

Everyone talks about "eCommerce" but that "industry" doesn’t even exist in any officially recognized classification system. Google is SIC 7371, Services – Computer Programming, Data Processing, etc., although ERI has renamed that category as Information Technology in their modernized industry classification scheme (more representative of the modern business world) and would label them as eSIC = 7370 Information Technology. The biggest eCommerce firm, eBay, calls themselves SIC 7389 Services – Business Services n.e.c. (Not Elsewhere Classified).

You frequently have to do research to find out exactly what industry should apply. Most of the ERI Assessors contain all the industry codes with cross-walks between the various classification schemes of different nations in effect at a given time. One of the simplest ways to find out what industry a company should be in is to take the name of a big competitor, search for the corporate proxy of that firm from within the ERI Executive Compensation Assessor and view their compensation table. Their industry code will be identified there.

ERI’s homepage Board Governance section contains a search engine that accesses all corporate proxies and tax filings by charities and foundations, at http://www.erieri.com/index.cfm?fuseaction=BoardCompliance.Main. In one of the initial paragraphs of the electronic proxy record, there will be a SIC or NAICS code or two. Some organizations have multiple industry classification identities, because they are conglomerates that combine different kinds of business or have units that straddle different industry sectors. Those who subscribe to the ERI Executive Compensation Assessor, NonProfit Comparables Assessor or the Salary Assessor can browse through comprehensive lists of every industry that exists. They can also use their Assessor to search for individual organizations, pull up their executive compensation table, and read their industry identity code, along with the exact actual pay of their executives.

If you are industrious, you can learn a lot about industries.

del.icio.us Digg StumbleUpon Facebook Technorati Fav reddit MSN Live Google Bookmarks


No comments have been posted.

Leave a Comment

(will not be displayed)
Leave this field empty:

Post Comment

Related Topics

Twitter Updates