Many people today don’t really know what their actual industry is. Are you an apple? Or are you an orange? The answer is important, because pay varies by industry, and every pay survey worth its price is an industry-specific survey. Unfortunately, conventional wisdom about “industry” is often wrong.
Industry categories do exist to classify the various types of enterprises that make goods or provide services. There is a problem, however: 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 find one. But there is no formal industry for high-tech. 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 there is 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., which is pretty vague. One analytical reporting service (ERI Economic Research Institute) has renamed that category as Information Technology in their modernized industry classification scheme (attempting to be 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). It should come as no surprise in this fast-changing world that a lot of industry strings include a final section labelled N.E.C.
You frequently have to do research to find out exactly what industry should apply. 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. In one of the initial paragraphs of the electronic proxy record in the United States, there will be a SIC or NAICS code or two identifying the primary industry. It frequently displays the secondary and tertiary codes covered by the enterprise also. Other nations have different protocols for their industry classifications, with the EU and the UN leading those initiatives: http://www.lib.strath.ac.uk/busweb/guides/indclassguide.htm
Although the topic may appear boring to some, it is critical for making valid comparisons. It can be quite embarrassing to be making a presentation on competitive pay in the apple industry, only to discover that this is actually officially an orange enterprise.
E. James (Jim) Brennan is Senior Associate of ERI Economic Research Institute, the premier publisher of interactive pay and living-cost surveys. Semi-retired after over 40 years in HR corporate and consulting roles throughout the U.S. and Canada, he’s pretty much been there done that (articles, books, speeches, seminars, radio/TV, advisory posts, in-trial expert witness stuff, etc.) and will express his opinion on almost anything.
Image: Creative Commons Photo "chicago hdr1" by dielotr
What you said makes sense, I like
Posted by: air jordans | 11/05/2010 at 02:34 AM
*An appreciation of learning, is a study in good faith.
Posted by: replica christian louboutin | 11/12/2010 at 03:19 AM