Resources: Introducing New Industry Codes for the Radford Survey Platform
Although Radford is best known for providing compensation data and insights focused on the technology and life sciences sectors, in recent years, hundreds of companies in other sectors and industries have joined our survey platform to gain insights on compensation practices for key technical and scientific talent. As this trend accelerates, we’ve decided to enhance our industry classification system to more clearly identify the full diaspora of companies in our surveys. We believe this change will make it easier for clients to benchmark pay with greater specificity, both within and across industry segments.
Our new industry classification system will officially go live during the 2020-2021 survey cycle, which begins with our July 2020 publications. However, clients will begin to see input materials using our new industry classification system much sooner. These materials include our new Salary Increase and Turnover Study input template, launched in January 2020, and the annual compensation input/output guide we plan to release in February 2020. Additionally, results for the first edition of our 2020 Salary Increase and Turnover Study, scheduled to be published in April, will utilize our new industry classification system as a preview of things to come.
To learn more about this exciting enhancement to the Radford survey platform, we encourage you to read the detailed FAQ below:
How are Radford’s new industry codes structured?
Prior to this change, Radford used 3-digit numeric codes (e.g., 100) to label industry segments. Our new classification system uses 3- or 4-digit alpha/numeric codes (e.g., TH1) to label industry segments. We believe our new industry codes will be easier for clients to interpret because they will generally combine the first letter of sector and industry names with a single-digit number aligned to a specific industry.
For example, the table below outlines our go-forward approach for the Hardware industry, which is part of the larger Technology sector:
||Computers / Peripherals
||Network Equipment / Products
||Electronics / Electrical
||Technology Capital Equipment
In the first row above (Semiconductor Components), our new industry code is developed as follows:
- The first letter of the code denotes sector or business area (i.e., T = Technology)
- The second letter of the code denotes the broad industry or business segment (i.e., H = Hardware); and
- The number identifies the specific industry (i.e., 1 = Semiconductor Components)
Each industry or business segment will include an “Other” category with a code ending in 99, which creates ample room for our new industry classification system to evolve over time.
Can I see a full list of the sectors, industries and sub-industries included in Radford’s new industry classification system?
Yes. To view a complete list of our new industry codes, please click here.
At a summary level, our new industry classification system includes 150 specific industries organized under the following sectors (or business areas) which will be used across Aon’s Reward Solutions survey offerings:
- Building Construction & Real Estate
- Consulting, Community Services & Government
- Energy (including Oil and Gas, Mining, and Utilities)
- Financial Services (including Asset Management, Banks, Insurance, and Wealth Management)
- Gaming, Entertainment & Media
- Life Sciences & Medical Devices
- Retail (including E-Commerce, Wholesale and Hospitality)
- Manufacturing (including Consumer Goods and Industrials)
- Technology (including Hardware, Telecommunications and Software)
While a vast majority of our clients continue to reside in the Technology and Life Sciences & Medical Devices sectors, we believe the addition of multiple new sectors, such as the ones listed above, will make it easier for all clients to segment data in a more targeted manner.
For example, our rapidly growing constituency of Gaming, Entertainment & Media clients (previously folded under the Technology sector) will now have their own sector to use as a focal point for analyses. At the same time, using the market filters available in our Quick Benchmarks and Market Queries tools, clients can continue to mix and match data on-the-fly across industry lines as they see fit.
How are industry codes used to segment the data Radford collects?
Before and after the change announced today, the Radford Survey platform will continue to utilize one industry classification system, which we will continue to apply in two key ways to segment the data we collect as follows:
Company-Level Industry Codes
All survey participants are asked to select one “best-fit” industry code covering their entire organization. This code is commonly collected in our “company profile” questionnaires and is used to provide overall demographics about the makeup of our surveys and can be used as a filter when defining criteria for certain custom reports.
Diversified companies must select a single company-level industry code and we generally advise them to consider the following guidelines:
- A diversified company with distinct business units or subsidiaries spanning multiple sectors or industries should choose the industry code associated with a majority of their total annual revenues;
- A diversified company with operations in multiple industries within a single sector should now use the industry code ending in 99 for that sector (e.g., GE99 for Other Gaming, Entertainment & Media would capture companies with distinct operations supplying online games, movie content development and the distribution of entertainment content); and
- A highly diversified company with operations in multiple sectors should now use code OO99 ("Other").
Incumbent-Level Industry Codes
All compensation survey participants are also asked to assign industry codes at the incumbent level to differentiate between employees working in different business areas. Critically, these codes are used to drive the industry-based filters found in our Quick Benchmarks and Market Queries tools.
For single industry companies (or companies that leave their incumbent-level industry codes blank), their company-level industry code is defaulted into their incumbent-level industry codes. In other words, their company-level and incumbent-level codes are identical. This is the case for approximately 90% of participating organizations.
For diversified companies – for example, a company with a software development arm, a professional services unit, and a retail presence – we strongly advise the use of incumbent-level industry codes to support the creation of a richer and more nuanced database. Our survey consultants will also connect with companies to improve their incumbent-level coding during the data review process if they see opportunities to refine the data provided.
Will reported survey results change because of this enhancement?
Yes, it is possible that year-over-year survey results will change because of this enhancement. While we expect changes to reported survey results to be small, we cannot fully predict the extent of potential changes, as our clients will have the ability to self-select new industry codes as they see fit.
Additionally, while a large majority of survey participants will transfer from their legacy industry code to a new industry code on a one-to-one basis, this isn’t possible in every case, and companies in our legacy “Other – Technology,” “Other – Life Sciences” and “Other” industries will now have more industry classification options to choose from. Over time, this will lead to shifts in our reported data.
We will also encourage all clients, even firms with largely monoline operations, to take greater advantage of incumbent-level industry codes to support the creation of a richer and more nuanced database.
Will my company’s industry code change automatically?
Yes and No. New data will need to be submitted using new codes. But continuing Radford Survey participants will be provided a new company-level industry code in an email to help guide – but not dictate – new industry selection. These suggested industry codes will be used during the transition period between July 2020 and April 2021 when the Radford compensation survey databases will contain a combination of 2019 and 2020 data. Radford will map 2019 data into new 2020 industry codes to maximize the size of the data available for reports using the new codes, until existing data is replaced with new 2020 data collected using the new codes.
New clients will be asked to enter an industry code of their choice when they first submit data to Radford.
If you ever have questions about the best industry code for your business, we encourage you to connect with your survey consultant to learn more about your options.
View all Release Notes