Identifying Organizational Faultlines With Latent Class Cluster Analysis

Abstract

Faultline theory proposes that when the distributions of individuals’ attributes in groups are aligned, they create homogeneous subgroups, characterized by within-group similarities and between-group differences. As homogeneity increases, these differences are increasingly likely to acquire meaning to subgroup members and thus to influence behavior. Although the face validity of faultlines is appealing, empirical methods have been difficult. The most commonly used, Fau and FLS, have several limitations, for instance difficulty with integrating nominal, categorical, and continuous variables. This article proposes latent class cluster analysis (LCCA) as an additional analytical tool. After reviewing the literature involving interdependent attributes, the most common faultline measures are described and compared with LCCA. A study of faultlines in a large organization is presented. LCCA induces a five-class model of organizational faultlines. A comparison of work-related communication contacts indicates that subjects have more within-subgroup than between-subgroup contacts, supporting the criterion-related validity of the faultline solution.