Identifying Organizational Faultlines with Latent Class Cluster Analysis

Abstract

Faultline theory proposes that when the distribution 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. While 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 paper 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.