FACTOR ANALYSIS

Eufracio G. Pacaanas, Jr.

 What type of test

NEED TO KNOW When to use it

Example
 • A statistical approach that can be used
to analyze interrelationship among a
large number of variables and explain
these variables in terms of their
common underlying dimension.
WHAT IS
FACTOR
ANALYSIS? • Used to identify the latent factors
driving observable variables

• Data summarization or data reduction

technique.
 WHEN TO USE FACTOR
ANALYSIS?

• Data Reduction
• Identification of Underlying Structures
• Validation of Constructs
• Generating Hypotheses
• Survey Analysis
 APPLICATIONS OF FACTOR ANALYSIS

It is commonly used in:

• Market research
• Psychology
• Healthcare
• Sociology
• Biology
• Education
EXAMPLE
1. Academic Record
2. Appearance
3. Communication
4. Company Fit
5. Experience
6. Job fit
7. Letter
8. Likeability
9. Organization
10.Potential
11.Resume
12.Self Confidence

Turn to Minitab
 FACTOR ANALYSIS ON MINITAB

• Click on STAT » Multivariate » Factor Analysis

• Put inside the variable box the variables from C1 to C12
• Number of Factors to extract = 4
• Methods of Extraction : Maximum Likelihood
• Type of Rotation : Varimax
• Select Options
• Matrix to Factor : Correlation
• Source of Matrix : Compute from variables
• Loadings from Initial Solution : Compute from Variables » Click OK
• Factor Analysis Graphs : Loading plot for first 2 factors » Click OK
• Results
Interpretation of Results Factor 1 : Academic Record,
Experience and Potential has high
correlation could be interpreted as
EMPLOYEE QUALIFICATION and
POTENTIAL growth on the company

Factor 2 : Likeability, Self Confidence

as
Personal Qualities

Factor 3 : Communication,
Organization as
Work Skills

0.823 » Explains 82.3% of the variation in the data Factor 4 : Company Fit, Job Fit as
Employee Fit
THANK YOU