Transformational Leadership and Compensations Effect to Employee’s Performances by means of Job Satisfaction as Mediation Variable at CV. General Design Klungkung Regency
Putu Ayu Krisna Dewi1*, Ida Bagus Udayana Putra2, Putu Ngurah Suyatna Yasa3
1,2,3 Warmadewa University Postgraduate Program Management Masters Program
ABSTRACT: Employees performance at company needs been noticed because it can affect to the company’s performance. This study desire to analyze how transformational leadership and compensation affect employee’s performances by means of job satisfaction as mediation variable. Object of this research are all employees of CV. General Design totaling 40 (fourty). The data collected by a questionnaire with five Likert scale and using Partial Least Square (PLS) as a data analyze. This research indicate about transformational leadership affect positif insignificant to employee’s performances, but it had positif and significantly effect to job satisfaction. Then compensation had positif effect and significant to the job satisfaction and the employee’s performances. While job satisfaction affect positively and had no significant effect to the employee’s performances. In addition, job satisfaction is not a mediation of transformational leadership and compensation effect on the employee’s performances. For the further researchers are hoped can add alternative constructs that affect to the employee’s performances besides transformational leadership, compensation, and job satisfaction. The next researchs, it should add more references related to research and hope this result can be used for reference to study on similar companies.
KEYWORDS: Transformational leadership, Compensation, Job satisfaction, Employee’s performances.
INTRODUCTION
Economic competition is very dynamic. Competition between companies in the service sector is also undeniable. Many companies in service sector, especially consultants that offer consulting service so can provide solutions to solving client’s problems. The number one needs of the company that handle in the service area is qualified human resources. CV. General Design that handle in the service area especially consulting services in the sector of civil and architectural has been providing consulting services in the construction and architectural sector since 2005. Many qualified employees that work for this company. The important capital that should be had by the companies to operate and deliver to the company goals was human resources (Permatasari & Prasetio, 2018). The success of the company will be achieved if the resources in the company have been managed properly by the leader. The leader can face challenges and also oppurtunities by applying Resource Base View Theory. This theory emphasizes that the company’s internal factors are very important including the relationship between resources, profitability, capability, and competitive advance (Barney, 2001). According to the opinion of Mangkunegara (2017) employee performance interpreted as a job outcome in term of grade and also amount that have been held by employees while finishing their works according to their responsibilities. Many things that affect to the employee’s performances there’re abilities and expertness, work plan, knowledgeable person, personality trait, ledership, job motivation, leadership style, organization’sculture (Saputra et al., 2022), job satisfaction, environment around the work place, loyality, commitments and job diciplines (Kasmir, 2016). As stated by Handoko (2008) employee’s performances be affected by motivation, compensation, work environment and organizational commitment. But here will discuss about transformational leadership, compensation, and job satisfaction (Saputra et al., 2022).Transformational leadership is about leadership style that stimulate employee to make a new perception for the leader with the intelectual stimulation (Saputra et al., 2022). The leader make a perception as a figur that support and give an individual consideration to the employees, inspirative motivation and charisma (Bass, 1990). The leader with transformational leadership style can affect the employee to increase their performance in line with research result by (Buil et al., 2019; Mahrum et al., 2021; Lestari et al., 2018) that argue transformational leadership style had positively effect and significant to employee’s performances.Not only transformational leadership style can increase the employee’s performances, compensation cans do the same too (Saputra, 2015). Compensation is all income like money, direct or indirect object earned by an employee as an honor for all services that have been submitted to the company (Hasibuan, 2017). Based on study of (Pangastuti et al., 2020; Juliarti et al., 2018; Mahrum et al., 2021; Saman, 2020) state that compensation had positively effect and significant to the employee’s performances.In development of research there are the differences on the research result amongst transformational leadership style and compensation. Mahrum et al., (2021) state transformational leadership and compensation had positively effect and significant to the employee’s performances. While Hartawan et al., (2021) argue that Transformational leadership doesn’t have a significant effect on the employee’s performance. Krisnawan & Djastuti (2021) state that compensation has positive insignificant effect to employee’s performances. The result show inconsistent each other. In this study is expected that Job satisfaction can mediate the link between transformational leadership style and compensation for employees’ performances (Jayawarsa et al., 2021). Result of study by (Aryanta et al., 2019; Juliarti et al., 2018; Kawiana et al., 2020; Rosalia et al., 2020) that employee performance was positively and significantly impacted by job satisfaction. Based on theory and result of study the Leadership style affects employee performance (especially transformational leadership style), compensation, and job satisfaction. CV. General Design is development planning and supervision consultant engages in consulting service on civil and architectural sector. Base on independent interview with Ir. I Gede Rudi Suryantara, S.H., M.Hum as director of CV. General Design from 2019 to 2022 there was problem about employee performance that can indicated by decrease in the number of percentages of work in accordance with the time schedule. It can be seen on Table 1. Table 1. Data percentages of work in accordance with the time schedule 2018-2022
Years | Number of Projects | Finished as Time Schedule | Presentages |
2018 | 20 | 18 | 90% |
2019 | 10 | 9 | 90% |
2020 | 9 | 8 | 89% |
2021 | 15 | 13 | 86,6% |
2022 | 17 | 14 | 82% |
Source: Director CV. General Design, 2022
According to data there is a decrease in the percentages of work since 2019 to 2022. Although the decrease still under 6% every years if it is left unchecked will make bad impact on organizational performance. Because of problem that found at CV. General Design and the different result of researcher so in this study chose to analyze the impact of transformational leadership and compensation to employee’s performances with job satisfaction variable as mediate on CV. General Design.According to introduction above so the problem of this study can formulate as: a) How can transformational leadership style affect the employee performance at CV. General Design? b) How the effect of compensation to the employee performance at CV. General Design? c) How transformational leadership style affect to job satisfaction at CV. General Design? d) How compensation effect to job satisfaction at CV. General Design? e) How can job satisfaction affect to employee performance at CV. General Design? f) How job satisfaction contribute to mediate transformational leadership effect to employee performance at CV. General Design? g) How job satisfaction contribute to mediate compensation effect to employee performance at CV. General Design?.The purpose to be search in this research are: a) For analyze effect transformational leadership to employee performance at CV. General Design. b) For analyze effect of compensation to employee performance at CV. General Design. c) For analyze effect of transformational leadership to job satisfaction at CV. General Design. d) For analyze effect of compensation to job satisfaction at CV. General Design. e) For analyze influence of job satisfaction to employee performance at CV. General Design. f) For analyze how job satisfaction can mediate transformational leadership effect to employee performance at CV. General Design. g) For analyze how job satisfaction can mediate compensation effect to employee performance at CV. General Design.
CONCEPT AND HYPOTHESIS
Leadership style that extensively researched can effect the employee performance known as transformational leadership style (Advani & Abbas, 2015). Transformational leader can be good figure to the employee, can motivate the employee to be creative, innovative and find the way to break the problem by new perspective. Transformational leader also gives consideration to every problem that faced by employees so that can make the good job satisfaction for increase employee performance (Diansyah, 2018). In an effort to increase employee job satisfaction the company should know many factors that can increase it. Compensation program so important to be applied so can increase the employee job satisfaction that will impact to employee performance. When the company want to give compensation to their employee it must be fair and appropriate so the employee feel satisfied then give their best performance (Saman, 2020). This research purpose to find the solution for solving problem about employee performance at CV. General Design focus on transformational leadership variabel and compensation. This research use quantitative and qualitative design and the conceptual of framework is bellow.
See in PDF File
Figure 1. Conseptual framework
According to conceptual framework above the hipotesis of this research are:
- H1: transformational leadership has the positif effect and significant to the employee’s performances.
- H2: compensation has the positif effect and significant to the employee’s performances.
- H3: transformational leadership has the positif effect and significant to the employee’s job satisfaction.
- H4: compensation has the positif effect and significant to the employee’s job satisfaction.
- H5: job satisfaction has the positif effect and significant to the employee’s performances.
- H6: how job satisfaction mediate transformational leadership effect to the employee’s performances.
- H7: how job satisfaction mediate the compensation effect to the employee’s performances.
METHOD
This research was conducted at CV. General Design in Klungkung Regency. This research used questionnaire to collect data from the respondents and also observation, interview, and documentation. The population of this research was all of CV. General Design’s employees total 40 employees. The sampling method was census method. Census method is the determination of the sample if all members of population are used as samples (Sugiyono, 2019). Census method was used because all members of population are 40 and less than 100 respondents. For the method of analyze in this research use Partial Least Square (PLS). The variables that was used on this research are:
- transformational leadership,
- compensation,
- job satisfaction, and
- employee performance.
RESULT AND DISCUSSION
This research analyze about the influence of exogenous variable and endogenous variabel. Before start the analyze it must be tested first to the empirical model research.
Table 2. Statistical Test Result
Variable | Indicators | Correlation coefficient | Explanation |
Transformational
Leadership |
X1.1 | 0,898 | VALID |
X1.2 | 0,933 | VALID | |
X1.3 | 0,726 | VALID | |
X1.4 | 0,793 | VALID | |
Compensation |
X2.2 | 0,885 | VALID |
X2.3 | 0,858 | VALID | |
X2.4 | 0,578 | VALID | |
Job Satisfaction |
Y1.1 | 0,733 | VALID |
Y1.2 | 0,856 | VALID | |
Y1.3 | 0,742 | VALID | |
Y1.4 | 0,806 | VALID | |
Employee Performance |
Y2.1 | 0,875 | VALID |
Y2.2 | 0,890 | VALID | |
Y2.3 | 0,785 | VALID | |
Y2.4 | 0,821 | VALID | |
Y2.5 | 0,750 | VALID |
Data Processed, 2022
Table 2 shows that all of indicators that built the research construct had an outer loading value more than 0,50 and significant to the statistic on 0,05 level so that they can be declared valid according to the convergent validity criteria. Because all indicators are valid based on convergent validity criteria so the result of calculations and tests can be seen on figure 2.
Figure 2. Outer Loading and Path Analysis Result
For the test result of direct and indirect effect or mediating variable testing is presented by Table 3 and Table 4 below.
Table 3. Direct Effect Examination
construct | Original Sample (O)
|
T-Statistic | Information |
Transformasional Leadership → Employee Performance | 0,132 | 0,954 | Insignificant |
Compensation→ Employee Performance | 0,740 | 6,321 | Significant |
Transformational Leadership → Job Satisfaction | 0,366 | 2,595 | Significant |
Compensation → Job Satisfaction | 0,597 | 4,541 | Significant |
Job Satisfaction → Employee Performance | 0,438 | 1,626 | Insignificant |
Survey Data Analysis Result With PLS
Table 4. Indirect Effect Examination
construct | Original Sample (O) | T-Statistic | Information |
Transformasional Leadership →Job Satisfaction→ Employee Performance | 0,160 | 1,062 | Insignificant |
Compensation→Job Satisfaction→Employee Performance | 0,261 | 1,741 | Insignificant |
Survey Data Analysis Result With PLS
The Influence of the Transformational Leadership to Employee Performance
According to the result of the statistic test transformational leadership had the positive effect in the amount of 0,036 and insignificant to employee performance. It is indicate that although transformational leadership better than before it can not increase the employee performance in real condition at CV. General Design. This result doesn’t support to Robin & Judge (2015) who states that transformational leadership builds interactions between the leader and the employees in order to change employee’s behavior became highly motivated and strive to achieve high achievement and performance. Be based result of calculation in this research, in order to improve employee’s performance the leader should be able to inspire, tell the employee how to solve the wok problems and give attention to employees whether it’s individual attention or in the form of prise. The leader at CV. General Design especially the top leader rarely active in the company operations because there was clear job description and time schedule for every project that must be completed by the employee. So that whether or not there is a leader, employees already know the work that must be completed and when the work must be finished. That’s why transformational leadership doesn’t effect to the employee performance in reality at CV. General Design.
This result is in line with study of (Hartawan, 2021; Eliyana et al., 2019; Kawiana et al., 2020; Priarso et al., 2018; Wahyuniardi & Nababan, 2018) that found transformasional leadership had positive effect and insignificant to employee’s performances. But this result contradict with research result of (Kawiana et al., 2020; Mahrum et al., 2021; Lestari et al., 2018; Purba & Sudibjo, 2020; and Ferri et al., 2020) that show transformational leadership had positively effect to employee’s performances and also significant.
The Influence of Compensation to Employee Performance
In this study found that compensation has the positif effect in the amount of 0,480 and significant to employee performance. It’s mean that the higher compensation at CV. General Design can increase the employee performance and less compensation for the employees so the lower employee performance can be given. According to Suwatno and Priansa (2011:219) compensation is the important thing for motivate and push the employee in order to increase their performance. Based on the statistic calculation if the company wants to increase the employee performance the leader of the company should increase amount of the compensation for the employees. Not only financial compensation but also non financial compensation like holiday activities or field trip in every year for all employees at CV. General Design.
The statistic outcome in line to (Pangastuti et al., 2020; Juliarti et al., 2018; Mahrum et al., 2021; Purba & Sudibjo, 2020; Wirya, 2019) that argue compensation had positif effect and significant to employee’s performances. But this result contradict to the research of (Aromega et al., 2019; Idris et al., 2020; Elburdah, 2020; Rosalia et al., 2020) which show that compensation had negative significant effect to the employee performance.
The Influence of Transformational Leadership to Job Satisfaction
According with result of statistic test transformational leadership had a positif effect in the amount of 0,412 and significant to job satisfaction. The result indicate that the better transformational leadership can work up job satisfaction in real condition toward CV. General Design. Chang & Lee (2007) argue that transformational leadership is one of many factors that contribute for rises job satisfaction. Transformational leader set an example and be a role model for the employees, push and giving motivation to the employees to be creative and innovative and also solve the problem with the new approach. Transformational leadership also cares about the problems that faced by the employee, willing to accept employee consultation and provide a sense of comfort in completing their work so that the employee feel satisfied and can created job satisfaction in employee.
Result in this investigation in line with study of (Eliyana et al., 2019; Krisnawan, 2021; Lestari et al., 2018; Priarso et al., 2018; Wahyuniardi & Nababan, 2018) which found that transformational leadership had positif effect and significant to job satisfaction. But this research contradicts to research result of Diansyah (2018) that states transformational leadership had insignificant effect to job satisfaction.
The Influence of Compensation to Job Satisfaction
In this study found that compensation had positif effect in the amount of 0,579 and significant to the employee job satisfaction. That means the higher compensation at CV. General Design will increase the employee job satisfactionin real condition. This result support to statement of Syah (2013) that if the employee needs have been met by providing fair compensation then the employee job satisfaction wil be created. This investigation in line to the research of (Krisnawan, 2021; Juliarti et al., 2018; Saman, 2020; Sinaga, 2021) that state compensation had positif effect and significant to job satisfaction.
Effect of Job Satisfaction to The Employee Performance
This result found that job satisfaction had positive effect in the amount of 0,390 but insignificant to the employee’s performances. That’s to say that increasing job satisfaction cannot increase the employee’s performances in real condition at CV. General Design. Every single employee certainly has the different level of satisfaction. According to result of statistical analysis job satisfaction indicator that should be noticed by the leader is about satisfaction with co-work. If the employe of company had satisfaction with their work environment one of it co-work the company will be more productive (Chen, 2006). Job satisfaction had insignificant effect to employee performance because the leader rarely interact to the employee so that an interactive atmosphere is not built for employees. Employees tend to focus on their individual jobs. It is hoped that the attention of the leadership will create a comfortable and pleasant atmosphere among employees. In order to establish employee job satisfaction that can enhance employee performance, coworker satisfaction needs to be raised.. That’s why job satisfaction doesn’t significantly influence to the employee performance.
The result in this investigation be in accordance to study of (Adiyasa & Windayanti, 2018; Rofiliana et al., 2021; Saban et al., 2020; Safani Sitorus, 2021; and Ismail 2022) that argue job satisfaction had positif insignificant effect to employee performance. But this result contradict to the research of (Aryanta et al., 2019; Juliarti et al., 2018; Martini et al., 2019; Kawiana et al., 2020; Rosalia et al., 2020) which show that job satisfaction had positively significant effect to the employee’s performances.
How Job Satisfaction Mediate Transformational Leadership Effect to Employee’s Performances.
According to standart of Hair et al., (2010) that job satisfaction can’t mediate transformational leadership to the employee’s performances. This is seen from relations of transformational leadership to the employee’s performances directly is insignificant, but indirectly effect of transformational leadership to the employee performance is insignificant too. It’s mean that the effect of the transformasional leadership to the employee’s performances had not run well pass through job satisfaction. So therefore job satisfaction is cannot mediated effect of transformasional leadership on employee’s performances in CV. General Design.
This result is contradict to (Feri et al., 2020; Krisnawan, 2021; Kawiana et al., 2020) who showed that job satisfaction had important contribution in mediate effect of transformasional leadership to the employee’s performances.
How Job Satisfaction Mediate The Compensation Effect to The Employee’s Performances.
According to criteria of Hair et al.,(2010) in this study job satisfaction can’t mediate effect compensation to employee’s performances. It can be seen by the relationship between compensation to the employee performance directly is significant, but indirectly the relationship between compensation to the employee’s performances through job satisfaction is not significant. It’s mean that effect of compensation to employee’s performances had not run well pass through employee job satisfaction. So therefore job satisfaction is cannot mediate effect of compensation to the employee’s performances at CV. General Design.
The result in this investigation be in accordance on study of Idris et al., (2020) who examined 155 fulltime and permanent employee as civil servants who had worked more than a year at State Polytechnic College in East Java, Indonesia. The result of the research had found that job satisfaction didn’t proven as mediator of compensation effect to the employee’s performances. However this result is contradict to the research of Krisnawan & Djastuti (2021) who examined 65 permanent employees of PT. Sango Ceramics Indonesia. The research had found that job satisfaction mediate the relationship of compensation to employee’s performances. Juliarti et al., (2018) and Sinaga (2021) also found the result that indicate employee’s performances has been affected by the compensation variable through job satisfaction accession.
Implication
The theoretical implication of this research is can be used as a reference as well as media in the development of knowledge related to human resource management (HR).The most dominant employee performance is reflected by indicators of quality, quantity and independence. This shows that the employee performance of CV. General Design based on quality, quantity and independence is good. The most dominant job satisfaction is reflected by the indicators of satisfaction with the job itself, satisfaction with salary, satisfaction with promotions and satisfaction with the attitude of superiors. This means that employees were satisfied with the job, salary, promotion and attitude of their superiors. The most dominant transformational leadership is reflected by the charisma indicator with the statement of the leader where I work respected by employees. This shows that the leader at the CV. General Design is charismatic and respected by employees. The most dominant compensation is reflected by the wage indicator with the statement that I still get more wages when I get additional work. This shows that the provision of wages or compensation in the company is good.
The practical implication of this research is The results of this study are expected to contribute to the managerial company CV. General Design and other organizations should pay attention to both the perspective of transformational leadership, compensation and job satisfaction in improving employee’s performances. The proposed research model has been tested for its fit model through the PLS analysis tool, which can streng then empirical support for the findings of previous researchers. The results of this study indicate that the compensation variable has a positif and significant effect on job satisfaction and employee’s performances. This means that the more compensation is given, the job satisfaction and employee’s performances will increase significantly too.
Research Limitation
- Scope limitations in this study were only carried out on CV. General Design. The results of this study focus on CV. General Design This study cannot be generalized to other companies. This means that this study only explains the effect of transformational leadership and compensation on employee performance at CV. General Design Klungkung Regency. It is hoped that in the future research can be developed not only based on one area and can develop a variety of subjects.
- Variable limitations in this study which only analyze the transformational leadership, compensation, and job satisfaction variables on employee performance variable. It is hoped that for the further research on the employee performance can add several other variables
CONCLUSION
Statistical outcome indicated that transformational leadership had positif and insignificant results on employee’s performances. Effect of compensation on the employee’s performances show positif and significant results. The influence between transformational leadership to job satisfaction has positively significant outcome. Effect of compensation to the job satisfaction that was positively significant outcome. Effect of job satisfaction to employee’s performances show positively outcome but insignificant. The role of job satisfaction as a mediating variable is not mediate relationship between transformasional leadership to the employee performance. Effect compensation to the employee’s performances has not been affected through job satisfaction.
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- Tafrizi Priarso, M., Diatmono, P., & Mariam, S. (2018). The Effect Of Transformational Leadership Style, Work Motivation, And Work Environment On Employee Performance That In Mediation By Job Satisfaction Variables In Pt. Gynura Consulindo. Business and Entrepreneurial Review, 18(2).
- Wahyuniardi, R., & Nababan, H. R. (2018). Pengaruh Kepemimpinan Transformasional Dan Budaya Organisasi Terhadap Kepuasan Kerja Serta Dampaknya Pada Kinerja Karyawan. Jurnal Teknik Industri, 19(2), 118–126. https://doi.org/10.22219/jtiumm.vol19.no2.118-126
Transformational Leadership and Compensations Effect to Employee’s Performances by means of Job Satisfaction as Mediation Variable at CV. General Design Klungkung Regency
Putu Ayu Krisna Dewi1*, Ida Bagus Udayana Putra2, Putu Ngurah Suyatna Yasa3
1,2,3 Warmadewa University Postgraduate Program Management Masters Program
Vol 3 No 3 (2023): Volume 03 Issue 03 March 2023
Article Date Published : 15 March 2023 | Page No.: 422-429
Abstract :
Employees performance at company needs been noticed because it can affect to the company’s performance. This study desire to analyze how transformational leadership and compensation affect employee’s performances by means of job satisfaction as mediation variable. Object of this research are all employees of CV. General Design totaling 40 (fourty). The data collected by a questionnaire with five Likert scale and using Partial Least Square (PLS) as a data analyze. This research indicate about transformational leadership affect positif insignificant to employee’s performances, but it had positif and significantly effect to job satisfaction. Then compensation had positif effect and significant to the job satisfaction and the employee’s performances. While job satisfaction affect positively and had no significant effect to the employee’s performances. In addition, job satisfaction is not a mediation of transformational leadership and compensation effect on the employee’s performances. For the further researchers are hoped can add alternative constructs that affect to the employee’s performances besides transformational leadership, compensation, and job satisfaction. The next researchs, it should add more references related to research and hope this result can be used for reference to study on similar companies.
Keywords :
Transformational leadership, Compensation, Job satisfaction, Employee’s performances.References :
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- Sukarta Wirya, K. E. (2019). The Effect of Compensation and Work Environment on Work Discipline and Performance of Mini Mart Employees in Denpasar City How to cite (in APA style). Jurnal Ekonomi Dan Bisnis Jagaditha, 6(1), 60–71. https://doi.org/10.22225/jj.6.1.605.60-71
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Author's Affiliation
Putu Ayu Krisna Dewi1*, Ida Bagus Udayana Putra2, Putu Ngurah Suyatna Yasa3
1,2,3 Warmadewa University Postgraduate Program Management Masters Program
Article Details
- Issue: Vol 3 No 3 (2023): Volume 03 Issue 03 March 2023
- Page No.: 422-429
- Published : 15 March 2023
- DOI: https://doi.org/10.55677/ijssers/V03I3Y2023-10
How to Cite :
Transformational Leadership and Compensations Effect to Employee’s Performances by means of Job Satisfaction as Mediation Variable at CV. General Design Klungkung Regency. Putu Ayu Krisna Dewi, Ida Bagus Udayana Putra, Putu Ngurah Suyatna Yasa , 3(3), 422-429. Retrieved from https://ijssers.org/single-view/?id=7989&pid=7939
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