The Effects of Transformational Leadership on Commitment, Motivation, Compensation and Employee Performance of Local Water Supply Companies in Timor Tengah Selatan Regency Indonesia

The Effects of Transformational Leadership on Commitment, Motivation, Compensation and Employee Performance of Local Water Supply Companies in Timor Tengah Selatan Regency Indonesia

 Frengky Dupe, Yohanis S. Sarong, Indri Astuti, Ricky E. Foeh, Erna E. Giri, Elly Lay
Department of Business Administration, Faculty of Social and Political Science, University of Nusa Cendana, Kupang, Indonesia.
DOI: https://doi.org/10.51244/IJRSI.2023.10405
Received: 05 March 2023; Revised: 29 March 2023; Accepted: 06 April 2023; Published: 03 May 2023

Abstract: This research is motivated by the contradictions contained in organizational theory and empirical findings of previous research on the effect of transformational leadership on organizational commitment, employee motivation, compensation, employee performance. The purpose of this research is to examine and explain the effect of transformational leadership on organizational commitment, employee motivation, employee compensation and performance. The method in this research is a quantitative approach with explanatory research. The analysis technique uses Smart PLS 3. Sample data were obtained from 40 respondents as employees at the Regional Drinking Water Company in Timor Tengah Selatan Regency.
The findings of this study are that transformational leadership has a positive and significant effect on organizational commitment, employee motivation, compensation and employee performance. Organizational commitment has a positive and significant effect on motivation. Employee motivation has a positive and significant effect on compensation. Compensation has a positive effect and is significant to employee performance. This study concludes that the variables of transformational leadership, organizational commitment, employee motivation, reasonable compensation have an important role in improving employee performance which excels in achieving organizational goals as a common goal. Therefore, it is necessary to get attention from policy makers to consider these variables.

Keywords: Leadership, Commitment, Motivation, Compensation, Employee Performance

I. Introduction

The development of the business and non-business world is influenced by the increasingly rapid technological developments that bring faster changes in the business world and are accessible to all groups. Advances in technology make business competition increasingly fierce and difficult to predict, even the role of human resources in certain fields can be shifted due to the use of robot technology. Technological advances have positive and negative impacts on human life and companies. Companies can experience progress with technological advances and can also experience setbacks. Both of these phenomena will depend heavily on the transfer of technology and knowledge transfer between leaders and organizational personnel. Technology transfer and knowledge transfer between leaders and organizational personnel will have an impact on the performance of organizational or company employee.

Human resources are one of the main elements that are very important in an organization or company because HR is one of the determinants of the success of a business or non-business organization in addition to human-created resources.

Regional Drinking Water Company (PDAM). is a company engaged in the provision of clean water services for the community and is also tasked with developing the regional economy and seeking profit as a source of local revenue. This is in accordance with law (UU) number 5 of 1962 concerning Regional Companies which states that regional companies are production units that aim to purchase services, organize public benefits and foster regional income. To assess the achievement of these objectives, performance measurement is needed at the Regional Drinking Water Company (PDAM). According to Mahmudi (2010: 14) performance measurement at these public sector companies is carried out in an effort to determine the level of achievement of goals and improve the quality of performance of employees in the company, so that Employees will be motivated to work optimally and be able to provide the best service.